Fundraising Regulator faces backlash over “naughty list”

Senior arts figures have stepped forward to question the actions of the Fundraising Regulator following its decision to publish a list of charities that have failed to make a ‘voluntary’ donation to pay for its services.

Included on the list were Creative & Cultural Skills (CCSkills), which claims it should never have been asked to pay; Hampstead Theatre, which says it has not been asked to pay; and Battersea Arts Centre, which has already paid.

Pauline Tambling, CEO of CCSkills, told AP that the organisation “does not spend anywhere near £100k p.a. on fundraising activity and never has. We don’t therefore believe we are ‘in scope’ for the payment.”

Greg Ripley-Duggan, Executive Producer at Hampstead Theatre, explained: “We have not paid the levy because we have never been asked to do so. If the Regulator gets in touch we will address the matter at that point. But, to date, we have received no communication whatsoever from them.”

He is unimpressed by the Regulator’s actions: “Whether or not this situation inspires confidence in the Regulator I leave for others to judge.”

Communication from the Regulator failed to reach the right people at South London Gallery – also on the list – where Head of Development Georgina Davey explained: “I have only recently returned from maternity leave whilst our Deputy Director who received the paperwork about the Fundraising Regulator has just gone off on maternity leave, so I think this slipped through the net.”

Battersea Arts Centre was also listed despite, according to a spokesperson, having recently paid.

Checking accuracy

AP asked the Regulator what efforts were made, prior to the list’s publication, to establish whether those listed had received its communications about the levy, or check the accuracy of the information that led to organisations being asked to pay.

A spokesperson confirmed that no attempt was made to call the listed organisations to see whether there had been any administrative or other errors related to their inclusion on the list: “Before the Fundraising Regulator sent the original letter and invoices they checked the contact details for the most senior people in all the charities, Chief Executives and Heads of Finance or similar to ensure that they would be sent to the right individuals at the relevant address. The initial invoices were sent a year ago so there has been plenty of opportunity for charities to raise concerns.”

The list of charities that were asked to pay the £150 levy – those that spend more than £100k a year on fundraising – was taken from the Charity Commission Annual Returns for 31 December 2014.

The spokesperson continued: “Where charities got in touch to say they should either be excluded from the levy – or levied at a lower level – the Regulator did then consider their audited accounts and what was in their annual return. Some charities were taken out of the levy when it was clear their annual returns had been completed in error (but it is for charities to contact the Charity Commission to correct their returns).”

Bad experience

But this was not the experience of CCSkills. Keith Arrowsmith, a Partner at Counterculture Partnership LLP and Company Secretary of CCSkills, told AP: “I emailed the Regulator’s office some while back and was told that the matter would be noted as disputed, but no one came back to me. I’ve been told today there is no dispute procedure, but CCSkills has been removed from the naughty list.”

He has some fundamental concerns about the Regulator’s systems: “Issuing invoices seems inappropriate, when the Regulator could send out a simple request for payment of a voluntary levy… an invoice is a note of goods or services rendered. That isn’t the case here.

“I suggested that, since the invoice is not appropriate, they should issue a credit note, but I was told they don’t do that – so I don’t think the Regulator has a system to cancel or reissue faulty invoices… They have used inaccurate information as the basis for the invoices, and the onus and costs of correction are borne by the individual charities.”

Disingenuous

Tambling described the Regulator as “behaving like a mobile phone company who refers a dispute to the debt-collector without engaging with the client”. She continued: “I would like to think that a Fundraising Regulator is there to promote good practice, not emulate the behaviour that drew attention to the problem in the first place.”

Like the charity Children in the Arts, which earlier this year accused the Regulator of deceptive fundraising, she is concerned about their tactics and described the public shaming of non-payers “in the interests of transparency and fairness” as “disingenuous”.

The Regulator describes the levy as “voluntary but expected”, but Tambling said: “Either it’s a voluntary levy or it isn’t.”

Arrowsmith is concerned that some charities may be paying the levy without fully understanding what they are signing up to. He said: “…the payment of the levy means that they agree to follow the Code – even at a time when the Regulator admits the Code requires clarification. One of the aspects of the Code is that auditable charities must set out in their annual report that they follow the Code – so I’m expecting a level of disclosure defaults to be registered by the Regulator – and for that to be hailed as a regulatory success!”

Who should pay?

Tambling questioned the use of the levy for the arts sector, and as the basis of the Regulator’s funding. She told AP: “They have been set up because of fundraising abuses (chugging and direct-to-public fundraising) and I’m not sure how valuable they are going to be in our sector which is mostly a completely different model. Personally I think it’s fair enough to see how effective they are before volunteering cash.”

She continued: “The Government is becoming very fond of the levy model – the apprenticeship levy for example is costing the NPO (National Portfolio Organisation) list around £3m a year and levies are being mentioned a lot now, so I think we should be mindful that we could end up with big budget lines for ‘voluntary’ payments to various agencies.”

Not all arts organisations have agreed to pay the levy, and Tony Heaton, former CEO of disability arts organisation Shape, which also appeared on the list, tweeted: “Only surprised the list isn’t longer...”

The development team at Camden Arts Centre issued a statement explaining that their Trustees had considered joining the Fundraising Regulator earlier this year, but “after canvassing views of some of our peer galleries, decided not to join this voluntary scheme for the moment. However, we have not ruled out joining in the future and our Trustees are keeping this under active review.”