There was recently an article Charity Commission may intervene if trustees refuse philanthropic donations, chair says
Essentially, the Chair of the Charity Commission of England and Wales said that the Charity Commission may intervene if trustees demonstrate “personal squeamishness” around sources of philanthropic funding. Needless to say, these comments were not well received by the charity sector.
I checked the definition of squeamishness and it came up with “the fact of being easily upset, or made to feel sick by unpleasant sights or situations, especially when the sight of blood is involved.” I would suggest that trustees or directors of charities should not be ‘easily upset, or made to feel sick by unpleasant sights or situations’ about any issues. But that does not mean they should not be upset at all when the necessary facts warrant such upset.
Looking at this issue from afar, it appears to me that it is amazing how a regulator can be both correct and completely wrong at the same time.
Yes, a charity offered a large donation should not, for some frivolous reason, decline such a gift. However, I cannot think of any examples of that in my 25 years dealing with charity law. I have seen some small and very very large donations rejected but in each case, there was more than adequate justification for the refusal. Some donors are not interested in advancing charitable work – they want to force charities to take on matters that are outside their objects or mission and may not be charitable out all. Some are interested in improving their stained reputations. Some may be interested in using charities for money laundering, terrorism or abusive tax schemes. The Charity Commission should be encouraging charities to reject ‘gifts’ when the charity has legitimate concerns and not emphasizing that it will be scrutinizing such decisions.
There also seems to be a conflation of refusing a gift and returning a gift. These are not the same thing. Once you have received a gift, except in very particular circumstances, a charity is not allowed to return the gift as it belongs to the charity and doesn’t belong to the donor.
The Charity Commission has reminded charities many times the reputation of a charity is one of its most important assets. Charities do not want to be affiliated with, or giving recognition to despicable actors in society who are trying to launder their reputations. Charities need to operate at a high standard. In fact, when it comes to gift acceptance, we suggest that all charities that do fundraising have a gift acceptance policy and it can be between 10 and 30 pages going into many of the complexities around gift acceptance. One of the most important reasons for having a gift acceptance policy is for the charity and its staff to be comfortable with declining gifts that are not perceived to be in the best interests of charities. This is especially the case when it’s large amounts of money, restricted gifts and significant recognition will be provided.
By the way, you aren’t legally required to have a gift acceptance policy, but not being aware of all of the complexities relating to gift acceptance, can be an extremely risky strategy especially for larger charities or charities that do a lot of fundraising. In other words, you don’t want to make all the same mistakes that many thousands of charities have made over hundreds of years. It also highlights the importance of charities having good template gift agreements with various clauses to protect the charity and make it more likely that the funds will be appropriately spent (including amendment clauses, cy pres clauses, morality clauses, etc)
Mr. Fraser has I think, done a really good job as chair of the Charity Commission, especially compared to some of his predecessors. I think that this particular statement was a misstep on his part, and perhaps one day we will understand better the background to it. There are so many regulatory issues that the Charity Commission should be focusing on that this is, unfortunately, not only a poorly framed issue but a giant distraction from other important issues.
In the Canadian context, where donations are often accompanied by official donation receipts, there are potentially even more complexities relating to returning funds, and therefore if a charity is not sure that they will be accepting a gift it is better to decline the gift, rather than accept it and then later return it.
When we look at the saga of the Sackler family, for example, we see that there is far too much pressure on charities to accept donations and to provide recognition to groups carrying out extremely questionable activities. This isn’t good for the charity sector. This isn’t good for society.
Hopefully, there will be some further clarifications from the Charity Commission on the topic.