Synopsis

Scottish Fundraising Working Group June 2016

Foreword

Scotland’s charity sector is a critical component of our civic society. The impact of charitable fundraising every day, in every community across Scotland, is genuinely life changing. It is, however, not without its challenges. That is why 2014 and 2015 were such difficult years for organisations fundraising in Scotland. High profile media coverage of instances of poor fundraising practice in the UK came as a shock not only to the public, but also to the vast majority of those fundraising organisations and many in the charity sector. The reports uncovered what has since been described as a ‘grumbling discontent’ amongst the public about some methods of charity fundraising. There was, however, little evidence that this was a significant problem in Scotland, and so it is appropriate that the response here is both proportionate and in line with improving culture, practice and building of charities’ capacity to handle complaints internally. However, the reports warranted further consideration in order to design a proactive approach to fundraising governance and complaints handling to maintain public trust in the sector in Scotland. At the initial request of Scottish Government, SCVO thereafter commissioned a review into self-regulation of fundraising in Scotland. This review identified a wayward fundraising culture and lack of ownership by charities of fundraising regulation. Additionally, there was a perception that fundraising practice lacked the previous levels of public confidence and that poor practice had developed in some instances. The review proposed three options to address donor dissatisfaction and strengthen fundraising regulation in Scotland. The independent Scottish Fundraising Working Group was set up by SCVO and tasked with three key objectives:

• An options appraisal for the three main options for fundraising regulation in Scotland
• An engagement process for eliciting the views of the third sector, public and donors
• A transparent and legitimate process for reaching the final decision

The vision of the Working Group was the creation of a fundraising regulatory system for Scotland which:

• Commands confidence in charity fundraising
• Inspires public trust
• Promotes good fundraising

In order to fully understand the views of donors, the public and fundraising organisations on the three options, an extensive period of engagement was required. This was undertaken through online survey, consultation and face to face meetings with the public and the sector through attendance at conferences and round table events. For this, I particularly thank those members of the Working Group who undertook this comprehensive consultation approach. The support of and for a new system of regulation in Scotland from fundraising organisations themselves is essential if the sector wishes to continue to raise charitable funds in a transparent manner which meets the public’s expectations of their charities. It was critical during the review therefore not to lose sight of the ultimate beneficiaries of fundraising charities. The Working Group recognised not only the importance of the beneficiary to the organisations, but also to the donor, in terms of recognising the value of the charitable work they support. I would like to thank my colleagues on the Working Group, and the sub-group, who have contributed considerably to the development of the new system. The Working Group has also benefited from the involvement of Scottish Government and the Office of the Scottish Charity Regulator, OSCR, as observers. It has also been invaluable to have had a close working relationship with the Fundraising Regulator during this period. I was delighted to attend initial Fundraising Regulator Board meetings as a Scottish observer as it develops its own system of fundraising regulation for England, Wales and Northern Ireland, and build the foundations for good forward relations. The Scottish public, Scottish charities, key stakeholders and accordingly the members of the Scottish Fundraising Working Group have unanimously chosen a system of enhanced fundraising regulation for Scotland. Our intention is that this helps command confidence in charity fundraising, inspires the trust of the public and ultimately promotes good fundraising which allows charities to reinvest in activities and projects across Scotland which change lives. I am privileged as CEO of ENABLE Scotland to see the direct impact and benefit of the generosity of the Scottish public in both time and donations in supporting and building better communities throughout the country, from Orkney, through the central belt and down to Dumfries and the Borders. It is my hope that the recommendations of this review will create a strong framework for charitable fundraising in Scotland to flourish within a climate of public trust in its principles, and its proven and transparent capacity to transform the lives of all our citizens. Theresa Shearer Chair – Scottish Fundraising Working Group

Executive summary

The Etherington Review of UK fundraising regulation, and SCVO’s review of fundraising regulation in Scotland, reported in the autumn of 2015. Both found that a new system of fundraising self-regulation was needed. In Scotland the Scottish Fundraising Working Group was convened by SCVO to perform this task. Its members came from Scottish and UK-wide charities, and the charity and fundraising professional bodies. Scottish Government and the Scottish Charity Regulator (OSCR) representatives provided input as observers whilst a sub-group provided additional technical expertise. Of the 24,000 charities registered in Scotland:

• just over 1% have a fundraised income over £500,000
• 40 have a fundraised income over £5 million
• 170 spend more than £100,000 on fundraising.

