Options Paper for Fundraising Self-Regulation in Northern Ireland

10 Feb 2017 Sandra Bailie    Last updated: 3 Mar 2017

This paper outlines the options for Fundraising Self-Regulation in NI. The Working Group is seeking to engage the sector and consult until 31 March, in order to make recommendations on the most suitable option for NI.

Consultation

Please take time to read the Options Paper below and then give your feedback by:

Introduction

In Northern Ireland the old bodies involved in fundraising self-regulation have now closed and there isn’t yet an agreed system in place to regulate fundraising practice. Having an agreed system for self-regulation will offer members of the public the opportunity to make their complaints heard if the charity response has been deemed unsatisfactory. Other parts of the UK have established their model:

Following an initial consultation event on 9 September 2016, NICVA was tasked by the NI VCSE sector with running a full consultation on the future of voluntary fundraising regulation in NI.  As a starting point for a full consultation, NICVA established a NI Fundraising Regulation Working Group. This group has developed options for Northern Ireland and is seeking to consult with the sector in order to make recommendations. At its first meeting in November 2016 the Working Group took the decision to accept an offer from the Fundraising Regulator to act as the interim Fundraising Regulator for NI whilst a more detailed consultation on the way forward was carried out.  

The working group fully endorses self-regulation of fundraising practice and recommends that this be more actively supported and enhanced in Northern Ireland. Self-regulation is the organisation taking responsibility for their own practice and pro-actively adhering to best practice, this is ultimately the responsibility of the board.  Like many other governance matters, board members may need help in understanding what regulations and good practice that they should be adhering to.  Helping the sector to improve their fundraising practice by giving them the practical tools to do this would greatly improve fundraising practice, and this is our first priority. In addition to the Code of Fundraising Practice, there are advice notes and guidance available on the DIY committee guide website as well as from NICVA and IOF.  

It is also worth noting that there is legislation covering different aspects of fundraising for example data protection, public collections and lottery legislation which charities and other not-for-profit organisations must comply with.  The lottery legislation which covers all types of raffles and draws needs to be updated, as well as the legislation covering door to door and street collections.  There are new provisions for public collections in the 2008 Charities Act but these have not yet been enacted.

Whatever the agreed structure is in NI it would work closely with the Information Commissioner’s office (ICO) and the Charity Commission NI (CCNI) with regards to issues falling under data protection legislation and Charity legislation.

Role of the fundraising regulation body

The fundraising regulation body, whichever option is agreed, would deal with complaints regarding:

  • How a fundraising organisation collects or solicits property, money or the promise of money from people. 
  • A fundraising organisation’s relationship with donors. 
  • How a charity or other fundraising organisation works with others to raise money. 
  • A fundraising organisation’s complaints-handling process. 
  • Issues related to the management of an individual’s contact preferences with fundraising organisations. 

 The fundraising regulation body, whichever option is agreed would not usually deal with the following:

  • Matters affecting a fundraising organisation that do not relate to fundraising.
  • Where a fundraising organisation does not meet the legal requirement to be a charity.
  • Where a fundraising organisation may purport itself to be a charity when it is not.
  • Where there is serious or sustained misconduct by those in management and control of a fundraising organisation.
  • If criminal activity is suspected, the matter will generally be referred to the police.

CCNI will only usually become involved in a fundraising complaint where there are concerns about:

  • a breach of trust by the charity’s trustees
  • damage to public trust and confidence in the charity or the sector
  • harm to the charity’s beneficiaries
  • mismanagement or misconduct by the charity’s trustees
  • misappropriation of a charity’s funds.

Levels of fundraising complaints in NI

Since February 2011 CCNI have received approximately 20 complaints about fundraising which is about 3% of the overall complaints figure. The Fundraising Regulator reported 3 complaints from people in NI since it was established in July 2016, 2 of these were from UK wide organisations. The now defunct Fundraising Standards Board complaints records ranging from 2010-2016 had a total of 4 complaints that were from complainants based in Northern Ireland. 

