The majority of people who join the not for profit sector do so to make a difference. Unfortunately, as a result of a number of charities mishandling their finances, to fundraising scandals and fraudulent door to door collections, the public have become weary. Amárach found whilst doing research for the Charities Institute of Ireland Report that one in two people in Ireland don’t trust charities. A small number of charities practicing unethical fundraising can result in increased regulatory oversight, not just for those few organisations but the sector as a whole. PWC studied case studies from the UK and highlighted three lessons about ethical fundraising that need to be learned.
1-Fundraising Risks Need to be Managed – Reputation is at the heart of every charity. It allows people to entrust their time, money and support in the organisation. Senior management needs to acknowledge the importance of reputational implications. They can do this through setting the compliance agenda for all fundraising activities. These rules should ensure that all fundraising activity is clear and transparent and have appropriate oversight and governance. If there is even a hint of non-compliance, your organisation can lose the trust of the public.
Generally, the regulatory environment is becoming more and more taxing for businesses, this is the same for the charity sector. Different legislation like for example GDPR is complicated and challenging. It is therefor vital that there are resources allocated to interpreting such regulations so that necessary actions can be outlined in the rules we mentioned earlier.
Unethical fundraising can also bring about other issues in the organisation such as having to relocate scarce resources in order to deal with the fallout eg investigations, complaints and legal matters. Apart from being costly, investigations also have other effects on the organisation that are not as obvious such as weakening morale. Ultimately, having to reallocate resources means there is less time spent on the cause and users will be the ones who are negatively affected.
2-Outsourcing Risks Need to be Managed – Sometimes charities decide to outsource their fundraising activities which can sometimes be beneficial from and operational and economic outlook. However, when it comes to outsourcing in general, there are always additional risks especially when it comes to reputation. Therefore, due diligence is incredibly important before any external party is appointed. Ongoing monitoring and governance is also vital in making sure that the ‘rules of engagement’ are being followed.
It is important to keep in mind that outsourcing fundraising does not outsource the responsibility of the organisation in relation to ensuring compliance. This includes duties such as acting with reasonable care and skill. In order to ensure contractor compliance, the organisation should set compliance targets and ensure that the agencies you are using are complying.
It is also possible to ensure quality through building good fundraising approaches into performance reporting. Unethical and aggressive behaviours from fundraisers can be encourages as a result of rewarding them by ‘acquisition rates’ only. A different way would be to measure ‘retention’ rates.
3-The fundraising strategy should be aligned with the communications strategy- It is important to get the message across as to why you fundraise. The research for CII highlighted a lack of trust, despite increasing regulation. However, the survey also showed that 2 in 3 people still feel that charities have an important role to play in our society. Fundraisers are a look into your organisation. If an organisation trains their fundraisers to be ambassadors, new supporters can be won and kept. An inspiring conversation can lead to a one-off donation giver becoming a regular donator.
The organisation should also communicate how they fundraise and where exactly these funds go. Educating the public on your fundraising will build trust. Similarly explaining how the organisation is spending the funds will also help to build trust. Almost 1 in 4 people haven’t decided how the feel about charities, having a clear and transparent fundraising model can be incredibly effective.
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PWC (2018) Charity News [online] https://www.pwc.ie/publications/2018/charity-news-spring-2018.pdf