At the time of publication there are three elements to the self-regulatory system that seeks to promote good fundraising practice amongst such charities. The first is the fundraising professional bodies; the Institute of Fundraising (IoF) and Public Fundraising Association (PFRA). The second is the Fundraising Standards Board (FRSB), the UK-wide fundraising regulator. The FRSB collects data on fundraising activity and complaint levels, and hears complaints that member charities have been unable to resolve. It will be replaced by the Fundraising Regulator on 7 July 2016, as recommended by the Etherington Review. The third element is the fundraising charities that have chosen to be members of the IoF, PFRA and/or FRSB and are expected to adhere to these organisations’ standards. Non-member charities are not regulated. Most fundraising methods are also subject to statutory or industry-led regulation by bodies such as the Information Commissioner (ICO) and Advertising Standards Authority. In addition, the Scottish Charity Regulator (OSCR) has a high-level role in relation to fundraising and charity governance, and also regulates certain aspects of public fundraising. OSCR’s survey of public attitudes toward charities in March 2016 is the most recent in Scotland. More than a third of respondents reported their trust in charities decreasing, with more than half of these relating the drop to media stories. The percentage of people who were very concerned about charity fundraising methods had risen from 15% in 2011 to 26% in 2016. Aggressive fundraising tactics, a fear of donations not going to the correct place, and cold calling were the fundraising issues that most concerned respondents. The Scottish Fundraising Working Group developed three potential regulatory models: Option 1: A UK-wide Fundraising Regulator acts as intermediary between the public and charities, hosting the standards for fundraising and promoting compliance with them. Option 2: A new Scottish Fundraising Regulator acts as intermediary as above. Option 3: No intermediary: charities and OSCR both have an enhanced role in regulating fundraising. An extensive programme of consultation with the third sector and public began at SCVO’s Gathering event in February 2016. Subsequently 500 people and organisations responded to an online consultation and 23 organisations chose to make formal submissions. Following this, 17 round-table consultation events were held with charities and Ipsos MORI was commissioned to perform 3 focus groups with the Scottish public. The feedback on the options was: Option 1: Charities saw a UK-wide approach as simpler and more cost-effective for UK-wide charities and easier for the public to understand. However, the focus groups identified that the public found it confusing and didn’t like the fact it was UK-wide. Option 2: A Scottish intermediary between charities and the public was seen to be well placed to understand the Scottish context for charity fundraising by both charities and the public but the cost of a new body was unattractive to both charities and the public. Option 3: This option was seen by charities to be sensitive to the charity environment in Scotland and to utilise a successful relationship with OSCR. Both charities and the public liked the fact that it applied automatically to all charities and did not require a new body. Option 3 had the most support overall. The Working Group has therefore concluded that it should be adopted. The system is seen as commanding confidence in charity fundraising because it covers all charities and offers the benefits of self-regulation. It involves two relatively well know entities, charities and OSCR, in a simple system and promotes good fundraising by involving fundraisers in developing standards which will apply to all Scottish charities. In addition, OSCR’s role in addressing both charity complaints and fundraising complaints makes the system clear and accessible, whilst the absence of an intermediary body makes it streamlined. Lastly, it builds on the existing, positive, relationships between charities and OSCR. The costs of running the new regulatory system are not seen as significant. In light of the consultation findings, the Working Group recommends four areas for improvement to Option 3. These are:

1. The introduction of a telephone and web-based fundraising complaints ‘hub’.
2. The adoption of a UK-wide approach to the standards for fundraising
3. The independent panel is utilised within the complaints process.
4. The regulation of cross-border charities uses the ‘lead regulator’ model.

In addition, the following recommendations are made:

5. It is strongly recommended that the Fundraising Regulator’s board should have at least one Scottish representative.
6. Charities should ensure donors have access to a simple process through which they can opt out of fundraising communications.
7. The independent panel’s chair should match the person profile developed by the Working Group and be endorsed by SCVO, OSCR and the Scottish Government.
8. The independent panel and OSCR should work together to define and promote a more comprehensive but proportionate fundraising complaints system for charities.
9. The non-statutory sanctions used by the independent panel should be chosen by the independent panel, with reference to those available to the Fundraising Regulator.
10. OSCR, in conjunction with other key stakeholders, should consider the need for more proportionate powers to facilitate their role in the new regulatory system.
11. A ‘Fundraising Guarantee’ should be developed as a public facing document which describes the values, culture and practices expected of fundraising charities.
12. Training for fundraisers should be developed to support the new regulatory system and linked to established qualification systems, where appropriate.
13. The resources required to run the new system should be reviewed after the first 12 months with an understanding that it is reasonable for charities to contribute to the costs of the fundraising self-regulatory system.
14. The new regulatory system should launch on 7 July 2016 to align with start date of the Fundraising Regulator. The Working Group should reform following a year of operation to review the new system’s effectiveness and to propose improvements, if necessary.

