Accepting and refusing donations: Getting the balance right
Following a recent roundtable on accepting and refusing donations hosted by the Institute of Fundraising and the Charity Commission, Sam Boyle takes a look at some of the main discussion points.
A couple of weeks ago we were really pleased to bring members together with the Charity Commission for a roundtable meeting on accepting and refusing donations. It’s one of those areas that always comes up for charities, which isn’t surprising as it is one of those areas where there is rarely a simple yes/no answer, and brings up many practical and ethical questions for a charity to consider.
The discussions brought up some issues we thought we knew, and others which we weren’t so aware of – especially around the issue of charities being regularly asked for refunds of routine donations. And as always, it was so helpful and useful to hear from real fundraisers who have to deal with these issues on an ongoing basis. So, what were the key issues that came up?
Here are some of the main discussions:
How do we as a sector respond to changes in public mood and the perception of what a ‘good’ or ‘ethical’ charity looks like?
Charities might accept a donation from an individual or organisation which is perfectly in keeping with their values, the law, and their charitable objectives at the time it was donated, but is then challenged later on. Political and cultural norms change, sometimes rapidly, and this could have an unforeseen impact on a charity’s reputation. For example, a business whose practices are uncovered, or a celebrity donor who has a sudden fall from grace due to unacceptable behaviour.
We of course have seen high profile examples of donations or partnerships being called into question because of environmental concerns and impact on climate change – for example, the recent decision by the RSC ending its partnership with BP. It also brought up the question of how much can a charity have a blanket policy of refusing donations in all cases from some organisations or sectors?
How do we get the balance right on accepting or refusing donations?
The Charity Commission is clear – the default position is for charities to accept donations, unless there is a good reason not to. However, we heard around the roundtable – and from other members – that sometimes the balance in reality is a bit more equal. Perhaps charities have been adopting a more risk-averse approach, being mindful of public perception or potential media spotlight guiding their approach – you are more likely to be criticised for a donation you accept, rather than one you turn down, as it is more likely to be in the public domain. But has this risk-averse approach meant that charities have been refusing donations when they shouldn’t be? What kind of evidence and justification/rationale is needed to inform decisions, especially when they are made on a hypothetical basis on potential future risk?
What are the best ways of managing an acceptance (or refusal) policy?
Whilst trustees are, in most circumstances, responsible for ultimately deciding whether they should accept or refuse a donation, the reality is that most charities won’t escalate every decision to their Board. Individual charities will often have a policy and process that works for them, with responsibility and power delegated to a CEO, director, or head of team to make day-to-day decisions in line with an overall agreed framework. However, inevitably, exceptions will arise and difficult situations present themselves which don’t neatly fit into an agreed policy. We heard around the table that different charities have different approaches – escalating decisions to trustees at different levels of value and risk factors. We heard that fundraisers would welcome some guidance on how to respond when difficult situations arise – but also acknowledge that there can’t be a ‘one size fits all’ response.
How do ‘ex gratia’ payments come into it?
Ex gratia payments also came up at the meeting. These are different to decisions about whether to keep or accept money based on the best interests of the charity, but cover the area where a charity’s trustees feel a compelling moral obligation not to take money or property that the charity is legally entitled to. For example, this could be because a charity receives a larger gift in a will than was really intended because of a legal technicality or an oversight on the testator’s part. If the charity keeps the money it will deprive some else that the testator clearly intended to benefit.
Decisions to make an ex gratia payment have to be taken by the trustees and those over £1,000 have to be agreed by the Commission.
What should be best practice for refunding routine donations?
We have heard that some charities could do with more practical support in this area, and that the issue of refunds is much more common in real life, especially with the growth of online payments and third party platforms. Do charities know when they are obliged to give a refund? What about managing the reputational risk associated with people asking for refunds? Charities told us that they need some additional guidance and help about how to respond to a refund request and clarity on when and where they need to be given.
What are our next steps?
Many of the issues we discussed don’t have straightforward answers. But it was invaluable to listen to contributions from some of our members and get the opportunity to understand more about the challenges that they have been facing. We have had real insight into what our members might want from future guidance but we will need to continue to reflect on how to best provide support.
We will be looking to revise our guidance and try to respond to the questions and issues that were raised. We’d love to hear any views or thoughts from you on this area – please do get in touch.
The Charity Commission is also considering how it can best support trustees in this decision making, especially whether they need more clarity about what the legal framework requires and allows. The Commission’s current round up of the issues is in this blog and they would welcome any views about developing resources on this topic. Contact email@example.com
Sam Boyle is Policy and Information Officer at the Institute of Fundraising.