Accepting and Refusing Donations

August 07, 2018 Alyson Pepperill
Accepting and Refusing Donations

Fundraising is a crucial part of a charity’s work, allowing it to deliver its services whatever the cause. However, with many charities having local groups, ‘friends of’ or multiple branches fundraising on its behalf, a lack of control of understanding of risk management at a local level can, on occasion, have repercussions for the charity as a whole.

With a number of high profile cases which have arguably put the reputation of the sector at risk – from targeting the vulnerable through to unethical behaviour – understanding risk management and having the correct procedures and processes in place to protect an organisation has never been more important. One of the areas of risk which has come to light in recent months is that of acceptance and refusal of donations. Here, we look at the Institute of Fundraising’s new guidance which aims to help charities make very difficult decisions on what may be in its best interests.

The guidance, which is aimed at those responsible for making decisions on gift acceptance, includes a step-by-step section on how to create and develop a policy on donation acceptance – from who should develop it and the areas for inclusion through to whether it should be made public.

While incidences where donations must be refused are thankfully rare, the guidance has been supported by the Charity Commission which believes there are “some situations where trustees must decide that refusing or returning a donation is in the charity’s best interests”.

The IoF guidance states:
• A charity’s trustees have the overall duty to ensure it is run well and act in its best interests. They may delegate responsibility for the acceptance policy, however this must be detailed in the charity’s records.
• Charities should ensure they have a policy that clearly lays out the organisation’s position on donation acceptance and ensures the public that donations are only turned down for proper reasons and in exceptional circumstances.
• When deciding whether to refuse a donation, trustees must only do so if to accept it would be more detrimental to the charity being able to achieve its objectives than rejecting it. For example, if the funds donated were obtained illegally.
• Depending on the circumstances (e.g. the terms of the donation and how the funds were raised), there may be restrictions on whether a donation can be returned and the relevant charity regulator may need to authorise such returns by issuing a specific order.

What is clear is that trustees are legally responsible for a charity’s fundraising, so the onus is on them to ensure the correct plans and protocols are in place, and that the charity’s fundraising is compliant with fundraising laws and regulations. Accepting dubious donations could see them at risk of legal action or official investigations being directed towards them personally.

Ultimately, the decision to accept or refuse a donation is not always easy – after all, a charity needs all the money it can get to carry out its work. Trustees must therefore decide whether the benefits outweigh the potential risks to reputation, their own prosecution and public trust through a carefully considered process.

The guide is free and can be downloaded from the IoF’s website here

For further support on risk management, visit our website here