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Navigating Donation Dilemmas: Charity Commission Guidance for Trustees

Author: Kristina Kopic, Head of Charity and Voluntary Sector

Published: 08 Mar 2024

Trustees can find themselves facing tough decisions, including when it comes to accepting donations. The Charity Commission for England and Wales has recently issued guidance to aid trustees in navigating these challenging situations.

New gift acceptance guidance

The regulator's guidance emphasises the fundamental principle that trustees should typically start from a position of accepting donations. However, it acknowledges that there may be occasions where refusing or returning a donation becomes necessary. Such decisions can have significant consequences, both financially and in terms of the charity's reputation and ability to fulfil its mission. The guidance reminds trustees that it is their principal duty to further their charity’s purposes, and to make decisions that are in line with the law, trustee duties and the charity’s powers.

What types of income are relevant?

The new guidance applies a broad meaning to the word ‘donation’ which encompasses money, land, goods or other property of any kind freely given to the charity.

It outlines clear steps for trustees to follow when confronted with the dilemma of whether to accept or reject a donation. Trustees are advised to carefully consider the risks associated with both options, including potential negative financial impacts, implications for service delivery, and effects on future donations. Equally important is an assessment of how each decision aligns with the charity's overarching purposes.

Moreover, trustees are encouraged to explore strategies for mitigating risks associated with their chosen course of action. This might involve negotiating conditional terms with the donor or developing transparent explanations for their decision. Throughout this process, trustees must remain vigilant against allowing personal biases or external pressures unrelated to the charity's objectives to influence their judgment.

Empowering trustees to make informed decisions

Orlando Fraser, Chair of the Charity Commission, underscored the importance of this guidance in empowering trustees to make informed decisions. Speaking on the matter, he highlighted the legal stance that charities should generally accept donations unless there is a compelling reason not to. Fraser expressed confidence that the guidance would provide clarity and support to trustees facing difficult choices, thereby fostering an environment conducive to philanthropy.

Fraser's remarks were made during the unveiling of the Charity Commission's new five-year strategy, which includes a commitment to bolster philanthropic confidence through robust yet proportionate regulation. The Commission aims to play a proactive role in promoting charitable giving across England and Wales, with the guidance serving as an initial step towards achieving this goal.

Returning a donation

There are instances where trustees may be legally obligated to return a donation, for example, where the donation has come from terrorist or other criminal activity, or where the donor does not have the mental ability to decide to donate. The guidance provides signposts to aid trustees in understanding their obligations in various scenarios, including whether to report a serious incident to the Commission.

Setting a policy

While the Charity Commission's guidance equips trustees with a roadmap, trustees will need to consider their charity’s specific purposes to develop a gift acceptance policy that is in the best interest of the charity. There are many benefits to having a policy in place before the need arises: it promotes consistent decision-making across the charity, helps trustees meet their legal duties and provides clarity about who should be involved in making the decision.

By adhering to the decision-making principles outlined in the guidance, trustees can ensure that their decisions are well-informed, transparent and ultimately in the best interests of their charities and the communities they serve.