Charities are of course obliged to accept donations and they should only refuse or return them in exceptional circumstances.
When to refuse a donation
In some situations, it’s clear a donation should be refused, for example where significant ‘red flags’ are found during due diligence checks on a donor, where a donor lacks capacity, or where donor conditions are too onerous or unlawful. However, outside these more straightforward scenarios are more difficult situations where a donation carries a concern about potential reputational or other damage to a charity.
In order to refuse a donation, charities need to consider the potential risks to the charity and its purposes and weigh these up against the benefits, to identify what’s in the best interests of the charity. Charities should only refuse a donation if the trustees believe the damage will outweigh the benefit of the donation. The bar is a high one and a donation should only be refused if, for example, it’s likely donations of an equivalent or greater value would be lost, or staff would leave if the donation was accepted. A conflict with the charity’s purposes is also a relevant factor – many cancer charities refuse donations from tobacco companies for this reason.
These are difficult decisions and should involve a careful assessment, based on evidence. It can sometimes be challenging for individuals involved in the decision to separate their own moral views from what is in the best interests of the charity, taking into account the presumption that charities should accept donations. Some unpleasant people donate to charity and charities often (rightly) accept their donations!
All decisions to refuse donations should be clearly recorded along with details of the reasons for the decision and the factors taken into account when reaching the decision.
In the spotlight
Sometimes decisions on whether to accept a donation are made under time pressure and where there is media interest. There won’t always be a straightforward answer – the ‘right’ answer will depend on all the circumstances (which may be different for different charities).
In 2018, when it was reported that female waitresses were sexually harassed at fundraising events held by the Presidents Club, Great Ormond Street Hospital Children's Charity immediately announced it would be returning donations from the event. But later the same charity changed its decision on the basis that refusing a large sum of money was not the best outcome for the charity’s beneficiaries.
Returning donations
Returning a donation is even more difficult than refusing to accept a donation because the circumstances in which charities can do this are more limited. Charities may need to take advice and sometimes obtain authorisation from the Charity Commission.
Donations policy
It’s often helpful for charities to have a policy in place that sets out how the charity will approach these decisions. This can provide a framework for taking good decisions, sometimes under pressure. The policy may rule out certain types of donations because the risks will always outweigh the benefits, for example because of a conflict with the purposes of a charity. It can also include guidance for staff and trustees to apply to due diligence on donors and other compliance issues.
If you need a donations policy, or would like a review of your existing policy, we can help.
Guidance
The Charity Commission has also published some guidance on this topic and the Chartered Institute of Fundraising has published more detailed guidance to help charities in this complex area.