Major Donors


Introduction to major donor fundraising

Prospect research

Due diligence and gift acceptance

Benefit packages and conditional gifts

Revocable gifts

Managing gift or donor club schemes

Tax issues including avoidance and evasion


Introduction to major donor fundraising

A major donor is an individual who makes a gift that has a significant impact on the work of a fundraising organisation. There is no set threshold for what a ‘major gift’ is – for some organisations it might be £500 for others it might be £10,000 and it can be money given over time, rather than just a one-off donation. 

Major donor fundraising is about people and relationships. It often will involve a number of individuals and teams working together across an entire organisation – from the chief executive officer and chair of trustees, to major gift officers or administrative assistants. Often it involves a lot of background work, meetings, research, and events before a gift is made – asking for a major gift at the first meeting before understanding the individual’s interests in your cause is unlikely to be successful.

Because the success of major donor fundraising is so dependent on development of relationships with individuals, it’s often described as an art rather than a science. But even so, it’s important that all fundraising communications, approaches, and activity in major donor fundraising follows the Fundraising Regulator’s Code of Fundraising Practice.


Prospect research

The role of prospect research in major donor fundraising

The term ‘prospect research’ covers a lot of different activity and work. Essentially, it means the identification of potential donors, and undertaking background/preparatory research so that the charity can make a tailored approach to an individual that is likely to appeal to their interests and experience. Prospect researchers may also undertake some of the due diligence work for a charity on accepting potential donations.

Prospect research can be used to:

  • Plan the best way to approach and/or cultivate major donor prospects
  • Decide who is best suited to approach the major donor for the first time to introduce the work of the organisation
  • Decide the most appropriate time for an approach to take place (for both the major donor and the organisation)
  • Ensure that whoever is to make the initial approach has all the necessary information about the beneficiary organisation, its work and the major donor


Prospect research and data protection

When researching existing or potential donors, charities will be processing personal data of individuals and so need to ensure they are doing so according to data protection legislation. Organisations must process all personal data fairly and lawfully, using an appropriate lawful basis for the processing, appropriately informing individuals, and respecting their choices.

For more information on data protection and prospect research take a look at our guidance.



Due diligence and gift acceptance

Appropriate due diligence policies 

Trustees are responsible for assessing and managing risks to their charity’s activities, beneficiaries, property, work and reputation. Money laundering and adverse publicity about a donor are examples of how a charity could be exposed to criminal liability and suffer reputational damage.

Having an appropriate due diligence/‘know your donor’ policies in place to provide fundraisers with appropriate guidance when raising large sums will be important.

The Charity Commission's Compliance Toolkit contains a number of resources to help charities put appropriate policies or processes in place – to access the Toolkit visit


Gift acceptance policy

One of the key areas for charities to consider and be aware of is thinking about which donors they might approach and whether there are any donations they would not accept. Charities have to undertake due diligence on donations so they can make sure the money is safe to accept, and that the acceptance of the gift is in the best interests of the charity and does not unduly affect its reputation.

More information and guidance on the acceptance and refusal of donations.


Money laundering

There are various offences relating to money laundering. Compliance when dealing with donors is of paramount importance.

The offences are contained in the Proceeds of Crime Act 2002 (POCA 2002), the Terrorism Act 2000 (TA 2000) and the Money Laundering Regulations 2007 (MLR 2007).

The offences in POCA 2002 apply to money or other property that someone has obtained through involvement in an activity that is criminal under UK law and that the offender knew or suspected to be such. TA 2000 applies to ‘terrorist property’. This is property that is likely to be used for terrorist purposes or the proceeds of terrorist acts, such as a reward for committing the act.

It is an offence to receive, retain or convert money or property known or reasonably suspected to fall into these categories. If the charity operates in a 'regulated sector' (providing financial, business or legal services), you will be under a positive obligation to keep certain records and report suspicions to the relevant authorities. Further guidance can be obtained from the National Crime Agency (NCA) and is contained in Charity Commission Operational Guidance OG410.

When approached by a new donor wishing to make a large donation, fundraising organisations have to sensitively satisfy themselves as to the donor’s identity and carry out a risk assessment.

Since POCA 2002 applies to money or other property that has been obtained through conduct that is criminal under UK law, it will even apply to property obtained in ways that are legal in the donor’s country but illegal here.

It would be advisable to be wary of any gift that comes from abroad or that comes with unreasonable or seemingly unnecessary conditions.

For instance, if a donor offers a large donation on condition that it is used to support a project about which nothing is known, the donor may be attempting to launder money. Are you satisfied that;

  • The named project is a bona fide charitable endeavour?
  • Its work is within the charity’s objectives?
  • The trustees are happy for the charity to support the project?

If, in the course of work outside the regulated sector, fundraisers suspect that the property to be donated is the proceeds of crime, the donations cannot be accepted and it is the fundraising organisations responsibility to report the proposed donation to the appropriate authorities (usually the Police or NCA).

If fundraising as part of business in the regulated sector, it is important the activity complies with the obligations in MLR 2007.

This includes obtaining proof of identity, keeping records of transactions, training personnel involved in the regulated business and establishing internal reporting procedures.

If fundraising organisations are not clear about their obligations, or are suspicious of a potential donor, the Charity Commission can be contacted for advice.


