Charity Donations post President’s Club

2nd February, 2018

We all like receiving a gift. Sometimes that gift is something really nice or important to you. It may be a well thought out present, something home made, an item you always wanted but couldn’t find, or even expensive. It may even be cash.

What if that cash came from a relative that you didn’t particularly like? Would you hand it back? It seems unlikely.

Does the analysis change if you don’t like where that cash came from? Would you hand back the money if the relative made their money from:

  • banking?
  • working for a cigarette manufacturer?
  • selling legal pornography?
  • known criminal activities?

If the relative made their money by dubious means where would you draw the line, if at all?

This dilemma has hit the headlines for charities as a result of the returned donations to The President’s Club where a sexual harrassment scandal led to advice from the Charities Commission regarding charities who have inadvertently accepted ‘tainted’ donations?

A recent YouGov survey said that one in five people think charities should return the President Club donations, with two-thirds saying they should keep the money. The remaining 13% are unsure, but how easy is it in reality for a charity to give the money back?

Trustees of charities must demonstrate that they are acting in the interests of the charity. When it comes to refusing donations, the rules are quite strict, a trustee would have to demonstrate that refusing money is in the commercial interests of the charity, if for instance the major donors had contacted the charity to say they would not support the charity in the future if it didn’t reject the money. If there isn’t a clear financial imperative, the refusal would then have to be cleared with the regulator, the Charity Commission, or the Attorney General.

In the wake of the scandal the Charity Commission has issued ‘Advice to charities that have received donations from the President’s Club Charitable Trust.’ They say:

“Depending on the terms of the donations and how the funds were raised, there may be restrictions on whether a donation can be returned and the Commission may need to authorise such returns. Charities should seek the Commission’s advice about whether our authorisation is required in their specific case. Trustees may wish to seek their own legal advice. The Commission does not expect trustees to return funds raised for charitable purposes in the circumstances but understands if they wish to consider doing so.

“Trustees should remember their duty to report any serious incidents which could harm their charity’s reputation to the Commission.”

So ethical and practical dilemmas of accepting difficult donations are far from easy for charities. They cannot be expected to monitor every fund-raising effort carried out in their name and smaller charities rely on every penny to keep their good work going. The general rule is that a charity accounting function has a duty to maximise its assets and so should not readily decline any opportunity to attract funds. But that does not mean it has to accept every donation.

The reality is a balancing act and it will ultimately be down to the trustees to decide whether it is in the interests of the charity to refuse, or even to repay, a donation and that can be a close call. Clear communications with the public and stakeholders will be crucial whatever their decision and as ever the best advice is to take advice.

A similar debate was prominent on Mumsnet regarding donations to the Guides from a known paedophile. A whole range of opinions were voiced. One popular comment was that the money should be spent on safeguarding / education in order to try and prevent guides becoming the victims of grooming.

On balance, spending the donated cash on efforts to mitigate the behaviour that the charity finds abhorrent seems a sensible place to start. If that is not possible, trustees should take advice and as part of that consult with their advisers, who will be able to give their experience on what they see in practice elsewhere.

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