The new fundraising regulatory system should report on an annual basis to the Scottish Parliament, which will scrutinise performance. Read the full report (opens as a Microsoft Word download).

Introduction

The intense media focus on charity fundraising in 2015 led to two reviews of fundraising regulation within the UK. Sir Stuart Etherington’s review, requested by the UK Government, delivered a new framework for self-regulation. SCVO’s review was requested by the Scottish Government in light of the differing charity law, and some fundraising law, in Scotland. The SCVO review sought to identify whether poor fundraising practices were prevalent in Scotland and whether fundraising regulation was working. It highlighted that Scottish charities, and their trustees, had not been sufficiently in control of fundraising regulation. A key finding of a Scottish charity fundraising summit in November 2015 was that a new system of regulation should be owned and led by the charitable sector. The Scottish Fundraising Working Group was convened by SCVO to perform this task. This report summarises the process followed, explains the options considered and outlines the Working Group’s recommendations for an enhanced regulatory system for fundraising in Scotland.

Charity fundraising in Scotland and the existing self-regulatory system

Data from the Scottish Charity Regulator (OSCR) shows that, of the 24,000 charities registered in Scotland, just over 1% have a fundraised income over £500,000, 40 have a fundraised income over £5m and 170 spend more than £100,000 on fundraising. For every £1 spent on fundraising, Scottish charities (with an income over £250,000) raise £6. The existing regulatory approach was developed primarily by the fundraising sector itself and is voluntary. It is not overseen by any statutory body but OSCR may intervene where there is misconduct under charity law. At the time that this report was drafted, it had three elements:

1. The Institute of Fundraising (IoF) and the Public Fundraising Association (PFRA): The former is the professional body for fundraisers and sets the Code of Fundraising Practice. The latter sets standards (the Rule Books) for charities performing on-street and door-to-door fundraising.
2. The Fundraising Standards Board (FRSB): This is the UK-wide fundraising regulator of which the majority, but not all, large fundraising charities are members. It collects data on fundraising activity and complaint levels and hears complaints that member charities have been unable to resolve. It is being replaced by the Fundraising Regulator on 7 July 2016.
3. The fundraising charity: Fundraising charities that are members of the IoF, PFRA and/or FRSB are expected to adhere to these organisations’ standards. Non-member charities are not regulated.

Most fundraising methods are also subject to statutory or industry-led regulation by bodies such as the Information Commissioner (ICO) and Advertising Standards Authority. Scottish charity law is a matter for Scottish Ministers and OSCR is the independent regulator and registrar for Scotland’s charities. OSCR has a high-level role in relation to fundraising and its relationship to charity governance. It also regulates certain aspects of public fundraising, such as the information to be provided during street collections, for example. None of these forms of statutory regulation are affected by the change in fundraising regulation proposed in this report.

Summary of work in Scotland to date

Key findings of SCVO’s review of fundraising regulation

SCVO’s informal review of the regulation of fundraising in Scotland reported in September 2015. It found that, whilst there was little evidence to support claims of widespread malpractice in fundraising or donor dissatisfaction, the self-regulatory system had allowed poor practice to go unchecked. To address this, it was recommended that charity trustees take ownership of fundraising in Scotland and that charities should design a new fundraising regulation system. A ‘fundraising guarantee’ was recommended that would specify how the public could expect to be treated by fundraisers, along with a redesign of complaints and reporting processes to empower the public and trustees. The Institute of Fundraising was tasked with leading a change in culture in fundraising and enabling whistleblowing by fundraisers. Further work was recommended on protecting vulnerable people from becoming overly-burdened by fundraising requests and in relation to the effectiveness of the regulatory requirements relating to sub-contracting fundraising.

