Should charity donations ever be refused or returned?
Over the last few years, charities have come under increasing pressure to be ‘doing the right thing’ when offered donations.
An example was recently reported in The Telegraph, with Save the Children UK rejecting a £750,000 donation from Neptune Energy, an international energy firm, on the grounds that it would breach the charity’s recently adopted policy on accepting money linked to fossil fuels.
The area of donations has come under particular focus with the Ukrainian crisis. The Charity Commission has reminded charities to check whether donors and other individuals or organisations that they’re dealing with are subject to sanctions, linking with existing guidance for charities to “know your donor”.
Not accepting, or returning a donation: what should a charity do?
Charities accept donations in good faith and in the majority of cases there will be little uncertainty that the funds should be accepted. However, if you’re in doubt, you must consider the best interests of the charity. The term ‘best interests’ should cover at least:
- Reputational risk: would a connection with the donor possibly put off other donors in the future, or do other harm to the charity?
- Would returning a donation put you in a difficult financial position and reduce your ability to undertake other charitable activities?
- Other ethical considerations: for example, does your charity have a policy of not accepting donations from tobacco or alcohol related companies? Or indeed fossil fuels, like Save the Children UK?
- Is there concern that the donation might be the proceeds of crime or terrorism?
In the Save the Children case, other charities were subsequently able to accept the funds from Neptune Energy. Different charities can validly reach different conclusions in similar situations on what is in the best interests of their charity.
What are the responsibilities of trustees?
The decisions of the charity rest with the trustees. The Charity Commission has produced a useful tool to help charities with their assessment: ‘Know your donor – Key questions’. The tool sets out potential questions to consider when accepting a donation. The questions are not intended to be asked for each donation, but may need to be considered, depending on risk, including the size and nature of the donation, and whether the donation appears to have any suspicious characteristics.
The discussion and decision on whether to accept higher risk donations should be undertaken by the trustees, and be carefully reasoned and documented in writing, so that in the event of a future challenge, they can evidence that the decision properly considered all the relevant issues.
If you decide to return a donation (for anything other than legal reasons), you may need Charity Commission approval for this (see CC7 Ex Gratia Payments by Charities and OG539 Ex Gratia Payments by Charities). You may also wish to seek legal advice on this matter.
If you suspect a donation has resulted from the proceeds of crime or terrorism, it should always be rejected, and you should contact the police.
You would also have a duty to report a Serious Incident to the Charity Commission if the event either resulted in or risked significant harm to the charity’s work or reputation.
For more information on how we can help with the donations process, please get in touch with your usual Larking Gowen contact. You can find contact details in the Our People section of our website. Alternatively, call 0330 024 0888 or email firstname.lastname@example.org.
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