Heat & Light

Heat & Light

The Information Commissioner’s recent decision to fine several charities for data processing and consent transgressions has generated a remarkable amount of heat (in the form of impassioned comment) but, from my perspective as a practitioner, somewhat less light (ie actionable insights).  So I have collected a short list of questions below – these are presented as honest enquiries, informed by an awareness that change in fundraising practices is inevitable, that better ways of working are possible, even desirable, and that tomorrow’s ICO compliance conference is likely to be a big part of this change.

Before the questions, though, permit a historical detour, as it is absolutely imperative to recognise the antecedents of current regulatory attention on charities.  Even the most cursory search of recent Fundraising Standards Board’s (FRSB) Annual Complaints Reports shows total complaints received doubled in four years, from 33,744 in 2012 to 66,814 in 2015, complaints which were prompted some 60 billion fundraising contacts over this time.  Strikingly, the FRSB estimated that for each complaint received, a further 20 people are annoyed but do not complain; this puts the 2015 total at around 1.3m.  Their source seems clear: “half of all complaints are incurred by less than 2% of charities reporting”…”just 1% of reporting charities (all of which have voluntary income of £10 million and over) generate six in every ten complaints”.  Frustration at continued inaction in addressing the issue led outgoing FRSB Chair Andrew Hind to deliver a strongly worded rebuke in his 2016 Complaint Report foreword:

“[T]his report shows that more than 66,000 people were so unhappy about a charity fundraising activity targeted at them last year that they took the time and trouble to make a formal complaint about it to the charity concerned…The stark reality identified by this report is therefore that, in all likelihood, some 1.3 million people were dissatisfied by the impact that a charity fundraising technique had on them in 2015. That’s enough unhappy people to fill Wembley stadium 15 times over.  Just three fundraising activities – direct mail, telephone calls and doorstep fundraising – are responsible for more than seven in ten of these concerns” [italics added]

A brief word also on the Daily Fail, whose 2015 ‘New Shame of Charities’ story is widely thought to have precipitated the current storm?  It should be remembered that the story was prompted by a concerned whistleblower, as DM Investigations Editor Katherine Faulkner made clear in her evidence (given in a closed session) to the Commons Public Administration and Constitutional Affairs Committee (PACAC) in October 2015.  The DM were not even the first newspaper to run such whistleblower stories in recent years – in 2009 the Daily Mirror published a similar one relating to charity telemarketing, while, in 2012 the Telegraph ran an exposé of what it called “aggressive, intimidatory and potentially unlawful [fundraising] tactics”, after an undercover Telegraph reporter worked at Tag Communications for 12 days, the FRSB later found Tag had “deliberately confused and misled the public” in their fundraising activities.  This story used the very same method as did the DM in 2015; indeed, it seems highly unlikely the DM would have covered charities in such detail in recent years had earlier stories not set a marker and had a whistleblower not approached them. Media coverage obviously caught the ICO’s attention (their reply to my recent Freedom of Information request says “[a]llegations have been made in the media that individuals are being overwhelmed by fundraising requests”).  But, odious as the DM is, there is a wider backstory of public dissatisfaction with and frustration towards charity fundraising which cannot, and should not, be ignored.  The current climate may make the above look like the case for the prosecution; it is not, but those who cannot remember the past are condemned to repeat it and I, for one, do not wish to see the recent past of British charity fundraising repeated anytime soon.

I would add that the recent ICO rulings seem to me to present a real opportunity for the sector.  I cannot escape the conclusion that affinity and engagement are the key determinants of large contributions, and I see no reason why an increased emphasis on measuring and acting on these attributes cannot yield substantial gains for many charities.  Odd as it sounds, I also welcome the recent scrutiny on screening – the ICO’s actions can in important ways be seen as a catalyst for fundamentally more open and transparent relationships with our donors.  They are also a spur to re-examine longstanding practices, a result of which may well be an increased capacity to build enduring relationships with supporters.

All that said, my questions are:

  1. Consents & reasonable expectations.  We travel magically to a Utopia where charities have in the recent past secured every necessary consent, perfect privacy statements are publicly displayed and where, thanks to a concerted communications campaign, “substantial distress” would not reasonably be expected to be caused upon learning that ones data been processed in a wealth screening.  In this world, is wealth screening illegal?
  2. Types of screening.  Any organisation with significant data assets screens regularly – so as not to send mail to deceased people/so use the correct address, and for any number of other reasons.  Is the risk of “substantial distress” the main, or only, difference between these processes?
  3. Substantial distress.  Both the recent ICO Civil Monetary Penalty notices and paper accompanying the imminent Fundraising & Regulatory Compliance Conference stress the likelihood that “substantial distress” would be caused were data controllers to learn their data had been processed in a wealth screening.  This might be true, however no evidence is cited to support this claim in the judgement or the paper, and subsequent Freedom of Information requests have been refused or are awaiting a reply (Note to Madeline Bowles: whoever you are, thankyou!).
    1. Related: how can we know “substantial distress” is likely when such distress is itself partly the result of the manner in which the activity in question is described or explained?
  4. Understanding capacity to give.  Quite simply, how are charities to arrive at an understanding of who might have capacity to be able to make a major donation without analysing publicly available sources?

Do also check out Factary’s very good recent “5 Questions to Ask the ICO“.

For those attending the conference tomorrow – enjoy.  For everyone else – catch you at online at #FRCC2017!