The development of the Scottish Fundraising Working Group

At a Scottish fundraising summit, hosted by SCVO in November 2015, it was agreed that the development of the new system of fundraising self-regulation should be owned and led by the charitable sector. As a result, the Scottish Fundraising Working Group was established by SCVO in December 2015 and tasked with:

• Producing an options appraisal for the three main approaches to self-regulation (the UK regulatory approach, a Scottish-specific approach, or a hybrid)
• Producing an engagement plan for involving the sector and gathering views
• Developing a final decision making process that was transparent and had legitimacy

During the winter of 2015/16 the Working Group developed the options appraisal and an engagement plan for securing views from the charity sector, donors and the public. The Working Group’s vision is a fundraising regulatory system in Scotland that:

• Commands confidence in charity fundraising
• Inspires public trust
• Promotes good fundraising

Donor/public opinions of fundraising in Scotland

OSCR’s survey of 1,000 members of the public in March 2016 is the most recent charity-related survey in Scotland. 8% of respondents reported an increase in trust in charities whilst 35% reported their trust had decreased, with more than half relating this to media stories. When respondents were asked about any issues or concerns they may have about how charities are run, 53% spontaneously mentioned at least one issue. 45% of these raised concerns about the proportion of donations that make it to the stated cause and 23% mentioned CEO/executive pay. How donations were collected (i.e. fundraising) was mentioned by only 6% of respondents. OSCR’s survey data shows how the public’s concern over fundraising has changed over time (see figure 3). The proportion of those ‘very concerned’ about the fundraising methods of charities has increased from 15% in 2011 to 26% in 2016. The proportion ‘not at all concerned’ dropped from 30% to 7% in the same period. Figure 1: Level of concern at fundraising methods used by charities. Survey respondents were also asked ‘thinking specifically about charity fundraising, what issues or concerns do you have?’ (see table 1). Concerns about fundraising were stated by 46% of respondents, with aggressive fundraising tactics mentioned most commonly (52%), followed by concern about money not going to the correct place after a donation (27%). Despite the negative media coverage during 2015, only 10% highlighted concerns about the targeting of vulnerable or elderly people. Table 1. Issues or concerns about fundraising specifically

	%
Aggressive fundraising tactics, including ‘chugging'	52%
Money does not go to correct place after donation	27%
Cold calling	18%
Use of paid/ third party fundraisers	14%
Targeting of vulnerable or elderly people	10%

When respondents were asked about their awareness of OSCR’s functions, seven out of ten were aware of at least one of OSCR’s core functions, while 39% believed OSCR is responsible for policing fundraising. When asked what functions OSCR should be responsible for, 51% believed OSCR should police fundraising. When charities were asked which functions OSCR was responsible for 43% believed OSCR was responsible for policing charity fundraising.

The three options consulted upon

During the summer of 2016, as a result of the Etherington Review:

1. The current UK-wide fundraising regulator, the FRSB, will close and be replaced by a new Fundraising Regulator
2. The current fundraising standards owned by IoF and PFRA will pass to the new Fundraising Regulator
3. A Fundraising Preference Service, enabling donors to opt out of fundraising approaches from charities, will be introduced by the Fundraising Regulator

These changes to the current UK-wide system mean that the Scottish third sector must select a new self-regulatory system for fundraising. The Working Group established that this new system should be:

• Clear and accessible
• Streamlined
• Connected to the existing regulatory model (OSCR, Information Commissioner, Gambling Commission, etc.)

The three options that were developed, and subsequently consulted upon with the charity sector and the public, are detailed below.

Option 1: A UK-wide Fundraising Regulator acts as intermediary

Scotland could join with England, Wales and Northern Ireland and utilise the Fundraising Regulator-based system proposed in the Etherington Review. This was envisaged as having ‘the power to adjudicate over all UK-based fundraising organisations, regardless of whether they have registered with the regulator or publicly shown their support for the system.’ The Fundraising Regulator will both hold and develop the current standards for fundraising, and regulate fundraising. It is not, however, a statutory regulator and therefore has no legal powers to investigate or impose sanctions. It is envisaged as co-operating closely with OSCR. OSCR would be notified if there was evidence of fundraising practices raising concerns about a breach of trustee duties. Figure 2 depicts how this model would work. Figure 2: Option 1 – the UK wide regulator Option 2: A new Scottish Fundraising Regulator acts as intermediary

Option 2: A new Scottish Fundraising Regulator acts as intermediary

Option 2 involves a new Scottish Fundraising Regulator taking the place of the FRSB or the Fundraising Regulator. This could either be an entirely new body, or it could be located within an existing organisation. In this option, the standards set for fundraising could be overseen by the Scottish Fundraising Regulator (which mirrors Option 1). Alternatively, the standards could be overseen by a more publicly accountable version of the Institute of Fundraising Scotland’s Standards Committee (see figure 3). This independent panel would involve the public, donors, charities and fundraisers, OSCR and the Scottish Government. Figure 3: Option 2 – a new Scottish fundraising regulator

