Transcript of presentation by Colin Lloyd, Chairman of the Fundraising Standards Board, to Action Planning ‘Funding the Future’ conference at Central Hall Westminster on 23rd November 2006

Ladies and gentlemen this is the world’s first initiative to self regulate fundraising, we are pioneering in this space, and can I just emphasise the word ‘self’, this is about the sector regulating itself. 

Why self regulation in fundraising and why now you may ask yourself?  This is now virtually a £10 billion sector, I'm sure that next year some £10 billion will be raised from the British public to support your sector.  We have a more educated donor base and public. David Senior mentioned my role with the Telephone Preference Service, I know from the complaints I received at the TPS how educated they are.

The sector itself has a very high degree of professionalism, and when any industry embraces professionalism at the level that you do, self regulation is very much at the heart of it.  We have provision in the new charity legislation of reserve powers also to impose regulation in five years’ time, if we do not succeed.

So behind me there's a great big stick from Ed (Miliband) and his counterparts, to make sure we succeed.  We also have increasing media interest in the sector, and many of the issues that face the sector are very much now in the public domain. And the speaker over there raised the question of community radio stations and so on and so forth, they pervade the sector in a way that we've never seen before.

AT the FSB we are archiving some of the comments that are coming out, just to give us a flavour of what is happening, and I just thought I’d share with you just four of those.  And in the Society Guardian, the are reports of how public irritation forces charities to end chugging. 

Save the Children, I'm sorry if there's someone in the audience here today, but your latest ad was banned.  There's a prison term for a fraud boss, according to the BBC, who’s just started a prison sentence in Scotland.  And the Guardian Weekly describes you as no longer soft and fluffy.  So ladies and gentlemen you are no longer soft and fluffy people.

So where did the FSB come from.  It was a Number 10 strategy unit, as the chairman has said, it’s been three years in the planning, I'm extremely grateful to Rodney Bewes and Ball’s report in establishing the principles behind the FSB, it’s been driven by the sector bodies and led by the Institute of Fundraising.

Also involved has been the Charity Commission, Oscar in Scotland, the Home Office, the Cabinet Office and the Scottish Executive.  And the initial funding of this scheme has come from the government for the first three years, and indeed the Scottish Executive have also funded the Scottish element of this. 

Ladies and gentlemen, the UK enjoys world class self regulation, it is absolutely no coincident that we have a world class advertising industry, and at the heart of it, is the Advertising Standards Authority, the two are symbiotic.  At the Direct Marketing Association, which I ran for many years, it grew from £4 billion expenditure to £14 billion expenditure in a decade.  And we embrace self regulation with an authority that policed as codes of practice in a way that we've never seen before, and I'm sure that many of you wouldn't go on holiday with a package tour company without checking first to see if they had an ABTA logo. 

And those wonderful plumbers have their Corgi system out there, and I'm sure we recognise that.  It is part of our way of life in this country.  I’d also like to share with you the good and the not so good.  The Mailing Preference Service was established some 10 years ago, sorry 15 years ago, and has been a wonderful example of self regulation.

Without it I'm convinced we would have opt in as a regime in this country for recognising consumer’s wishes to receive direct mail, as it is we have opt out, and every time the government's looked at direct marketing regulation, they’ve said that the Mailing Preference Service works well, we have 98% compliance in this country of the use of the Telephone Preference File.

By the side of that should be a Telephone Preference Service logo, and I had the privilege of setting up the self regulatory service about 10 years ago.  After 3 years the adoption by the sector was very very low indeed, and the government had no hesitation when they brought in the Electronic Communications Directive, to look at telephone marketing in this country, and bring in regulation. 

We now have a Telephone Preference Service, and 13½ million British consumers out there have opted not to receive unwanted sales and marketing telephone calls to their home.  And that file is growing at something like 2,500 people a month.  The FSB’s positioning is that we are going to be champions of best practice, rather than the sector police force.

