Designing the Self-Regulation of Fundraising in Scotland - Summit report

Context

SCVO’s report into charitable public fundraising in Scotland was published on 23 September, alongside a review conducted by Sir Stuart Etherington for the Cabinet Office of the UK Government. Both reports share the broad conclusions that the current arrangements are not working well and need to be strengthened, that public trust and confidence is paramount and that charity trustees and charities themselves collectively need to take more direct responsibility for fundraising methods, standards and dealing with complaints. The two main recommendations from our report were that:

• Charity trustees should take ownership of fundraising in Scotland in order to maintain public trust in fundraising, and not delegate this to fundraisers

• Charities should lead the design of their own fundraising regulation system, with the associated rules, codes, thresholds and sanctions

Purpose of summit

The purpose of this summit was to put people from across the charitable sector at the heart of the decision-making processes required to design a new system of self-regulation for fundraising. It drew on the knowledge and experience of staff and trustees, and enabled them to shape fundraising regulation to ensure public trust and confidence, and safeguard the work of charities. Around 150 people from across the charitable sector attended the summit at the Edinburgh International Conference Centre on the 26 November.

Your views, your thoughts

This plenary session at the start of the summit provided the opportunity for the delegates to contribute their views and provide a sense of where they feel the major challenges are, what needs to change and what is currently working well.

Public

• Public trust and confidence is key to all of this – we must understand the concerns of the public, but need to help them understand that their perceptions can be out of step with the reality

• OSCR public surveys have uncovered an ongoing, underlying bubbling of quiet discontent amongst the public, so the situation might not be quite as peaked or as aggregated as we may think

• Educating the public can be difficult – we need to engage them first to find out their interests and priorities

• We need to increase trust in the charitable sector generally - not just in fundraising

• Fundraising scandals should be viewed in the context of what is a concerted effort to undermine the third sector and damage public trust in charities - this is the only issue that has stuck and we need to consider why?

Organisational

• There has to be buy-in from as many people as possible within an organisation to deliver universal understanding and change

• Some organisations bear a far greater responsibility for the state of fundraising than others

• Charity annual accounts and returns are often not clear, consistent or user friendly

• For some organisations there is a race to get the money in the door whilst forgetting ethics, transparency and most importantly purpose

• We need to sell our stories better – storytelling, building relationships, focussing on donors as people (respect them) and not just see the £ signs

• We need to develop better routes for complaints to get to fundraisers as they often don't see the complaints

• There is a wider issue of good governance and a need for training and investment for trustees

• The review must not simply be about regulation, we need to look at governance, culture and other factors which will improve fundraising practice

Regulatory

• Scotland has the opportunity to become a world leader in fundraising regulation

• There is a need to get the ethical underpinning to fundraising right before looking at new regulatory models and action in other areas

• We should be aiming for fundraising regulation based on donor protection rights – we have the opportunity here to make donors and beneficiaries central to it all

• When we look at the possibility of new institutions we shouldn't forget about the old ones and the role they could play

 

Workshops - a new system of regulation: The three options – Scottish, UK-wide or hybrid?

These workshops allowed delegates to discuss the pros and cons of the three main approaches available for designing a new system of funding self-regulation - Scottish, UK-wide or hybrid. There was some confusion about the distinction between the UK and Hybrid options, so the responses for these two options have been amalgamated below.

Pro-Scottish

• We have the opportunity to be pro-active, not reactive, and can design a self-regulation system that meets our needs, as opposed to having something imposed on us - the Etherington review has already decided what will be implemented

• Most charitable causes are already devolved to Scotland, e.g. care regulation

• Scotland currently seems to have a more supportive pro-charity atmosphere, so a Scottish regulator could be a better fit

• Many UK-wide charities already submit to separate regulators e.g. Care Inspectorate

• There is the potential for OSCR to extend its powers which will be a more obvious solution to the public

• A precedent was established for cross-border working when charity law was created in Scotland - regulators agree the details between them

• The sector would have the choice whether to adopt the Fundraising Preference Service or other rules

• The UK system seems too reactive, sanctions focussed and less progressive

Pro-UK/Hybrid

• What we could be asking is: why not have a UK wide system? Practically, it would avoid duplication of effort and cost and avoid confusion among donors and beneficiaries

• There would be confusion with a different Scottish framework in an increasingly digital world where there are no borders

• If there was an opportunity to influence the UK option to make it more in line with what we think is appropriate, then in principle it would make sense to do that

• It could be difficult to explain a dual system to donors

• Cross-border organisations could have to create two different approaches to their fundraising to deal with two systems

• It would bring uniformity and would be less confusing (for the public and for charities)

• A Scottish system would need an entirely new body to be established with board members and staff, and work done to promote to the public

• Fundraising in Scotland is not so very different to that in the rest of the UK - codes and regulation would apply to both, and from the point of view of the donor there is no difference

Making it work

• It’s all about proportionality, about achieving a system that suits the diverse size, shape and nature of the sector in Scotland

• The underlying principles should be able to apply to Scottish and cross-broader orgs, large and small

• A Scottish option couldn’t simply be the Etherington approach with a ‘Scottish badge’ - what would the point be?