Option 3: No intermediary - charities and OSCR have an enhanced role

In Option 3 no single regulatory body replaces the FRSB in Scotland. Instead, a greater responsibility is placed on charities to self-regulate, whilst OSCR has an enhanced, ombudsman-style, role. This is depicted in figure 4. The fundraising standards would be developed by an independent panel as in Option 2. The regulatory process would apply universally to all charities, not just members as is the case with the FRSB. Charities would be expected to adopt and publicise a comprehensive complaints process. OSCR would act as backstop, in a role similar to an ombudsman, hearing only complaints that have fully exhausted a charity’s complaints process. Complaints that had not completed a charity’s complaints processes would be referred back to the charity. Figure 4: Option 3 – No intermediary

The consultation process

6.1 Consultation with the third sector

The following methods were used to gather the views of the third sector on the consultation:

• The Gathering: A consultation session was held at SCVO’s Gathering event in February 2016 with around 60 participants. Option 1 was favoured by cross-border charities whilst Option 3 was preferred by charities operating solely in Scotland.
• Online survey: There were 505 responses to an online survey performed by SCVO in February/March 2016. 200 responses were formal submissions from charities, with the remainder submitted by individual sector staff, trustees and volunteers. 24% were in favour of Option 1, 20% in favour of Option 2 and 55% in favour of Option 3. There was no significant difference in the views of organisations and individuals
• Written submissions: There were 23 formal responses to the consultation. UK-wide charities expressed a strong preference for Option 1 whilst Scottish charities, including universities, alongside the legal bodies, were strongly in favour of Option 3.
• Round-table sessions: 17 round-table discussions were facilitated by Working Group members during April and May 2016. One-third involved sector and professional organisations and the other two-thirds involved Third Sector Interfaces[1]. Participants almost universally supported Option 3.

The key reasons given for the support for each option were as follows:

• Option 1: A UK-wide approach was seen as easier for the public to understand and simpler and more cost-effective for charities operating across the UK.
• Option 2: Whilst there was doubt if one was needed, a Scottish intermediary between charities and the public was seen to be well placed to understand the Scottish charity and fundraising regulatory framework.
• Option 3: This option was seen as being sensitive to the charity environment in Scotland, as utilising a successful relationship with OSCR, applying automatically to all charities, being easy for the public to understand and cost effective.

Option 3 had most support overall, and had significantly more support from amongst Scottish charities than the other options. Whilst the sector understands the attractiveness of the Fundraising Preference Service concept, charities are not convinced that it offers anything over the Telephone Preference Service and Mailing Preference Service. The lack of detail available made it very difficult for participants in the consultation to have a clear opinion as to the benefit of adopting the Fundraising Preference Service in Scotland.

6.2 Ipsos MORI donor focus groups

SCVO commissioned Ipsos MORI Scotland to conduct three focus groups with members of the public in Dundee, Glasgow and Edinburgh during May 2016. Each option was discussed with participants during the sessions. Since Option 3 had emerged as the clearly favoured option during the consultation period, most time was spent discussing this. Discussion of the current system of regulation resulted in universal criticism. It was seen as confusing, difficult to understand, too complex, off-putting and vague. Participants in all groups were broadly positive about Option 3. They liked the fact that it applied to all charities, that OSCR has a key role in the model and that there is no need for a new body. It was seen as appropriate that charities have a chance to resolve a complaint themselves before it is escalated and that there would be a publicised and comprehensive complaints process. Ultimately, it was seen to be more user-friendly than the existing process and in tune with how other organisations handle complaints. All groups responded negatively to Option 1 which involves a new UK fundraising regulator. It was seen as confusing and not user-friendly; from this point of view it was seen as similar to the current system. Most participants did not like the fact that it was a UK-wide proposal, fearing that issues relating specifically to charities in Scotland may be missed. Also it was felt that complaints may take longer to resolve if everything went to a UK body. Most participants were also sceptical about any new body being set up, perceiving it as adding to cost and bureaucracy. There were many positive views about Option 2, consisting of a new Scottish fundraising regulator. Participants liked the Scottish focus of this model and the fact that the first referral point after the charity was to an independent body. However, the potential drawbacks to this model included the cost and bureaucracy of setting up a new body, uncertainty how it would work for a Scottish charity which is registered elsewhere, and the reduced role for OSCR. Overall, Option 2 was seen as less appealing than Option 3. The conclusion was that Option 3 was the preferred choice for most participants.