Options

A range of options were considered by the Working Group. The first two options - Joining the Fundraising Regulator(England and Wales) and Developing a NI Fundraising Complaints Service - were those that were deemed to be most viable and have therefore been presented by the Working Group in more detail. The other three options were considered in depth by the Working Group but appeared to present strong barriers to implementation and were deemed not to be viable  -  if one of these were found to be the most preferred option then this would involve another piece of work to clarify implications and implementation.

Option 1) Join Fundraising Regulator (England and Wales)

What would this look like in practice?

  • A member of the public can contact the Fundraising Regulator with any complaint about fundraising online or by telephone    
  • In the first instance, the complainant will usually be referred to the charity concerned.
  • If unsatisfied with the response from the charity they can approach the fundraising regulator who will consider whether or not to investigate or refer back to the charity. If unresolved the FR will consider the complaint, investigate
  • The Fundraising Regulator will then attempt to resolve the complaint by working with all concerned prior to passing the complaint onto its Adjudication Committee as a “last resort”.
  • At any stage (one to three), a case may be escalated to the Adjudication Committee for a decision. This may occur, for example, where they have received multiple complaints about the same issue and/or charity; where they have identified wider or systemic issues within the complaint, or where they consider there is a risk to public safety.

Advantages and Disadvantages

This option is fully developed. The Fundraising Regulator is already up and running, well-resourced and a relatively low-cost option already used by UK-wide charities operating in NI. They are experienced in Fundraising Regulation and understand the issues.

This option is not dependent on any particular level of funding from NI charities being agreed. The voluntary sliding scale fee structure (levy) is also set and is known to apply to only to organisations spending over £100,000 on fundraising.

The “brand” and website, along with all the necessary systems and processes are also already established.

This option seems to represent a quick and easy way to comply with all 5 recommendations from The Cross-Party Review of Fundraising Regulation and inspire public confidence.  It also has Charity Commission NI and UK and NI Government approval.

This approach is not specific to NI and so may lack the benefit of both in-depth local knowledge of the conditions in which the VCSE sector here operates. However, the Fundraising Regulator is fully aware of NI-specific legislation and has already agreed to NI representation on its Board.  They have also confirmed that they would seek local knowledge and advice on any cases from NICVA and CCNI.

UK-wide charities operating in Northern Ireland are already covered by the Fundraising Regulator under the “lead regulator model”.  The “lead regulator model” could equally well be used for charities operating across the island of Ireland.

Cost

Costs are clear.  The levy is applied on a stepped scale, is a fixed rate for three years, and is to be paid annually.

Annual Expenditure on Fundraising  

Annual Levy £’S

£100,000 - £149,999 £150
£150,000 - £199,999 £300
£200,000 - £149,999 £800
£500,000 - £149,999 £1500
£1million - £1,999,999 £2500
£2million - £4,999,999 £4000
£5million - £9,999,999 £6000
£10million - £19,999,999 £8000
£20million - £49,999,999 £12,000
Over £50million £15,000

 

A small number of exempt charities (mainly Higher Education organisations and Universities) and “Third party” fundraisers (fundraising agencies and commercial participators) have different levy’s.

In addition to the levy, there is a registration scheme for charities below the levy threshold with a small administrative fee of £50 charged for annual registration. Other organisations carrying out fundraising will also be able to register.  Registration is entirely voluntary.

For FAQs regarding the levy and to see the discussion paper and final details see here.

How would this system sit with the Fundraising Preference Service (FPS) & Fundraising Code of Practice?

Joining the Fundraising Regulator would automatically entail signing up to the Fundraising Preference Service (FPS) and Fundraising Code of Practice which are both already in place. 

The corollary is that both are expected to reflect NI-specific legislation and our operating landscape.  

At the moment no additional costs would be incurred with regard to either the FPS or Code of Practice.

FR relationship with NI

There would be NI representation on the FR board

FR would liaise closely with bodies in NI such as CCNI, NICVA and IOF.

