When the allegations of sexual harassment at the Presidents Club's annual all-male fundraising dinner first came to light, a number of charities were expecting to receive money from the event talked about refusing the donations. This led to the Charity Commission issuing a brief bulletin on the legalities of charities refusing promised donations and returning donations they have already received (for a précis of the Commission’s advice, please see our previous article). In the end, the charities concerned decided not to reject the donations – possibly because of the legal headaches involved. Even so, many charities were undoubtedly left wondering what the rules are.
According to the introduction, the 28-page paper "outlines the legal principles that you need to know, goes through the questions you will need to think about, and provides practical help and advice so that you can make the right decision for your charity". It also provides links to other relevant guidance.
The guidance is divided into several sections.
- Who is responsible for making decisions?
Among other things, this recognises that although trustees are ultimately responsible for the way a charity handles donations, in practice decisions may be delegated to staff. Charities need a policy to ensure that those decisions are made in line with standards and procedures approved by the trustees.
2. What do the rules say?
Trustees have a duty to act in their charity's best interests and, as the guidance explains, donations can only be refused in exceptional circumstances. In reaching a decision, trustees (or staff, applying the charity's policy) need to weigh up the potential benefits and detriments.
The guidance states: ’Although ethics and values will be important…these cannot be the decisive factors. The organisation needs to be able to demonstrate that acceptance of the donation would be detrimental to the achievement of its purposes’. It also makes the important point that the rules on refusing donations are different from the rules on returning donations that have already been banked.
3. Developing a policy: A step by step guide
This provides trustees with questions to consider when putting a policy together, covering everything from formulating the criteria for refusing donations, to practicalities such as setting the timeframe for dealing with donations about which the charity has concerns.
4. What would we do if?
This provides a few example scenarios, explaining how the rules would apply in each case. It moves on to discuss a recent Charity Commission case report about a charity that raised funds to buy a particular asset and how it dealt with the donations it had received after the asset in question was withdrawn from sale.
Review of the guidance
The Institute of Fundraising is not a regulatory body, so the guidance does not carry any weight in terms of proving compliance. However, it refers to Charity Commission guidance in a number of places, highlights the factors that trustees need to bear in mind when considering this issue, and offers valuable advice on creating and implementing a policy. It also helpfully describes the circumstances in which returning a previously accepted donation is possible (or even required). Unfortunately, the distinction between refusing donations and returning donations that have already been accepted is not carefully maintained throughout (for example, the section on pages 14-15 is titled “Is authorisation required to return a donation?”, but the paragraphs on the rules in England and Wales are about refusing prospective donations). Nevertheless, in our view it is a useful document that should help trustees get to grips with this subject.
You can download it from the Institute of Fundraising's website.
If you require further information on anything covered in this briefing please contact Rachel Holmes, or your usual contact at the firm on +44(0)20 3375 7000.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, September 2018