Heat & Light II: “Let Sunshine Win the Day”

George Osborne revelled in his role as the ‘Austerity Chancellor’.  However, for all his talk of “tough choices”, this austerity did not, it seems, extend to charitable sector spending, where at times his decisions seem generous almost to the point of profligacy.  Nowhere is this clearer than in the case of disbursals of funds raised by fines on banks, in which Osborne had significant – if not sole – say in directing the funds, totalling by some estimates almost £900m. Some edited highlights of these disbursals include:

  • £50m to the Cadet Expansion Programme (itself established in 2012 by the Coalition) to place 500 Cadets in British schools, each cadet costing, it seems, a cool £100,000, more than many whole charities cost each year
  • £7.6m towards the refurbishment of Wentworth Woodhouse, which led the Guardian to question the surprise choice – with a £42m total cost of renovation, £7.6m will only pay for the roof to be fixed and some other structural repairs at a private home which only granted access to the public in the 1980’s.  The funds were said to be contingent on the Wentworth Woodhouse Preservation Trust publishing a business case which, at the time of writing in February 2017, did not seem to have been posted to the Trust’s website
  • £20m towards the costs of the National Rehabilitation Centre at Stanford Hall in Nottinghamshire, which Ceasefire magazine have cogently and persuasively argued should really be a cost borne by Government, who sent affected veterans to battle in the first place
  • £35m towards the Armed Forces Covenant (Libor) fund.  The Fund was established in 2010 by the new Coalition Government – David Cameron himself tasked the initial  working group with producing a “low-cost” ideas for rebuilding the Covenant.  Again, this is arguably money which should have been provided by Government to care for veterans.

A recent Private Eye story also reported on the continued expense of the National Citizenship Service (NCS), which (it reports) will receive £1.26bn from 2016-2020.  This includes £187m in 2016-17 making it one of the largest charities in the country according to recent figures from Professor Cathy Pharoah at the Centre for Giving and Philanthropy at Cass Business School.  Despite this, the NCS is on track to miss participation targets by some 40%, with a recent National Audit Office report, saying “[w]eaknesses in governance and cost control need to be addressed”, concerns which led Meg Hillier MP, Chair of the influential Parliamentary Public Accounts Committee, to say “it is difficult to see how [the NCS] will be sustainable in the long term”.

Charities faced allegations of misspending or getting poor value for money from LIBOR funds they received, but surely the bigger question surrounds opaque Government decisionmaking.  It is concerning that not long before the Kids Company enquiry, the Treasury and MoD were making highly centralised decisions as to who would receive hundreds of millions of pounds, with very little transparency, and with MP’s apparently lobbying for a share of the funds.  As Civil Society reporter Helen Sharman wrote in late 2016, “[w]hen an MP writes to the man in charge of the government’s chequebook, seeking preferential treatment for a charity he supports, and the charity then receives a considerable chunk of what is on offer, we cannot help being slightly suspicious that public money is being distributed to charities because of patronage, rather than merit.”  Ms Sharman’s Civil Society colleague Gareth Jones sums the issue up well in saying “the longer the Treasury declines to outline a detailed decision-making process for these grants, the more we will have to infer that there simply isn’t one.  With charitable funding so scarce, it is vital that every penny is directed in the most targeted, effective way. No doubt the vast majority of causes receiving Libor funding (if not all) are very worthy, but do we know that there aren’t other causes that are more deserving?”

In 2006, David Cameron famously used his first Conservative conference as leader to urge colleagues to “let sunshine win the day”.  Will this Government let some sunshine illuminate their decisions around how charity funding choices are made?

Bricks and Mortar

With legacy bequests left to British charities measured in the billions and the value of British residential real estate measured in the trillions, why is high-value legacy fundraising not top of every fundraising directors to-do list?  The estimated value of members of the Sunday Times Rich List has grown from £99bn in 1997 to more than £500bn in 2016.  However, even this astronomical growth is dwarfed by the explosion in the estimated value of British real estate, whose value a 2016 Saville’s research report estimates at more than £6tn (trillion).  To put that into perspective, if everything in the UK were to be sold, it would fetch an estimated £8tn.  In answering the question “where is the money”, the answer, in the UK at least, is clear: “bricks and mortar”.

This is an urgent issue for British charities.  A perfect storm of more activist regulation, stubbornly high attrition/low response rates and a struggling cost-per-acquisition business model mean charity Direct Marketing is both waving and drowning.  Of charities’ existing major revenue streams, only legacies, major donations and ‘mid-value’ giving seem to have any chance of filling the gap left by falling or flatlining direct mail, face-to-face, door-to-door, telephone and DRTV.  And Legacies offer far greater scope for much-needed unrestricted funds than do major gifts, as well as the chance for collaboration between fundraising teams to build a value proposition stretching across the life course.

And crucially, legacies are highly unequal – in a good way.  A colleague recently recounted how a former charity received around 200 legacy bequests each year, with half a dozen accounting for around 40% of the total received – just one or two more of these big bequests would have transformed the charity’s financial outlook.  For a sector populated largely by micro-organisations, many with few or no paid employees, legacies are far more realistic proposition than securing and stewarding major donations.  Substantial legacies are possible for far more people than major lifetime gifts.  Many households in middle-England would never have the means to give a gift in the hundreds of thousands, but far more would could consider a legacy of this scale.
Property wealth is also far more broadly distributed than cash, meaning legacies enable more regional charities to raise big gifts. Many HNWI’s are London-based, however property wealth is far more broadly distributed, meaning charities across the country can seek and secure significant legacies.  The UK, already unequal and set to become even more so in the near future, offers far more opportunities to raise funds from property wealth than cash.  We should recognise this, and act accordingly.

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