Option 2) Develop a NI Fundraising Complaints Service

What would this look like in practice?

  • Members of the public could contact Northern Ireland Fundraising Complaints Service by telephone or through their website 
  • In the first instance, the complainant would always be referred to the charity concerned (The First Line of Defence). 
  • If unsatisfied with the response from the charity they would then be referred to the trustees of the charity (The Second Line of Defence). 
  • Only if the complaint is still not resolved will the complaint be officially passed onto the Independent Panel for adjudication.
  • As with the Fundraising Regulator, it is only after the charity involved has effectively failed twice to resolve a complaint that its adjudication body, i.e. the Independent/Adjudication Panel becomes involved.

This option is not yet developed and would require an additional piece of work to establish the NI Fundraising Complaint service structure, including some of the developments below.

  • The establishment of an Implementation Group to take forward the recommendations.
  • The development of an Independent Panel.  This would be set up as both a charity and a company limited by guarantee.  This status would enable the Panel to not only protect its members, but also give it the legal personality to contractually enter into agreements with statutory and other bodies as required. Independent Panel members would be volunteers and would be recruited and selected against defined role descriptions. They would be supported through an induction process and relevant training.
  • The Independent Panel would be responsible for outsourcing the delivery of a Complaints Service Helpline to an appropriate, independent organisation.  There would be a holding fee and a set cost for each call received.  The Panel would be responsible for overseeing this work.   For example, assisting in developing specific scripts for Complaints Service Helpline staff and ensuring that the process is quality assured. 
  • The Independent Panel would outsource the development of a NI Fundraising Complaints Service website as well as the maintenance and updating of it. The panel would agree the content and format.
  • For this option to work there would have to be agreement from the sector to pay the necessary fees to cover the costs incurred. These costs are very difficult to estimate as it is impossible to prepare for every risk/eventuality such as a legal challenge.
  • The Independent Panel would be responsible for setting up an administrative process for payment of fees and administration of the finance:  this may also be outsourced.

The Scottish Implementation Group have generously stated that, having successfully developed the Scottish Fundraising Complaints Service, they would be happy to share their relevant learning and resources in terms of developing this option.  In particular, the process of gaining legal status for the Independent Panel and the development of a "fundraising guarantee" for NI.

Advantages and disadvantages

This option is dependent on the necessary funding from NI charities being guaranteed and a fee structure being developed, consulted on and agreed by the sector. This may result in organistions spending less than £100,000 on fundraising having to contribute financially.

A NI-specific Helpline and Independent Panel would act as a simple, centralised resource for the NI public.

It gives the NI sector ownership and Panel members would have more of an understanding of the NI sector than the Fundraising Regulator’s adjudication body.

Given the smaller pool of potential Panel members available within NI, the potential for conflicts of interest for Panel members may actually be inversely much greater.

Adopting this system means that NI charities would be unable to use the Fundraising Regulator’s “kite mark”.  To instigate an alternative system, as the Scottish sector did with its “Fundraising Guarantee” obviously has resource implications.

The NI sector would use the "lead regulator" model, with complaints about UK-wide charities continuing to be referred to the Fundraising Regulator.  A Memorandum of Understanding (MOU) between the Fundraising Regulator and the Charities Regulatory Authority would need to be put in place.

There would effectively be three forms of fundraising regulation NI –

  • NI only charities – NI Fundraising Complaints Service
  • UK wide charities – Fundraising Regulator
  • All Ireland charities - Charities Regulatory Authority.

Cost

The set up and annual running costs can only be estimated at this stage and would be about  £20,000. This does not include the resources required of a scoping exercise to establish the costs, which organisations would be willing to pay and the appropriate fee structure, as well as the establishment of the Independent Panel and board.

As stated above, this option is clearly only viable if there is a guarantee that the costs involved will be met by charities operating in NI. 

