More than half of charities disagree with the Fundraising Regulator’s decision to link the fundraising levy to the Consumer Price Index from 2025, according to the regulator’s consultation on its levy proposals.
The regulator confirmed today it planned to implement an increase of 50 per cent for the largest fundraising charities in the amount they pay under the levy, which is a voluntary fee that charities spending £100,000 or more a year on fundraising are asked to pay.
The regulator said that after taking into account responses to a consultation with charities on proposed changes to the levy, it had altered the plan to allow a staggered introduction over the next 18 months instead of implementing one larger rise in September.
The regulator also confirmed it would go ahead with plans to link levy increases to the Consumer Price Index inflation rate from September 2025.
But the findings of the regulator’s consultation on the proposals, also published today, show that 56 per cent of 216 charities that responded disagreed with this proposal.
Of these respondents, 101 were levy-paying organisations – 70 per cent of which said they disagreed with the proposal.
The regulator said that while some respondents agreed that linking the levy to the CPI would make it easier to anticipate future increases, many said that a CPI-linked rise was too arbitrary.
Some suggested that the levy should instead be based on an assessment of the financial environment that UK charities are operating in and the costs of delivering regulation.
The regulator said: “Several respondents highlighted the financial pressures charities are currently facing, noting that a high CPI rate could result in charities facing very high levy fees at a time when other costs are increasing, services are under pressure, and funding sources are uncertain.”
Others also said that a CPI-linked rise would be most challenging for small charities to handle, while two claimed that some charities would need to forgo registering or renewing in the event of such a rise.
Some respondents also suggested a capped annual increase as an alternative option, the regulator said.
When respondents were asked whether the proposed levy changes were appropriate, the vote was nearly equally split among the 222 who answered the question – 51 per cent said they supported the changes, while 49 per cent opposed them.
Of the 104 levy-paying respondents who answered this question, 73 said they were opposed to the plans.
Of respondents who were opposed to the proposals, 55 per cent highlighted the unfavourable economic environment as an impediment to the proposed levy changes, the regulator said.
A further 38 per cent of those in opposition to the proposals questioned the proportionality of the proposed levy changes.
Some suggested that the changes were excessive and disproportionate at a time when charities are facing significant financial struggles.
Of those who opposed the plans, 30 per cent highlighted value for money in their submissions, with some respondents requesting greater clarity on the benefits to the sector of the increases and more transparency on how the additional funds will be used.
Toby Harris, chair of the regulator, said in a blog: “We recognise the impact the current economic climate is having on charities and, taking these concerns into consideration, the board has agreed that, while the levy will have to go up for the first time in eight years, the proposed increases will be phased in over two years (in September 2024 and September 2025).
“From September 2026 the levy will increase in line with the Consumer Price Index, as set out in the original proposal. However, as the board has always done, it will reflect on these increases annually when considering our budget.
“As the sector evolves so must we, so that we can continue to support charities to deliver their vital work. Simply put, it is principally the levy that enables us to do this and to continue doing it effectively and proactively in the shared interests of charities and the generous public so that there is a continuing positive environment for fundraising to prosper.”