University fundraising might be about to get much harder

This morning the Council for Advancement and Support of Education (CASE) has published its latest report highlighting the continued success of university fundraising departments. Collectively the 112 universities in the study secured £860 million in donations in 2014-15, up 8 percent on the previous year. Success in fundraising should be applauded, particularly at a time when public funding is coming with an increasing number of strings. But new regulations are about to be introduced that could make it much harder for universities to raise money in the future.

Charitable fundraising has been the subject of considerable debate in recent months, sparked by the sad events surrounding the death of Olive Cooke. The Fundraising Standards Board found that Olive had received over 400 mailings and was on file with almost 100 charities who bombarded her with requests for money shortly before she took her own life.

Following a review led by Sir Stuart Etherington, Chief Executive of NCVO, the regulations that govern fundraising are now being tightened up. The review found a series of problems with the regulatory landscape, including complexity due to the large number of bodies involved in regulation; gaps in oversight because of its voluntary membership; and ineffectiveness of its policing and enforcement standards.

The umbrella group proposed a series of recommendations to address this, two of which are of particular interest to higher education:

  1. The creation of a new fundraising regulator, which would cover all charities and be able to give stronger sanctions for noncompliance. The regulator will be fully operational by the end of 2016 and the costs met by charities who spend more than £100,000 on fundraising each year. Stephen Dunmore, former Chief Executive of the Big Lottery Fund, has been appointed to lead the organisation.
  2. The creation of a Fundraising Preference Service, which individuals would be able to register with, thereby opting out of communication with any charity for fundraising purposes. Organisations engaging in high volume fundraising would need to check their contacts against this list before contacting them.

While there is no evidence that universities were responsible for the bad fundraising practices that have been aired in the context of the Etherington Review, they will almost certainly be affected by the coming changes.

The majority of universities are charities albeit exempt ones: HEFCE is the principal regulator rather than the Charity Commission. And universities spend considerable and rising sums on fundraising. According to today’s report, the sector invested £93 million in fundraising, up 10 percent on the previous year.

Universities will also be affected by the new Fundraising Preference Service where members of the public sign-up without potentially realising that this will block their university from contacting them. How many members of the public are likely to know that their alma mater is also a charity caught up in new rules around fundraising? By my guess, not many.

The concerns over the Fundraising Preference Service are well justified and have been aired by both Universities UK and the Russell Group, and yet Etherington has called on the sector to take a lead in supporting the new regulator.

The nature of the relationship between alumni and their university is clearly different to a normal fundraising relationship, not least because the student is already known to the university. There have also been no complaints about university fundraising and, in fact, universities have been encouraged to do more to maintain contact with alumni. A report commissioned by HEFCE found that the alumni participation rate was 1.2 percent in 2012, against a 10 percent rate in the United States, and set a target for the UK to increase this to 5 percent within the next ten years.

On the other hand, while we are not aware of any complaints about university fundraising, it does not mean that there is no poor practice in the sector. The Fundraising Standards Board can only refer to complaints of its voluntary members, of which it looks like just three are universities. And with graduate earnings data set to become more visible in the future, and ongoing concerns about value for money amongst some students, it may be that tomorrow’s graduates are even less willing to give back to their former universities. Today’s report finds that the total number of donors has remained static in recent years – a trend that could well continue.

There is also no denying that, whether or not the relationship is different, universities are engaging in fundraising and bringing in considerable sums as a result. According to Coutts ‘Million dollar donor’ report, universities receive more one-million-pound gifts that any other fundraising sector. Their charitable status will undoubtedly have helped them in this, and the sector has benefited from significant tax relief as a result. So while it’s right to ensure that the rules do not lead to any unintended adverse consequences, it would be ill-advised for the sector to plead for special treatment.

Perhaps a greater conundrum than how universities are subject to fundraising regulations is the debate about universities’ corporate form – one in urgent need of attention. Universities were not the main focus of the NCVO review perhaps because they are not seen as mainstream charities, in the same way that they are not strictly seen as public entities.

The implication of such dissonance, as we have seen recently with the case of English language requirements, is that higher education institutions are tacked on to policies as an afterthought. We run the risk of implications not being anticipated and universities ending up being subject to several different (perhaps even competing) regulatory regimes. For instance unlike other charities, universities are also likely to be affected by new EU regulations which could require them to get retrospective consent from alumni to hold their data on file – something unlikely to help the fundraising effort in the future.

A full copy of the Ross-CASE report can be found here.

Leave a Reply