Guidance

The Charity Commission for England and Wales has published guidance covering the acceptance and refusal of donations, fundraising conducted legally and responsibly, and trustees’ duties in relation to fundraising.

In its guidance Accepting, refusing and returning donations to your charity (published 4 March 2024), the Charity Commission states:

“As trustees, your principal duty is to further your charity’s purposes. Your starting point should be to accept and keep a donation offered or given to your charity. This is because donations are important to successfully delivering your charity’s purposes…

But sometimes you must refuse or return a donation, and in other circumstances you can decide that it is in your charity’s best interests to do this. Your decision will often be significant for your charity. You must always carefully balance all of the factors that are relevant to your charity’s circumstances…

Your decisions must be in the best interests of your charity.”

All activity undertaken by a charitable organisation, under the leadership of its board of trustees, must be carried out in furtherance of the charity’s stated purposes. This duty is clearly articulated in CC20: Charities and fundraising – a guide to trustee duties, which states that trustees

“must make sure that everything your charity does helps (or is intended to help) to achieve the purposes for which it is set up.”

This principle is particularly relevant to fundraising, where decisions about accepting funding should be based not only on financial need, but also on charitable purpose, reputation, and maintaining public trust.

Cultural organisations that are registered as charities must also be able to demonstrate public benefit, and trustees are required to make decisions that safeguard and advance this benefit.

Whilst fundraising decisions may have implications for an organisation’s operational capacity and reputation, trustees and senior staff must remain focused on their legal duties and commitments and ensure that decisions are made in the best interests of the charity.

Trustees must also apply “know your donor” principles, proportionate to the level of risk associated with accepting a donation, including its size, nature, and any potentially suspicious characteristics.

This includes ensuring that the charity has appropriate knowledge of the donor, such as:

• Who the donor is and what is known about them;
• Whether the charity has an established relationship with the donor;
• Whether additional identity or due diligence checks are required;
• Whether the donor is a UK taxpayer and whether Gift Aid can be claimed;
• The form in which the donation is being received (for example, cash, cheque, or bank transfer);
• Whether any public concerns have been raised about the donor or their activities, including the nature, timing, and outcome of any regulatory or police investigations; and
• Whether adverse publicity relating to the donor could damage the charity.

Trustees should also consider the nature of the donation itself and any conditions attached, including:

• The size of the donation;
• Whether it is a one-off gift, a regular donation, or the first in a series of anticipated future donations;
• Whether the donation forms part of a series of interest-free loans from sources that cannot be identified or verified;
• Whether the charity is receiving an unusual or substantial one-off donation;
• Whether any conditions are attached to the donation and whether these are reasonable;
• Whether the donation is conditional on specific organisations or individuals being used to distribute funds;
• Whether the donation is conditional on benefiting particular individuals, directly or indirectly;
• Whether the donation is made in sterling or another currency, including any requirement to return funds in a different currency;
• Whether the donor is based outside theUK, or whether the funds originate overseas, and whether the relevant country or region presents specific risks;
• Whether donations are received from unknown bodies, or from jurisdictions with weak financial regulation or legal frameworks; and
• Whether funds are received from a known donor via an unknown intermediary, or through an unusual payment mechanism.

If trustees have concerns, they should consider whether refusing the donation is in the charity’s best interests.

Where checks indicate suspected criminal activity, trustees should consider reporting the matter to the police or other appropriate authorities and should assess whether a serious incident report to the Charity Commission is required.