7. The new model of fundraising regulation for Scotland

7.1 The choice of Option 3

In coming to its decision as to the best model for fundraising regulation for Scotland, the Working Group has benefited from significant input from fundraisers, charities, professional bodies and the public. It has also cooperated closely with the Fundraising Regulator as the system of regulation for England, Wales and Northern Ireland has been developed. The Working Group recognises that charities who raise funds in Scotland, and OSCR and Scottish Ministers, are ultimately responsible for the rules, standards and procedures associated with all charitable fundraising in Scotland. With this, and the views of the Scottish public in mind, the Working Group has concluded that Option 3 should be adopted as the model for the regulation of fundraising in Scotland. The Working Group also concluded that an independent panel should be responsible for the standards by which fundraising should be performed. It is recommended that this panel has an independent chairperson who meets the person profile developed by the Working Group. The endorsement of SCVO, OSCR and the Scottish Government should also be sought for the proposed chairperson. The independent panel would involve a broad range of stakeholders including representatives of donors and the public, fundraising professional bodies, charities, OSCR and the Scottish Government.

7.2 The criteria on which the choice of option was made

Option 3 was chosen by the Working Group with reference to its vision, and to the key principles defined for a new fundraising regulatory system, as outlined below:

1. Commands confidence in charity fundraising: The proposed model covers all Scottish charities, an aspect welcomed by both charities and the public. The regulatory partnership between the third sector and OSCR is designed to give reassurance to the public, regulators and government that this is an enhanced and credible model. As the model is still rooted in self-regulation by charities it should inspire confidence within the third sector.
2. Inspires public trust: Option 3 combines the two bodies the public recognises best – the charity and OSCR – in an outwardly simple system. Two in five of the Scottish public already think OSCR is responsible for policing fundraising; half think it should be responsible for this task.
3. Promotes good fundraising: The involvement of fundraisers in the independent panel is seen as helping to ensuring the standards for fundraising represent best practice. The requirement that all charities, large and small, must adhere to the standards is a significant step forward from the current voluntary system.
4. Clear and accessible: OSCR’s role in Option 3 avoids a member of the public having to decide whether an unresolved charity complaint relates to ‘charity governance’ and so should go to OSCR, or ‘charity fundraising’ and so should go to the Fundraising Regulator / a Scottish fundraising regulator.
5. Streamlined: Option 3 involves no additional body and requires, in the view of the Working Group, limited additional resources. Because it applies universally to all Scottish charities, there is no need for additional registration or membership.
6. Connected to the existing regulatory model (e.g. OSCR, Information Commissioner): Option 3 was praised by charity consultees for utilising the existing, positive, relationship they have with OSCR. 43% of charities already believe OSCR should be responsible for policing fundraising and OSCR is supportive of the proposed self-regulation system. It welcomes the proposal for a clearer complaints handling process for both charities and the public, with additional protection for prospective donors.

7.3 Recommended improvements to Option 3

The Working Group has identified four areas for improvement to Option 3. These are:

1. The introduction of a telephone and web-based fundraising complaints ‘hub’: To enable the public to easily make their feelings known about charity fundraising a simple, interactive, process is required. This is envisaged as automatically delivering a complaint to the appropriate body, or bodies, and tracking its process. Such a service would also help resolve any confusion as to which is the appropriate regulator for a member of the Scottish public to complaint to. The longer term vision is that this becomes a single point of public access to assistance regards charities.
2. The adoption of a UK-wide approach to the standards for fundraising: It is important that standards for fundraising in Scotland are aligned as far as possible with those existing elsewhere in the UK. It is therefore recommended that, for the first 12 months, the independent panel adopt and develop, in partnership with the Fundraising Regulator, the existing Code of Fundraising Practice and Rule Books.

At the end of this period the arrangement should be reviewed. The independent panel should reserve the right to develop its own fundraising standards for Scotland should the arrangement cease to function to the benefit of the Scottish public or third sector in the future.

