Analysis: What's the most effective use of a donations windfall?

Daniel Lombard looks at the options for Samaritans, which unexpectedly received more than £1m after the death of marathon runner Claire Squires

Claire Squires
Claire Squires

The tragic death of Claire Squires, who collapsed in the last mile of the London Marathon and later died, has brought a huge boost in donations to Samaritans, the charity for which she was running.

At the time of going to press, the total given to the charity on her JustGiving page by nearly 70,000 donors totalled almost £1m, including Gift Aid. This represents nearly 10 per cent of the Samaritans' total income of £10.2m in 2010/11.

How do charities cope with such rare windfalls? Samaritans has responded by setting up a tribute fund that will be spent on projects that the runner's family feel would have been important to her.

Many windfalls come in the form of unexpected legacy donations. These made up half of Mayhew Animal Home's income last year, with the largest amount - £400,000 - from a long-term supporter in the form of cash and shares.

Caroline Yates, chief executive of the London animal rescue charity, which has an annual income of between £1.5m and £1.75m, says staff were pleased and surprised. "We didn't run away with ourselves and spend it willy-nilly," she says. "We had a strategy in place, we looked at our budget overall and brought some projects forward."

Some of the money was used to pay for improvements to the cattery roof, with the remainder going to the charity's reserves. But what are the pitfalls of being handed large, one-off donations?

"They might be destabilising if you look at things simplistically and think that these one-off donations will be repeated every year, because then you over-forecast and might not get anything," says Yates.

Lewis Coghlin, director of fundraising at Cats Protection, says decision-making in situations like this should be closely linked to long-term priorities."You shouldn't rush into any decisions," he says. "Think about what you wanted to include in the budget but couldn't afford to do because of the lack of capital - that should be the first thing to be picked up by a large donation.

"It should be spent in the way that brings the most long-term, strategic value to the charity, rather than a knee-jerk response."

Michael Egan, national head of not-for-profit at the chartered accountancy firm UHY Hacker Young, agrees that careful planning is required.

"A badly made decision might lead to the charity setting up a project it wouldn't have otherwise done and ending up over-reaching itself," he says.

"I can think of one charity that did this: its actions resulted in an overspend and general funding was used to keep the project going. It hadn't planned the special project properly and went at it like a bull at a gate."

Egan thinks Samaritans' decision to set up a tribute fund in honour of Claire Squires is the right one. "It wouldn't have received the donations if the fundraiser had not died," he says.

Louise Thomson, head of policy (not-for-profit) at the Institute of Chartered Secretaries and Administrators, says avoiding mission creep in spending windfalls is equally important.

"Any new activities must be congruent with the charity's governing document, and the usual governance checks and business planning should be conducted to ensure that such resources are spent wisely and legally," says Thomson.

Meanwhile, Samaritans is trying to handle the boost to its profile and finances as sensitively as possible. "We desperately wish it was not under these circumstances," says Catherine Johnstone, the charity's chief executive.

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