Benefit packages and conditional gifts

Supporting information and guidance on benefit packages and conditional gifts 

It is common for a charity to engage a major donor by offering them benefits (e.g. a place at a gala dinner), or recognition (e.g. to name a new building), or less material forms of engagement (e.g. trusteeship). Equally, a major donor might want to make their gift conditional so that, for example, the funds:

  • Are applied for certain purposes only
  • Go to another charity if the project fails
  • Are retained with only income being spent


Alternatively, a major donor might wish to make a contribution other than by way of gift (e.g. a loan or other form of social investment).

All organisational representatives need to be clear in dealings with a major donor whether or not they are able to bind the charity to a particular arrangement.

Some conditions might be unacceptable to an organisation because of its status (e.g. it requires inappropriate political campaigning) or for operational or reputation reasons.

There may be serious legal consequences for fundraising organisations if terms are not recorded and approved. If there is any uncertainty, legal advice should be obtained.


Revocable gifts

The courts or other authorities can in certain circumstances set aside gifts made by vulnerable people or made without due regard to the needs of others. When negotiating a major gift there are, therefore, certain circumstances that will require careful handling. For example:

  • Social services law authorises local authorities to seek repayment of some gifts made in advance of a person moving into local authority accommodation, if the gift was made with the intention of avoiding accommodation charges
  • Gifts by bankrupts or in anticipation of bankruptcy can be set aside by the trustee in bankruptcy
  • Gifts by those incapacitated at the time permanently (e.g. hearing impaired) or temporarily (e.g. drunk) can be set aside, broadly speaking where there is a lack of understanding on the part of the donor or unfair advantage is taken of the donor
  • Some donors may have limited or no capacity to make gifts out of property they control (e.g. trustees of private trusts, and attorneys); and gifts in wills can be set aside or varied by the courts if the deceased is found to have made insufficient provision for his family or dependents



Managing gift or donor club schemes

Donor schemes

Major donor membership, friend or gift club schemes are a way of encouraging donors to increase the level of their support, through involvement with the cause and other major donors, and enable fundraisers to manage communication, events and donor recognition in a cost-effective manner. If properly established and promoted, membership schemes may encourage the creation of a body of major donors who are giving at increased levels, are more aware of the cause and have a closer association with the mission, purpose, aims and objectives of the organisation.

The structure of the scheme should be carefully considered before being introduced, as the launch and maintenance of the scheme may involve committing a significant level of resource, and making significant changes to the scheme, once launched, may be difficult. For example, consider the number of different levels of membership, the level of gift required to attain different levels, and whether a scheme is appropriate for an organisation's major donors.

Seeking the opinions and suggestions of existing donors and potential club members would be beneficial before a scheme is launched to make sure that the level of gift required, concept of the scheme, and benefits offered are appropriate and will prove to be attractive to potential members.

It is not advisable to place existing donors under undue pressure to increase their support purely to become a member of the gift club. The option to opt out of a scheme should be available at all times.

Making it clear what level and frequency of gift is required to become and remain a member of the club in all communications and solicitations is important. It should be clear whether the level of donation required is net or gross of reclaimed tax.

Membership of such a scheme may offer contact with the trustees or senior management of the organisation, opportunities to discuss issues affecting the organisation, and access to more detailed information from the organisation, but it must not confer control or direct influence on the organisation’s decision-making process.


Tax issues including avoidance and evasion

Tax issues

Most major donors will wish for their giving to be as tax-effective as possible. An unconditional gift is likely to obtain for a donor relief from capital gains tax and inheritance tax. However, only certain assets when donated create a deduction for an individual donor from their taxable income and/or gains or profits. These are:

  • Cash gifts (either under the Gift Aid scheme or through Payroll Giving)
  • Gifts of shares, securities and other easily realisable investments (see HM Revenue and Customs guidance on charities for details)
  • Gifts of land (including leasehold interests) in the UK


See for more information on charity related tax issues. HMRC can also be contacted by charities on: 0300 123 1073. 

When completing any major gift, it is important to ensure that the charity or the donor is provided with sufficient information to enable it/them to verify to an auditor or examiner and the tax authorities the nature of the receipt. In particular:

  • When the donation is a Gift Aid payment by an individual, organisations obtain an appropriate declaration (the form of which will vary depending upon the method of giving used)
  • When the donation is a gift of land, donors will need to provide a certificate of verification obtained from the organisations
  • If the donor is selling shares to benefit the organisation, organisations need to find out whether the donor intends to claim Gift Aid or income tax share relief, and record clearly that the donor is acting on behalf of the charity before the sale occurs
  • Fundraisers need to agree in advance with the charity any benefit package for or reciprocal arrangements with a donor, and need to be careful not to commit a charity to such arrangements without the charity being given the opportunity to take any necessary tax advice


If benefits are provided in return for a gift, HM Revenue and Customs might treat the donation as consideration for a standard-rated supply and so subject to VAT. This could oblige the charity to account for VAT on the gift and, if the charity is not VAT registered, lead to it having to register.

Fundraisers need to check with the charity the VAT status of any benefits to donors and whether any exemptions apply (e.g. for fundraising events) before agreeing to provide the benefits and, if necessary, ensure the charity:

  • Values the benefits provided
  • Produces an appropriate VAT invoice to the donor