3. The independent panel is utilised within the complaints process: The Working Group recommends that the role of the proposed independent panel is extended beyond developing standards for fundraising in Scotland to support OSCR’s handling of complaints. This is seen as providing a more proportionate response to complaints that charities have not been able to resolve to a donor’s satisfaction. It will enhance the role of self-regulation, ensure there is an authentic and robust voice of the public and donors, and ensure a level of independence from the statutory regulator. It will also ensure charities have an appropriate and proportionate response. This is depicted in figure 5:

4. The regulation of cross-border charities: It is recommended that cross-border charities in the UK are subject, in the first instance, to a lead regulator model as is used by OSCR and the charity Commission for England and Wales for general charity regulation. It is recommended that similar reciprocal arrangements are agreed by the appropriate regulators and the new independent panel. A Memorandum of Understanding should be drawn up to recognise this arrangement and to ensure each country’s choice of regulatory system is respected. The revised complaints process is shown in figure 6.

Figure 6: The proposed complaints process In the medium to long term, the resources required for the new regulatory system include staff time to handle initial complaints and adjudication at Stage 3, by OSCR. There will also be ongoing maintenance costs for the complaints hub. These costs are balanced by the possibility that the proposed system could, in the long-term, reduce regulatory costs by promoting better fundraising practice. The new process would also reduce costs for Scottish charities that are currently members of the FRSB. The Working Group sees the replication of the existing data collection function of the FRSB as onerous and not necessarily useful. It is not proposed that this function is continued.

8. Other recommendations

In addition to the four enhancements to Option 3, the following recommendations are made.

5. Scottish representative on the Fundraising Regulator’s board: It is strongly recommended that the Fundraising Regulator’s board should have at least one member representing Scotland. This will ensure Scottish interests are represented in terms of the setting of standards for fundraising and the regulation of fundraising by non-Scottish, UK-wide, charities in Scotland.
6. Managing fundraising communications: The Working Group recommends that charities provide their donors with a simple process through which to opt out of fundraising communications. The lack of detail available at the time of publication of this report means it is not possible to pass comment on the benefit of the Fundraising Preference Service for the Scottish public.
7. Chair of the independent panel: The Working Group recommends that the chair of the independent panel should meet the person profile developed by the Working Group. Endorsement for the proposed chair should be sought from SCVO, OSCR and the Scottish Government in line with the process adopted by the Working Group for its proposals.
8. Complaints processes: Further work should be performed to define and promote a more comprehensive but proportionate fundraising complaints system for use by charities. This should include the development of the two-stage complaints process and clarification around the role of trustees in handling fundraising complaints.
9. Non-statutory sanctions: The sanctions used by the independent panel should be chosen by the independent panel, with reference to the (similarly non-statutory) sanctions available to the Fundraising Regulator.
10. Statutory sanctions: The Working Group recommends that OSCR, in conjunction with other key stakeholders, considers the need for more proportionate powers. Primary legislation would appear to be required for OSCR to fulfil all of its role as envisaged in Option 3. OSCR believes it could use its general inquiry powers in relation to charity trustee duties and its remit to ‘encourage, facilitate and monitor compliance by charities with the provisions of the 2005 Act’.

Scottish Ministers could also introduce secondary legislation in the form of regulations under section 83(2)(h) of the Act. However, the only sanction which can be imposed for failure to comply with regulations made under this section is a criminal offence. There is no interim sanction or civil regulatory sanctions provided, which would be problematic in achieving a proportionate and effective regime.

11. Fundraising Guarantee: The Working Group supports the development of a ‘Fundraising Guarantee’, a public facing document describing the values, culture and practices expected of fundraising charities.
12. Promotion of good fundraising practice: Training for fundraisers should be developed to support the new regulatory system and linked to established qualification systems, where appropriate. Stronger promotion of good practice in face-to-face fundraising in Scotland is needed.
13. Resourcing of the new regulatory model: The limited resources necessary to run the new regulatory system for the first 12 months have been provided by SCVO. It is recommended that the resources required are reviewed after this initial period with the understanding that it is reasonable for charities to contribute towards the costs of the self-regulation of charity fundraising.
14. Timescales for introduction: Whilst the full system will take time to deliver, the Working Group is confident that the new system of fundraising regulation can be launched successfully on 7 July 2016, the date on which the Fundraising Regulator will become operational. The Working Group proposes to reform temporarily after a year to review how well the system is working and to propose improvements, if any are required.
15. Reporting to Parliament: The new fundraising regulatory system in Scotland should report on an annual basis to the Scottish Parliament, which will scrutinise performance