Not sure whether to accept, refuse or return a donation? CFG takes a look at the Charity Commission's new guidance which sets out the latest legal rules for trustees.
The Charity Commission has published new guidance to help charities when deciding to accept, refuse or return a donation.
The regulator has made clear that trustees should start from a position of accepting donations, but from time to time a charity may face a difficult decision as whether to refuse or return a donation.
The guidance is designed to help trustees have informed discussions when faced with a choice that has potentially significant consequences.
Clare Mills, Director of Policy and Communications at CFG, comments: "We're pleased to see this new guidance from the Commission. It upholds the trustees' authority to refuse or return donations and makes the starting position for trustees clear from the outset."
The Commission has set out a structured approach, advising trustees to:
- consider the risks involved in refusing or returning the donation, and how likely and serious these are. These include negative financial impact, ability to deliver services and ability to attract donations in future.
- consider the risks involved in accepting or keeping the donation, and how likely and serious these are. These include the likelihood of reduced support or reputational harm, particularly among supporters or beneficiaries.
- determine how any decision aligns with their charity’s purposes.
- determine what steps they can take to mitigate the risks. These include negotiating the terms of a conditional donation with the donor or developing a public explanation for a decision.
The regulator also warns trustees not to allow their personal views, or any external pressures that do not relate to their charity’s purposes, to influence them to act in a way that is not in their charity’s best interests.
The guidance reaffirms the importance of following existing principles which trustees must use when making any decision that will impact their charity. These principles help to ensure trustees are acting reasonably and serve only their charity’s best interests. If followed correctly, any choice will be adequately informed and evidenced.
The guidance adds that trustees should take enough time to allow sufficient information to emerge, should balance short and long-term risk and allow trustee boards to ask questions and challenge assumptions.
Clare Mills adds: "CFG would recommend that all charities familiarise themselves with the new guidance and set out a policy on the acceptance, refusal and return of donations. It's important for charities to understand why they would accept, or not, and by doing this thinking ahead of time, and recording it, the charity can ensure a consistent and measured approach. It's this sound judgement and considered approach that the Commission will expect to see should the decision be called into question."
Emphasising the Commission's role as a "proportionate regulator", Chair Orlando Fraser said: "When charities are offered a donation, the law is clear that their starting point should be to accept unless there is very good reason not to.
"I hope this guidance will empower trustees to feel able to make the choice that’s right for them when faced with a tough decision. It has been designed to offer clarity and support as they navigate what can be tricky territory."