The CCNI has confirmed that, unlike in England and Wales, data on what registered NI charities spend on fundraising is not available.  Nor will it be available within the time span of this consultation.  For this reason, an additional piece of work would be needed to find out how many charities in NI would be willing to pay for this option and what they would consider to be a reasonable cost.

UK-wide, All Ireland charities and International charities are most likely to be excluded from payment as they are covered by another form of regulation. So this leaves NI only organisations to meet the full costs.

In order to cover the projected annual costs, there are several ways this could be calculated. Each of these options is for a different number of organisations contributing and consequently different amounts payable.

  1. If we were to use the same financial model as the Fundraising Regulator (England and Wales)  - i.e. only those with an annual fundraising spend of £100,000 or more would contribute to the cost of this system, this would likely be 60 organizations paying £333 each. (Important to note that we do not currently have the information on fundraising spend by organisation and so this is only an estimate. UK-wide organisations and RoI based organisations would be exempt from paying into this system as they already contribute to the elsewhere)
  2. We could lower the fundraising spend threshold, but this could potentially impact smaller charities negatively. For example, 133 organizations paying £150 each
  3. We could work on the premise of no threshold – that the cost is split between all charities. This could mean 400 charities paying £50 each.  It could be difficult to get this amount collected from all charities, leaving the service unfunded. This option also has a higher administrative cost and would impact on the overall running costs.

How would this system sit with the Fundraising Preference Service (FPS) & Fundraising Code of Practice?

The Fundraising Regulator would be prepared to work closely with the NI VCSE sector to ensure that NI-specific issues are reflected within the Fundraising Code of Practice.

The Fundraising Preference Service is for members of the public in England and Wales and also in Northern Ireland and Scotland where they are donating to charities based in England and Wales (say an overseas aid charity) to register where they no longer want to be contacted through direct marketing by charities they name.  If this option were chosen, the Fundraising Regulator would not be able to take a request to opt out of a NI- only charity.

NI relationship with FR

There would be a Memorandum of understanding with the FR.

NI would work closely with FR in the development of the Code of Fundraising Practice.

The other three options that were considered by the Working Group are presented below with reasons why they were not considered to be viable.

Option 3) Existing NI organisation takes on responsibility 

Having an existing NI organisation take on primary responsibility, with CCNI potentially providing additional background support to this organisation, was one of the first options to be considered by the Working Group.

It was clear that this option offered the sector a NI-specific option through an already established NI organisation which understood both NI-specific legislation and our operating landscape.   However, after much discussion, this option was deemed not to be viable by the Working Group  on the basis that for any organisation considered, e.g. IoF, NICVA or any number of well-established large fundraising charities there was a clear conflict of interest. 

Neither IoF nor NICVA could investigate complaints against their own members.  In addition, it was not viewed by the Working Group as appropriate for one NI charity to be responsible for investigating another NI charity. It was seen as unacceptable for any NI charity to effectively set themselves up as the NI arbiter of good fundraising practice.  In addition, it was clear that any charity with the skills to undertake this role was likely to be one involved in fundraising, giving rise to serious potential conflicts of interest.

Option 4) Charity Commission for NI (CCNI) takes on responsibility OR takes on enhanced role 

The working group is aware that this may seem an attractive option for fundraising self-regulation in NI. Throughout this consultation process thus far, questions have frequently been asked as to why the CCNI cannot act as the fundraising regulator for NI or even take a much more active role in voluntary fundraising regulation. We have had intense discussions about it and have referred back what this option could look like to CCNI. Unfortunately after discussion with CCNI it is clear that CCNI is not in the position to take on this role due to lack of capacity and resources as well as the reasons outlined in the statement below.

There are a number of perceived benefits in having CCNI take on an enhanced role and essentially performing both a voluntary and statutory fundraising regulation.  It would provide the public with a single, central point of contact with an already established organisation which has incredible breadth of knowledge of the sector, already set up systems for providing advice and the skills, knowledge and expertise to do so.  For the public the system could also be clearer or easier. 

