Charitable Fundraising Websites

Tracey Crouch Excerpts

Tuesday 28th November 2017 Westminster Hall

[The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Tracey Crouch)]

It is a pleasure, as always, to serve under your chairmanship, Mr Hollobone. I thank my hon. Friend the Member for Cheadle (Mary Robinson) for bringing such a topical and important issue to our attention.

We should celebrate the fact that we are a generous nation. As my hon. Friend said, Charities Aid Foundation research indicates that the British public donated about £10 billion to charity in 2016, making the UK the most generous nation in Europe and one of the most generous in the world. Today is Giving Tuesday, the global day of giving that encourages people to volunteer, donate to charity and spread the word about doing good stuff. Last year, 4.5 million people in the UK gave their time or money to charity on Giving Tuesday, and for the second year running the campaign broke the world record for the most money donated online in 24 hours.

Many people need to be asked before they give, so charities have to invest some of their money in fundraising in order to raise funds to undertake their important work. According to the National Council for Voluntary Organisations, every £1 that a charity invests in fundraising raises an average of £4 in return. Fundraising, when done well, also means that charities can develop positive relationships with their supporters.

Recent years have seen the emergence and rapid growth of online fundraising platforms as a new and convenient way for people to donate to charity or other causes. Huge sums are raised for charity through online fundraising platforms. The largest, JustGiving, has helped people to raise more than £3 billion for good causes since 2001. We need only look at the incredible public generosity and use of online fundraising platforms following recent tragic events such as the Grenfell tower fire and the terrorist attacks in London and Manchester to gauge the popularity of that form of fundraising. However, fundraising must be undertaken responsibly by all if public trust is to be maintained.

Sadly, in 2015, charity fundraising came into the spotlight for all the wrong reasons, risking public trust and confidence in charity. Two years on, the charity sector has taken responsibility and embraced change. It set up a new independent and effective self-regulatory body, the Fundraising Regulator, which has worked with fundraisers and charities to strengthen and enforce the code of practice. It has implemented the Fundraising Preference Service, enabling members of the public to easily put a stop to unwanted fundraising requests. Charities and their trustees have embraced higher standards. They are monitoring and overseeing their fundraising activities much more closely, and are strengthening their data protection policies and practices.

My hon. Friend asked whether we could give the Fundraising Regulator more teeth. The regulator regulates the fundraising community by consent. Working with the sector, it has taken major steps to strengthen the regulation of fundraising and ensure that the public are protected from poor practices. Where there is deliberate abuse or unlawful activity, it is for the Fundraising Regulator to report to the relevant statutory regulators—for example, the Charity Commission, the Information Commissioner or the Financial Conduct Authority, and in appropriate cases the police—and encourage them to use their statutory powers. We think that effective self-regulation rather than Government intervention can deliver on the public’s expectations.

As my hon. Friend also mentioned, recent online fundraising has shed light on the need for improved standards of transparency and accountability for online fundraising platforms. The issues include a lack of transparency about website fees and charges, the potential for online fraudulent activity, and the need for the public to have access to good advice about online giving. We need to ensure that high standards and best practice are shared and followed across all online fundraising platforms. That is why, earlier this year, I asked the Fundraising Regulator and the Charity Commission to work with the online fundraising platforms to address public concerns and promote high standards and good practice.

The Fundraising Regulator and the Charity Commission convened a summit with 14 of the largest online fundraising platforms in September. The aim was to agree collectively on principles to increase public understanding and transparency about the different forms of online donating, in order to secure public trust and confidence. I am pleased to report a positive response from the online fundraising platforms and a number of commitments from their meeting with the regulators. They have confirmed their commitment to transparency on fees and charges and have agreed to work with the Charity Commission and Fundraising Regulator to explore how that can be improved. They have also agreed to disseminate clear and consistent public advice about the choices available for donating. They will review their resilience to fraud and help the regulators to review the code of fundraising practice with the aim of expanding the standards for online fundraising.

On fees and charges, we need to recognise that there is a range of commercial and not-for-profit organisations that operate as online fundraising platforms. In addition to the debit and credit card transaction fees that apply in all cases, there are significant costs to be covered in providing the service. That is the case for online fundraising platforms and for traditional methods. In some cases, those costs or a proportion of them are subsidised by associated businesses as part of their social responsibility programmes, reducing the proportion of fees that comes out of individual donors’ gifts. In other cases, fees are taken from the donation or any gift aid on the donation.

My hon. Friend the Member for Cheadle asked about gift aid and the fees that are taken from the total value of the donation plus gift aid. That is the case regardless of whether the platform says that the fees are taken from the body of the donation or from the gift aid that is paid on top of it. Platforms also take responsibility for processing gift aid claims on a charity’s behalf, including any associated reporting and audit requirements. As always, we continue to have discussions with those involved. It is important that in all cases any charges and fees are reasonable and transparent, so that donors can make an informed choice. I welcome the decision that some fundraising platforms took to waive or reduce their fees, or to make a donation, in relation to fundraising for disasters such as the Grenfell Tower fire and the terror attacks earlier this year.

My hon. Friend asked whether we could put pressure on the industry to reduce debit and credit transaction fees. I assure her that UK card processing fees of generally between 1% and 2% compare favourably with the payment processing fees charged in other countries, which are usually higher—significantly so in some cases. I am fairly certain that members of the industry will be watching this debate and they are welcome to discuss what they can do to help support charities’ fundraising efforts with me and my colleagues.

The Charity Commission and Fundraising Regulator will continue to work with the online fundraising platforms and will keep me updated on progress. They sent me a letter yesterday that outlined current progress, which I am happy to share with my hon. Friend. Those platforms provide an important service that is popular with the public and raises significant sums for charity. They have shown that they are willing and committed to work with the regulators and the Government to respond to public concerns and to strengthen standards and transparency. I welcome that, and I hope that other hon. Members do too.

Again, I congratulate my hon. Friend on securing this important debate, particularly on Giving Tuesday. I am willing to continue the conversation outside this Chamber.

Question put and agreed to.