Editors’ Note: Rhodri Davies continues this week’s focus on governmental reform of charities within the UK, as part of HistPhil’s forum on philanthropy and the state.
The charity sector in the UK is currently going through a torrid time. A series of issues with the way charities operate and fundraise have recently come to the attention of the media, politicians and the public and have resulted in what some have labelled a “fundraising crisis”. As a result, public trust in charities, which has been consistently high for many years, appears to be eroding. As such, charities have found themselves under intense political scrutiny, and have become a target for politicians seeking to position themselves as acting in the public’s best interest. This has resulted in investigations by a number of Parliamentary committees, new policy announcements from the government, and the introduction of new legislation and regulation – including the creation of an entirely new regulatory body to oversee charitable fundraising (the Fundraising Regulator).
There has also been a distinct strain of far-less-justified criticism in the form of a sustained attack by some politicians and sections of the media on the idea of charities engaging in campaigning and advocacy work. This should be a cause of great concern for charities because, as I argue in my recently-published book (Public Good by Private Means: How philanthropy shapes Britain), it is through their long history of campaigning for social change that they have achieved many of their greatest successes. The worry for charities is that those with an anti-campaigning agenda will be able to play on unrelated concerns about fundraising in order to convince the public to go along with new policies and legislation designed to curb the ability of charities to speak out on behalf of their beneficiaries, and that they are able to do this precisely because the charity sector has not yet managed to get its own house in order.
I would argue that this is a clear situation in which ignorance of the historical context has had a significant impact on the overall situation. The sense of moral panic whipped up about the way in which charities fundraise and operate relies on a narrative implying that such behaviour represents a worrying, never-before-seen phenomenon. Likewise, the defensiveness exhibited by charities seems partly based on a perception that the criticism they find themselves facing is unprecedented.
However, as soon as you look at the historical evidence it becomes clear that none of these assumptions is remotely true. Charities have always engaged in campaigning designed to address the root causes of problems, at the same time as they have delivered direct services to address their symptoms. Likewise, there have consistently been concerns about some of the ways in which charities raise and spend their funds, which have periodically boiled over into “crises”.
The idea that charitable fundraising is “out of control”, for instance, is nothing new. An 1880 editorial in The Times lamented that “When a name has once been printed on a subscription list, its owner becomes a marked man. He has joined, by his own act, the unhappy class to which an appeal can be made with some chance that it will be met. From that day forward his persecution will never cease.” Similarly, David Owen noted in his classic book English Philanthropy 1660-1960 that in Victorian London, “collectors, paid and voluntary, were crossing and re-crossing each other’s trails throughout the metropolis, frequently calling on the same individuals on behalf of identical varieties of charitable endeavour.” These fundraisers even had at their disposal a printed directory of individual donors, entitled The Charitable Ten Thousand, which was published with convenient blank pages so that fundraisers could add the names of candidates for future charity appeals.
Some have suggested the real problem is that fundraising has become a business, but it is worth noting that the idea of commercial fundraising is an old one. Owen notes that in Victorian Britain, it was not uncommon for charities to employ fundraisers on 5% or even 7.5% commission. In one case, this relationship turned very publicly sour when a fundraiser managed to secure a significant legacy gift of around £700,000 for a charity but the organisation refused to pay up on the grounds that legacy gifts were not covered by the terms of their contract. A court found in the charity’s favour, but it hardly presented them in a very appealing light.
The lesson to take is not that charities have always behaved badly when it comes to fundraising. Rather, it is that during periods when high demand for charity services is combined with vigorous competition for available funds (as was found in the Victorian era, and as we find in today’s climate of austerity and reduced government spending), the pressure on charities to push the boundaries in terms of fundraising becomes acute and can spill over into malpractice. Charities should be aware of this cycle and try to prepare themselves for tougher times so that they do not end up transgressing in the pursuit of funding and thus risk damaging public trust.
What, then, of the government response to the crisis? One concrete outcome has been the introduction of a new Fundraising Regulator, and it is interesting once again to look back to the 19th century for a precedent. In the middle of the century, a controversy erupted over the huge number of dormant and redundant charitable trusts in London. Many had purposes that were either irrelevant by the 19th century (e.g. a fund to support sermons celebrating the defeat of the Spanish Armada), or which could literally not be carried out (e.g. a fund for the ransoming of Christian captives from the Turks or Barbary pirates, which was no longer a problem). Fundraisers in the capital were aggrieved that they were competing ever harder for donations, whilst significant sums of charitable money were sitting there serving no purpose at all. Following a Parliamentary inquiry, it was decided to imbue the existing Charity Commissioners with new powers to “break open” these redundant trusts and put the money to some use (which they did by aggregating the funds in the new City Parochial Foundation). This bestowal of new powers on the Charity Commissioners led to the formation of a permanent Board, which created for the first time a standalone organisation responsible for regulating charities and paved the way for the regulator we have today (the Charity Commission for England and Wales).
The most relevant aspect of this story is the reaction from the charity world. Although many had been demanding that something be done about the proliferation of redundant trusts, the assumption had been that the solution would be led by the charities themselves. When, however, the realisation dawned that the government intended to take far more direct action, there was much consternation. Many declared concerns about the dangerous precedent it set in terms of overruling donors’ wishes, which were seen as central to the very idea of a charitable trust.
In the UK, we once again find the activities of charities coming to the attention of government; and once again the government has decided to create new powers to regulate these activities. Although the newly-introduced Fundraising Regulator is currently based on a model of self-regulation by charities, it has been made abundantly clear by the government that if this fails to achieve the desired results, they will resort to statutory regulation. Just as in the 19th Century, many charities have not reacted positively to the idea of greater government control over their activities.
Perhaps, however, if more charities had been aware of the history, they might have recognised the danger: as soon as politicians start to believe that charities are incapable of policing themselves, the likelihood of government intervention is high. Hence the onus is on charities to demonstrate that they can govern themselves and that if bad practices start to emerge they will be dealt with swiftly and effectively.
If charities in the UK do not address the current climate of criticism quickly, the likelihood is that they will be subject to further government regulation of their fundraising activities. Furthermore, they will hamper their own ability to defend themselves against the unjustified, yet damaging attacks on their campaigning role. Hence, through a failure to address deficiencies in one aspect of their operations, charities may end up compromising their ability to contribute to society—which would come at a long-term cost to our democracy as a whole.
Rhodri Davies works at Charities Aid Foundation (CAF), where he leads Giving Thought – CAF’s in-house think tank focussing on current and future issues affecting philanthropy and the charitable sector. He is the author of Public Good by Private Means: How Philanthropy Shapes Britain (Alliance Publishing Trust, 2015).