Statement from the Charity Commission NI with Reasons not to offer the option of an enhanced role for the Charity Commission

NI is seeking to implement a new system of fundraising self-regulation, i.e. voluntary regulation.   As the statutory charity regulator the Commission has no role to play in NI’s future system of fundraising self-regulation, just as it had no role under its previous system.  Under its current statutory remit the Commission may only examine certain concerns about fundraising, which include issues such as:

  • a breach of trust by the charity’s trustees
  • damage to public trust and confidence in the charity or the sector
  • harm to the charity’s beneficiaries
  • mismanagement or misconduct by the charity’s trustees
  • misappropriation of a charity’s funds.

"Creating a regulatory framework for fundraising in Northern Ireland would be contrary to the sector’s previously expressed preference for self-regulation.  For this reason, it would be difficult to justify including this as an option in a consultation on the self-regulation of fundraising.   

Enhancing the role of the charity regulator for Northern Ireland in this way would also create a dual framework of regulation across UK jurisdictions.  While charities registered in England, Scotland and Wales would be bound by self-regulation, charities registered in Northern Ireland would be subject to statutory regulation.  This would not only lead to confusion for charities that work across jurisdictions, but more importantly for the public and donors who are at the heart of this issue. 

Furthermore, regulation by the Commission would not only require additional resources, but would also require additional legislation which could take several years to put in place, creating potential for the sector to be exposed to reputational damage in the interim."

5) Join with The Scottish Fundraising Complaints Service

This option would allow NI charities to tap into a voluntary fundraising regulation system which is already in place, with a brand, systems and processes already set up or at least likely to be fully determined by the end of the NI consultation period.  In terms of resources available it could represent a more proportionate solution than any other. Also, in terms of the financial implications for NI charities, it would clearly offer the best value for money:  it is currently free.  However, the Scottish VCSE sector has agreed to fund future costs as required so there could be some cost, the level of which is as yet unknown, in the future.   

This option is also clearly not NI-specific.  It was set up specifically to meet the needs of Scottish charities within a legal framework that is actually less analogous to Northern Ireland’s than that of England and Wales. It may also suffer from the fact that the website, etc. is called Scottish Fundraising Complaints: this would clearly be confusing for the NI public.

The potential lack of local knowledge of our VCSE sector, and the climate in which it operates, would also need to be addressed through some form of representation within, and input into, the system.  However, this would not be insurmountable if some way of representing the interests of NI charities could be developed and agreed with SCVO and OSCR.  The system will however be reviewed after its first year (July/August 2017 and it is not clear how sustainable this option will prove to be.

Most notably, for NI to join with Scotland the agreement of the Scottish Government and OSCR would be required, not least because they partially fund the system.  It might also complicate matters as it is not clear how cross-border/All-Ireland charities could be accommodated.  MOUs with CCNI and the Charity Regulatory Authority in the Republic of Ireland might be needed in addition to the MOUs already in place with the Fundraising Regulator, OSCR and the Charity Commission for England and Wales. 

Further Information 

Further information can be found within the articles below - 

The Cross-Party (Etherington) Review on fundraising self-regulation & its implementation in England & Wales  - looks at the Cross-Party (Etherington) Review on fundraising self-regulation and progress on the implementation of its key recommendations in England & Wales.  

Fundraising self-regulation in NI - Time for Change?  - looks at the now defunct system of fundraising self-regulation in NI, why change is needed and why effective self-regulation is a key part of good governance.  

Fundraising self-regulation systems across the UK and Ireland - looks at the differences in how fundraising is currently self-regulated by the VCSE sectors in England and Wales, Scotland, Ireland and NI.  

Comparing VCSE sectors of NI, England & Wales, Scotland & Ireland - compares VCSE sectors across the UK and Ireland and looks at "proportionality" in choosing a new NI fundraising self-regulation system.  

Donor consent in light of the Fundraising Preference Service (FPS) - looks at what the Fundraising Preference Service actually means for NI charities and how it fits with current and planned data protection legislation. 

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