• There should be a public perception study undertaken urgently to be sure we know what the exact issues are

• If the hybrid option is adopted there would need to be a Scottish sub-committee and strong representation from Scotland on the new regulatory board

Afternoon workshops

These facilitated workshops allowed delegates to discuss how the new regulatory system might work in practice by looking at some of the key challenges.

A Fundraising Preference Scheme (FPS) – do we need it and how would it work?

• We can’t opt out of all communications from other sectors, so it seems ridiculous to have a system where you opt out of all charity communications

• There hasn’t been a public ask or demand for this kind of service

• How do we even know that the FPS would work? The Mail Preference Service and Telephone Preference Service don’t

• The FPS puts the onus on the donor, but they can already opt out by contacting charities directly

• If this goes ahead, cost and practical implications to charities of making sure they comply could be huge – constant screening against FPS. Few charities have resource to cope with this. How will small organisations cope?

• How will you know what counts as a fundraising communication and what doesn’t? In some cases the difference is very subtle.

• People may have very different and complex messages about being contacted – how can one system possibly address that?

• You can’t possibly build trust and confidence if you can’t communicate with people

How do we ensure trustees effectively supervise fundraising?

• Trustees have sub-committees for everything except fundraising. Need to consider if charities have the right people and expertise on the board?

• Need balance between the operational and strategic view - it’s about having good systems

• We need good guidance for trustees - OSCR or SCVO to take the lead?

• A good practice guide should be produced that ensures: trustees sign off fundraising strategy, fundraising features in annual reports, any third party agreements (with fundraisers) are signed off at board level and fundraising is discussed regularly at board level

• Fundraising should be part of an organisation’s risk register

• Trustees have a lot of work to get through. Is it realistic to ask them to do more?

• More fundraisers on boards would help

• There is an issue for OSCR that trustees of new charities get a trustee guide but after that OSCR doesn’t know who trustees are and can’t send them a guide. New trustees to boards rely on good induction to be made aware of duties

Who does what – ‘regulating’ in a new landscape?

• This is an opportunity for Scottish charities to think outside of the box and design something they really want

• It feels a natural fit for OSCR to be the regulator, something that all in the third sector should be able to get on board with easily

• Having OSCR as the universal body should hopefully help to tie up better the issues of good governance with good, effective fundraising

• If OSCR took the lead this could lead to an overall increased confidence in the third sector and organisation-wide buy in to the ethics of good fundraising

• The Code of practice needs to be explicitly linked to ethics - but the ethics we agree to be bound by and work towards need to be confirmed

• It would be dangerous to put the championing and regulation functions together; someone should do the training, best practice and championing, and another organisation needs to do the regulation

• Can SCVO be the champion for the sector and work with the regulator to make the best scenario that works for all?

• The Information Commissioner must play a role in making improvements and should be called to account more

• It is still unclear how the new regulator will be financed

Who should all this apply too – compulsory or voluntary membership, deciding on and enforcing sanctions – and who pays?

• The answer is more about behaviour and ethics than regulation

• Without effective sanctions there is little compulsion for the small minority engaged in bad practice to change their behaviour

• There needs to be a catalyst for the majority of charities to sign up to the Institute of Fundraising

• This is not just about fundraisers signing up – there needs to be others within organisations that are aware of the rules and codes

• Failure to meet code of practice should have a defined list of sanctions with increasing levels based on the severity of the breach

• Being able to safely whistle-blow is crucial – there needs to be procedure in place which makes this simple

• OSCR should take on the Code of Practice, enforce sanctions and charity law should be widened to include fundraising

• Oversight of charity fundraising should be part of a trustees duties

• We need to look at a model of continuous improvement rather than simply minimum standards

• There isn't one universal version of good practice – these mean different things to different people

• Could the Scottish Government provide seed funding to help start the new body to set-up with charities funding after that through a scaled membership model?

Developing the Fundraising Guarantee & a new Code of Fundraising Practice

• Any guidelines need to take account of the needs and capabilities of smaller organisations

• The Fundraising Promise is good, so it should be built upon rather than scrapped

• The Code of Practice must have regulatory backing otherwise it won’t be effective

• We need to raise the profile of the Fundraising Guarantee

• The Institute of Fundraising should still be responsible for the Code of Practice

• Trustees and charities need to be involved – not just fundraisers

• There should be an umbrella body that is responsible for everything – will make it clearer for donors and the public

• Signing up to the to the Fundraising Guarantee should be mandatory

• We need to consider that best ways of informing the public about the Fundraising Guarantee – the current statements on donor communications are not very helpful

• The Code should reflect the needs of charities across the board – not just large members of the Institute of Fundraising

• We need to give more powers to OSCR to intervene

• We should consider a threshold for the new regulator that is based on organisational size

Giving the public & donors a voice – getting feedback, dealing with complaints and improving transparency

• We could have a rotating body of lay people on the regulatory board, but what number would be effective? It’s too large a group to have only one or two.

