How the first YEAR of your charity donation ends up in the hands of the chuggers
- Charities contract work to third-party companies that employ ‘charity muggers’
- Firms paid up-front fees of as much as £1.3m for targeting donors to sign up
- One Sixty Fundraising is being paid £478,000 plus VAT by Plan International
Millions of pounds given to charities are being used to pay street fundraising firms, the Daily Mail reveals today.
Charities often contract out the work to third-party companies that employ ‘chuggers’ – charity muggers.
Their job is to approach passers-by and ask them to sign up for direct debits.
The fundraising firms are paid up-front fees of as much as £1.3million for targeting donors in the hope they will sign for up to five years.
This means at least the first 12 months of an individual’s donations are swallowed up in fundraising costs.
Charities often contract out the work to third-party companies that employ ‘chuggers’ – charity muggers
In one case, more than two years of monthly direct debits to an international charity, which sponsors children in poverty-afflicted areas, are swallowed up by the payments to a private fundraiser.
One Sixty Fundraising is being paid £478,000 plus VAT by Plan International, a charity dedicated to helping children. It hopes to raise £1.3million based on donors giving for five years.
But these estimates mean that even if the charity hits its targets for the campaign, donors will typically have to give for 27 months to cover the costs paid to the private fundraising firm.
Unicef is paying One Sixty Fundraising £1,303,731 for a central London campaign, in the hope of raising £5.2million if donors continue to give for four years.
The figures mean donors must give for at least one year before the charity recoups its investment and begins to make money.
It is thought that fees to fundraisers are regularly in excess of the £96-a-year average that donors give in the first year of direct debit payments. Last year, more than 400,000 Britons signed up to donate over direct debit, according to the Institute of Fundraising.
But chuggers have come under fire, accused of harassing people during the rush hour and on their lunch breaks.
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By 2015, 100 towns had signed up to a scheme to ban chuggers on certain days. Newcastle has banned them from parts of the city centre altogether under Public Spaces Protection Orders. Baroness Ros Altmann, who campaigns on behalf of the elderly, said: ‘It’s astonishing that kind-hearted donations are effectively not going to charity for at least the first year. You think you are doing something marvellous in signing up and helping the charity but instead your money is effectively being paid to cover these sales people and nothing may be going to charity for a duration.
‘I don’t believe these high-pressure sales tactics have a place in charitable giving to start with.
‘The charities need to be up front about how much these private firms are getting.’ Daily Mail reporters signed up to charities using third-party fundraisers across the country after a whistleblower who worked for one such firm raised concerns.
When reporters agreed to donate, they were told that all their money would go to the good cause. They were only told about the upfront fees at the very end of the transaction, just before a signature was required.
The whistleblower, who wishes to remain anonymous, worked for Real Fundraising, which has provided services to Barnardo’s and Oxfam. He said charities only made money if donors gave for extended periods. ‘Before that the people donating are effectively just paying Real Fundraising for its campaign,’ he added. The Fundraising Regulator has called on charities to disclose how the fundraising organisation will be paid and the length of commitment expected of the potential donor.
But the watchdog yesterday said it was enough for charities to inform potential donors that the commitment is expected to be long term rather than specifying a minimum time period before costs are covered.
The charities contacted by the Mail agreed they should be transparent with donors about fundraising costs but none were prepared to disclose their agreed sign-up fee for individual donors. Barnardo’s refused to reveal the price it pays for each sign-up, describing it as ‘commercially sensitive information’.
The charity said it spends 6p out of every £1 raised on fundraising. A spokesman said: ‘We invest in recruiting new donors with the aim that they understand our work and see the difference their donations make over a period of years.’
Unicef spends 29p of every £1 of income on fundraising.
A spokesman added: ‘We constantly monitor and tweak our campaigns to make sure we are predicting how much they are going to raise as accurately as possible and to keep the costs of raising that money as low as possible. If working with fundraising companies like One Sixty became too expensive, we would stop using them.’
Danielle Atkinson of Plan International said: ‘Raising funds costs money. Using agencies is an established way to do so efficiently, as we can control exactly how much we spend.’
A spokesman for One Sixty said its financial declarations ‘were provided to us by our charity partners and are in line with the Fundraising Regulator’s guidance’.
A spokesman for Real Fundraising said: ‘Real takes its responsibilities very seriously and abides by the code of fundraising practice to inform all donors of the costs involved in the face to face fundraising campaign. We do not want supporters to feel under pressure to continue donating longer than they are able to. Supporters are in full control of the direct debit they pay to our client and may cancel whenever they see fit.’
David Holdsworth, deputy chief executive of the Charity Commission, said the public could give directly to good causes in order to cut out third party companies.
‘The British public rightly expect transparency about how charitable funds are raised,’ he said.
‘Our research shows they want to see honest and ethical fundraising. Our advice is to be savvy and to use your head as well as your heart – ask questions about where your money is going and the work that the charity does.’
Secrets of firm whose staff stop you in the street
Set up in 2009 by two ex-doorstep fundraisers and a chugger, the firm’s stated aim is to ‘change the world’.
It targets wealthy long-term donors using profiling techniques based on postcodes and claims to have signed up more than 90,000 people to almost 40 charities, including the RSPCA, Action Aid and Cancer Research UK.
Its chuggers, who move from city to city each week, have to sign up three donors a day to win a slice of ‘the best bonus scheme in the industry’. The most successful win trips abroad to destinations including Goa, Amsterdam and Geneva. Its staff are banned ‘on ethical grounds’ from using certain companies’ products in work time, including those of KFC, Nestle and Coca-Cola.
Director Mark Nesbitt, 41, and his business partner Tom Lebor, 40, founded Urban Leaf in 2009 after ‘realising they could run a fundraising agency better than their boss’. The firm says it specialises in long-term donors and ‘quality over quantity’.
Company records show the two bosses paid themselves £25,000 each in dividends last year. Fundraisers are paid a hefty £12-£16 per hour and the firm says on its website that charities ‘will always need money to do what they do and so people like us will need to get it for them’.
One Sixty Fundraising
Set up in 2014 by law graduate Matt Monfared, 31, and his business partner Matthew Atkinson, 37, One Sixty is currently being paid £1.3million for a Unicef campaign and more than £500,000 by humanitarian charity Plan International.
Mr Monfared is an ex-street fundraiser for homeless charity Shelter in Birmingham, where he claims to have managed the most successful team in Britain. He went on to manage the charity’s street fundraising in the south of England.
Companies House records show he and Mr Atkinson last year created another company called Maven Fundraising.
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