The Large Red Button: Proposals for the Fundraising Preference Service

A year ago, Sir Stuart Etherington’s report on “Regulating Fundraising for the Future” set out recommendations that included the creation of a fundraising preference service (“FPS”) comparable to the existing telephone and mail preference services. This new FPS would, it was said, enable members of the public to stop the flow of unsolicited approaches from fundraisers. It was that flow of direct marketing from charities, along with the questionable practices of a number of fundraising agencies, that had hit the headlines earlier in 2015 and prompted a renewed drive to get the fundraising industry to improve its standards and protect the public.

A working group was set up last December, chaired by George Kidd, a former civil servant with recent top-level roles in the regulation of direct marketing and of premium rate telephone services, and this group’s report (dated July 2016 but published on 24 August) now sets out its recommendations to the newly launched Fundraising Regulator. The full report can be seen here.

The recommendations take account of some of the real concerns of charities and fundraising organisations about the possible unintended consequences of giving people a simple “large red button” to opt out of receiving any fundraising communications. As expected, the proposals for the new FPS do not envisage the FPS providing a complete opt-out mechanism, nor will it give users a chance to specify any organisations that they do not want to be caught by the mechanism.

In summary, the recommendations are as follows:

• The Fundraising Regulator will have to develop its own definition of what amounts to a “fundraising communication”. This will be narrower than the current definition of “direct marketing” as used by the Information Commissioner’s Office, and will catch communications where the core purpose is fundraising. The opt-out mechanism will not apply to “informational communications”.
• Charities will only be required to observe the FPS if they are among the biggest spenders on fundraising, but entities below the threshold (expected to be around £100,000 expenditure on direct marketing) to be set by the Fundraising Regulator will be able to subscribe to it on a voluntary basis.
• The setting of the threshold should take account of the need for the system to be workable in practice, meet public expectations and reduce (but not eliminate) the risk of registered users still receiving unwanted fundraising communications.
• The FPS will not apply to social media channels, on the basis that any contact with fundraisers through these channels relies on active engagement by users.
• Users will not have the option, at this stage, to register with the FPS any preference as to what channels their “reset” will apply, so they will not (for example) be able to selectively block mail while still allowing email. However, they will have the option (called the “small red button”) to name specific organisations from whom they do not wish to receive fundraising communications.
• Users will register with the FPS for a two-year period, and towards the end of that period will be asked by the Fundraising Regulator if they wish to renew their registration.
• In view of the legal issues involved, the only people who will be allowed to register with the FPS on behalf of another person will be those who hold a power of attorney or the equivalent, so the level of protection may fall short of what some might have expected following the revelations last Summer about the targeting by fundraisers of vulnerable people.
• The public will need guidance as to how the FPS will interact with the existing TPS and MPS procedures.
• Organisations that have received financial support within the last 24 months from someone who has now registered with the FPS will have a window in which to contact their supporters in order to ascertain whether they really intended to block future fundraising communications. This mechanism is intended to help organisations that users may not have realised were going to be caught by the FPS.

The report recognises that the FPS will not be seen by many as a perfect solution to the problem. For example, many users may have expectations about its effectiveness that are unrealistic, given that organisations with smaller fundraising spend will not be prevented from writing to them. For fundraisers, there are likely to be some operational wrinkles, for example regarding how a fundraiser that is not a registered charity can be validated to have access to the FPS data file. But the proposals for the FPS are in many ways less alarming for the voluntary sector than they were when they were first put forward.

What will happen if a fundraiser fails to observe the FPS and sends unsolicited fundraising materials to someone who has opted out? That person will be able to make a complaint to the Fundraising Regulator; while the regulator may try to encourage the complainant to resolve the matter direct with the fundraiser, complaints may be investigated and adjudicated, with the following possible remedies:

• A recommendation may be made that the fundraisers in question have further training or are directed to online guidance
• The organisation may be asked to explain how it will remedy the issue in future campaigns and/or to publish an apology
• The organisation may be asked to suspend fundraising or seek clearance for any fundraising campaigns over a specified period
• The regulator may ask the organisation to commission an independent audit of its fundraising activities
• Adjudications may be published
• Cases may be referred to the Charity Commission if the failings are indicative of shortcomings in a charity’s governance
• Cases may be referred to other regulators as appropriate

It will now be for the Fundraising Regulator, which launched in July this year, to consider these recommendations and, if it decides to proceed, to develop and implement the FPS. The service is expected to be ready to go live in April 2017.

At the same time, the Fundraising Regulator will be implementing its registration and levy proposals for fundraisers, which will see organisations that spend over £100,000 a year on fundraising having to pay a levy from September onwards to support the setting up and operation of their regulator, the amount being on a sliding scale from £150 up to £15,000 a year. Its proposals are set out in documents that can be found here.

One big question that still hangs in the air is how long the proposed FPS will operate, bearing in mind the arrival (expected in 2018) of the opt-in rules under the EU General Data Protection Regulation (“GDPR”). To some extent, the FPS is a transitional measure until the GDPR requires the UK to require a positive opt-in. Even if the UK leaves the EU soon after the GDPR comes into effect, the terms of the UK’s exit may involve signing up to compliance with a range of EU laws and regulation (particularly if the preferred exit route is into the EEA) but if the UK takes a different route that sidesteps the GDPR, it is conceivable that the FPS may still be needed to resolve the problem of unwanted fundraising communications.

Contact our charity law experts today

If you would like to know more about these fundraising issues and how they might affect your charity, please contact Paul Ridout on 01895 207862 or email paul.ridout@ibblaw.co.uk.