• Charities could collect and feed in views of their donors/ supporters when contributing to the review – perhaps through a standard template and shared questions

• It is important to get wider public’s views through polling, though have to be cautious as surveys can be self-selecting and skewed

• We need to consider how the charity sector actually compares with other sectors re complaints – is there actually a problem?

• The increased focus on feedback – both positive and negative – from donors could ensure a more pro-active, less negative way of identifying issues, eg incentivise feedback on websites, just giving, ‘trip advisor’ type concept

• We need to consider Whistle-blowers – how can fundraisers best address poor practice they come across?

• We need to stand up and tackle negative media stories that paint fundraising in a bad light – currently the public narrative is stuck, need to be clearer on what we do and why we do it (e.g. what would not happen if we didn’t fundraise)

• We should celebrate charities and donating - case studies, stories from supporters on why they give and how they first got involved, how funding helped

• We need to look at governance – trustees will have more ownership if ‘loss of public trust’ is part of risk register and fundraising is covered well in annual report

The way forward

The final session of the summit allowed SCVO to gather some of the key themes emerging from the day and find out what delegates think are the key priorities for the working group to take forward. There was also an invitation for people to nominate themselves or others to join the working group.

• There is still a lot of confusion about the different options and it is clearer than ever that designing a new system of self-regulation will be a complex task

• We shouldn’t be complacent, but we must also keep in mind that there is still a high level of trust in charity

• Proportionate should be the key principle that underpins any new regulation

• We need to consider the political context as the UK model won’t work in that political environment

• Openness and transparency are key values which must underpin self-regulation

• There is an important role for OSCR in enforcing the sanctions which ensure public confidence

• It would be helpful to have a logic map with the choices outlined and the strengths and weaknesses of each option

• We need to find ways to reach out to smaller charities for their views – they are not well represented at the summit

• There is no UK option – only a Scottish only system or a hybrid.

• Charities have to take ownership of this process – you can’t have self-regulation imposed by government

• We need to work out how we can make a collective decision on the best way forward in six months

• We need to find ways of bringing in the views of donors and supporters to this process

• The hope is to have a solid proposal for the way forward by the 1^st June 2016

• It is vital that options are presented by the working group – not a final decision

 

Next steps

Following the Summit a Working Group and two sub groups have been established to undertake the next steps in the process. They will produce a report which will form the basis of a further discussion at The Gathering on the 17^th and 18^th February 2016. Chaired by Theresa Shearer (Enable CEO and SCVO Trustee), the Working Group will progress three key areas of work:

• Produce an options appraisal for the three main approaches to self-regulation which can be used as an engagement tool by the sector
• Produce an engagement plan for involving the sector and gathering views
• Develop a final decision making process that is transparent and has legitimacy

The working group members are:

• Theresa Shear (Enable & SCVO Trustee)

• Andy Kerr (Sense Scotland)

• Mark O’Donnell (CHSS)

• Gregor McNie (Cancer Research UK)

• Stephanie Fraser (Bobath Scotland)

• John Brady (St Andrews Hospice)

• Tony McElroy (Impact Arts)

• John  Downie (SCVO)

• Fraser Hudghton (Institute of Fundraising)

The group will be advised by:

• Jude Turbyne (OSCR)

• Laura Sexton (Scottish Government)

 

Appendix – NCVO summit, Friday 4^th December

NCVO organised a Summit on the 4^th of December to update the sector on progress with the Etherington review. Speakers were NCVO’s chair Sir Stuart Etherington, Charity Commission chair William Shawcross, Civil Society Minister Rob Wilson and chair of the new Fundraising Regulator, Michael Grade.

• Around 250 people attended this two hour event which was also streamed live to an audience of around 500 who watched online

• The event was an update on progress following Cabinet Office approval of all of the recommendations in Sir Stuart Etherington’s report and the appointment of Lord Grade as interim Chair of the new Fundraising Regulator

• SCVO and the Scottish Government were represented at the meeting

• The third sector will be engaged in helping to develop the details, but it was made clear that all the recommendations in the Etherington review will be implemented

• George Kidd (Direct Marketing Commission) will chair the Fundraising Preference Service working group

• Both Sir Stuart Etherington and Michael Grade referenced the Scotland issue positively, including a public commitment that the choice was ours, although Grade hoped that we can work “in harmony” with his plan

• An interim CEO for the new Fundraising Regulator will be in place by Christmas

• Rob Wilson, the Minister for Civil Society made it clear that this is the last chance for the sector to get this right or they will impose statutory regulation

• The new system will be in place by the end of next year

• The new regulator will be accountable to the Public Administration and Constitutional Affairs Committee

  Further information on the NCVO summit is available on their website