I didn’t want this part of my career to be a policemen in any industry, I want to be here to show that best practices work, and they work extremely effectively.  Our role, is that we are overseen by an independent board, we are custodians of the fundraising promise, that I’ll come on to in a moment. 

We will adjudicate on donor complaints that reach us, having first gone through the charity concerned, to see if they can solve the problem before it gets to us.  We will signpost other donor recourse routes, for those consumers that complain to us and they're not, and the charities are not part of our scheme.  So we're  going to be a signposting operation.

We will support best practice, we will feed complaint trends to the Institute of Fundraising for code updating, and we'll undertake donor research to anticipate future issues.  The role for fundraisers is to contractually join the scheme, and one of the requirements we put into that, is that it requires trustee approval, and very often the trustees don’t have their meetings more frequently than three or four times a year.

So we've been having to wait for the trustees’ meeting to take place before the fundraisers can sign themselves up.  We want to ensure a robust and transparent complaints procedure, there's a requirement to display the FSB logo and strapline wherever possible.

We will be asking for an annual compliance report to the Fund Standards Board, and that’s predominantly about identifying trends.  And for example if there was a huge trend in complaints about direct mail, then we’d feed that back to the Institute and the code owners, and indeed the sector.  And we'll require members of the scheme to adhere to the Institute of Funding Raising practice codes and the funding promise.

The fundraising promise itself has been through a rigorous and robust consultation process, and there are six key principles in the promise.  There's a commitment to high standards, there's a requirement to be open and honest, there's a requirement to be clear, to be respectful, fair and reasonable, and accountable. 

In setting this scheme we have wanted to take account of the donors’ interests, and the scheme will only work if there's a fair balance between the sector’s interests and the donors’ interest.  So an early point we wanted to ask donors their views of the fundraising promise and also the value of FSB membership by charities to this scheme.

We commission Which, as an independent body who used You Gov for most of the research, so two highly reputable bodies that were totally independent of any views that we may have.  And I thought I’d just share with you two of those results.  Of the people that we interviewed, 58% said that they are more likely to donate to the charity that is part of the Fundraising Standards Board scheme showing the Fundraising Standards Board logo. 

And of existing donors, 19% said that they are likely to donate more if they feel that they have the safety of the Fundraising Standards Board adherence. And bear in mind ladies and gentlemen, we haven't even launched this scheme to the public yet, and we're getting this feedback already, so there's definitely some issues there, some latent demand that I think we're picking up, and I was extremely encouraged when I saw these results. 

The other issue that we have, is how to resolve complaints effectively, and the Charity Commission recently announced that two third of charities have no complaints procedures whatsoever.  And the FSB has established complaint protocols and definitions, and in my experience of the DMA, I realised a long long time ago, that a well handled complaint creates advocacy for the charity that it’s supporting, they tell their friends and say how wonderful it was, and the stone drops in the pond and the ripples go out. 

Conversely, a badly handled complaint can be incredibly negative, we live in an age of the internet, of email, of blogging, of media and so on and so forth, and it can have an extremely damaging effect if the complaint is handled badly.  And it’s therefore important for us to make sure that not only the members handle complaints properly and professionally, but we also do ourselves.

And the FSB will also be there to help smaller charities, in our discussions with them we've realised that many of them aren’t sophisticated, they don’t have a proper complaints process.  We will be helping them do that and supplying them with templates and systems that they can help manage complaints for effectively.

And I thought I’d finish with just a little update of our progress at month nine of this life that we're now leading.  We've established administrative offices in London and Edinburgh, with an excellent staff.  We have a consultation process which is now complete, on the fund raiding promise and the contractual relationships we have with charities. 

The first phase of our sector launch is complete, and we've had an excellent response to that, the second phase will commence shortly, we've just launched in Scotland and I'm delighted with the response that we've had from the Scottish community.  We have two regional small charity tests underway, with local authorities in those areas, and I’ll be very interested to see the results that they get from the really tiny charities in a particular community.