Charity Chills & Nonprofit Nightmares: Lessons from the UK

Tuesday, October 27, 2015
The Standards
Transparency & Accountability

The past few months have been tough for UK charities. Concerns over fundraising practices have put fundraising and its regulation front and centre. While the behaviour of only a handful of charities among thousands has been questioned, the impact has been felt throughout the charitable sector in the UK.

UK charities are experiencing backlash unlike anything we’ve seen in Canada. So what does this mean for Canadian charities? In this post, we provide a quick overview of what’s happening in the UK, the lessons we can learn, steps the Canadian charitable sector is taking, and what else we can do to prevent something similar from happening here.

The UK Context

It started in May when media reports claimed that 92-year-old Olive Cooke, an avid supporter of charity and one of the UK’s oldest and longest-serving poppy sellers, died by suicide because of overwhelming charity solicitations. While her family quickly denied that charities were to blame for her death – the story took flight.

In July, the Daily Mail tabloid conducted an undercover investigation of a London-based call centre that led to a government review of four prominent charities. The investigation alleged that abusive practices took place, including the use of high-pressure tactics and calls to people registered on an opt-out list for phone solicitation, a list that includes people with Alzheimer’s and dementia.

Then last month, the Information Commissioner’s Office was reported to be examining reports that Samuel Rae, an 87-year old man with dementia had his personal details sold to charities up to 200 times. He lost £35,000 after his information ended up with scammers.

Public trust in UK charities is at an eight-year low and it’s clear that fundraising tactics used by some charities are creating distrust and damaging public perceptions. In response to public outcry, this summer the government commissioned a review of the current model of fundraising regulation.

Implications for UK charities

Sir Stuart Etherington, chief executive of the National Council of Voluntary Organisations (NCVO), led a review into the current self-regulated fundraising model. The findings were published in September and shortly thereafter the Cabinet Office accepted all recommendations.

A new fundraising regulator

The review concludes that the current regulatory system governed by the Fundraising Standards Board (FRSB) has lost the confidence of the public and fundraising organizations. Currently, the FRSB adjudicates against standards set by the Institute of Fundraising, the professional membership body for UK fundraisers. The review recommends the creation of a new fundraising regulator, one that would own and enforce the code of fundraising practice and be accountable to Parliament. It would proactively investigate breaches of standards and enforce sanctions including “naming and shaming” organizations, ordering compulsory training and suspending organizations from specific fundraising practices.

Opting out of fundraising communications

The review finds that the public is frustrated by their lack of control over how they are contacted for fundraising. In response, it recommends the creation of a fundraising preference service that allows individuals to opt out of charity appeals. Fundraisers would be required to check names against the opt-out list before soliciting donations.

Criticisms of review recommendations

While the review supports the self-regulation of fundraising, it takes the ownership of fundraising standards away from the fundraising community. Andrew Watt, President and CEO of the Association of Fundraising Professionals (AFP), believes this is a mistake. Watt states, “While an independent regulatory body plays an important role, it is wrong to implement recommendations built on the assumption that fundraisers cannot be trusted.”

The recommendations are intended to create a better balance between individuals’ right to privacy and charities’ right to solicit donations. However critics argue that they prioritize the interests of the public over those of fundraising organizations. Fundraisers are being asked to adhere to stricter preference service rules than those applied to other industries. This could seriously impede charities’ ability to talk to donors.

What does all this mean for Canadian charities?

What happened in the UK demonstrates how quickly media stories can spiral out of control and lead to reactionary policymaking. A few bad apples can create a ripple effect throughout the sector.

Watt believes that what happened in the UK is the result of charities forgetting their obligation to the public. He states, “I think nonprofits in Canada need to look much more closely at what caused this crisis of confidence in the UK – it was charities not taking responsibility for their actions. You can’t expect people to give you their full backing unless you show them respect and communicate clearly about what you’re doing – it’s a simple thing.”

In many ways Canadian charities have taken proactive measures to mitigate these risks and to limit government intervention in the area of fundraising. Imagine Canada’s Ethical Code was first introduced in 1998 in response to public concerns about fundraising practices among Canada’s charities. Since 2012, the Standards Program, stewarded by Imagine Canada, awards accreditation to charities and nonprofits that demonstrate excellence in five areas including fundraising, governance, financial transparency and accountability, staff management and volunteer involvement.

Yet the introduction of legislation or policy that restricts fundraising communications could be detrimental to Canadian charities. Canada’s Anti-Spam Law (CASL) came into effect last year which requires senders of electronic messages to have the consent of any recipients. Previous to the implementation of CASL, Imagine Canada fought hard for specific exemptions for charities within the overall requirements. Without the exemptions, this legislation would have strongly impeded charities’ ability to reach out to potential donors.  Similarly, the introduction of an opt-out service for fundraising communications such as recommended in the UK fundraising review would significantly impact the sector here in Canada.

Where we go from here

Canadians need to understand the charitable sector, how they are part of it, and why we ask for donations. Charities at home and abroad are proactively telling their stories and conveying their impact. A number of organizations are challenging the myths that dominate the sector including the Charity Defence Council in the United States, an “anti-defamation force” that counters misconceptions about the sector, and the Understanding Charities Group in the UK that acts to demystify charities and improve public trust and confidence. Imagine Canada’s Narrative helps initiate a new conversation with Canadians about the contributions and impact of our sector and its Guide to Giving lists questions donors can ask themselves to help inform their charitable giving contributions. Later this fall, an Imagine Canada public relations campaign is set to speak directly to donors about what to consider when making charitable gift decisions during the holiday season.

Moving forward we can take to heart the lessons from our UK counterparts. The sector in Canada has taken occasional hits but nothing to the extent of what is happening in the UK. Our relationship with Canadians is strong but we must work hard to maintain that trust. If Canadian charities and their actions are to be a lesson for other countries, let it be for their commitment to excellence in trust, transparency, and accountability.

 

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