NG: When should a charity refuse a donation? The short answer is: when it is not in the charity's interests to do so. Ultimately, it is the responsibility of the charity's trustees to decide what is or is not in the charity's interests. In the normal run of things, it will be in a charity's interests to accept, and that decision would not need to be justified or explained. But there are circumstances in which accepting a donation could ultimately be harmful to the charity or its beneficiaries - for example, if it would cause controversy because of its source, if the donation had inappropriate terms or conditions attached or if behind the donation lay some ulterior, or even illegal, motive, such as money laundering. This is likely to be an important decision for the charity. The Charity Commission has recently published guidance on decision-making that will help trustees with their duties. People might disagree with the decision of the trustees, but if it was made properly, no one can criticise them for making it.
DR: I agree. The guidance from both the Charity Commission and the Institute of Fundraising is clear and logical. However, it can only provide a broad overview, and charities must work out how to interpret it in their own particular circumstances. My charity, Alcohol Research UK, funds research into the harm caused by alcohol, and we are frequently offered questionable donations. We have established internal guidance on how such offers should be considered. The bottom line is that we would not accept any donation that would ultimately cause a net reduction in our assets by putting off other potential donors. We would never accept donations from the alcohol industry - as defined by our guidance - because this would be highly controversial and would destroy the integrity of our research.
Likewise, we could never accept a donation with any conditions attached that jeopardised our research - for instance, by asking us to undertake work that was less than scientifically robust.
NG: It's absolutely right that charities need to interpret and apply the guidance to their own circumstances. It makes sense for a charity such as Alcohol Research UK to have a policy in place to deal with scenarios that can more or less be predicted. Where things are less clear, trustees might be helped by the principles in the decision-making guidance. These include acting within their powers, acting in good faith, taking account only of relevant factors and managing conflicts of interest.
DR: Trustees can sometimes find it hard to separate their personal prejudices about a donor, usually a corporate one, from the needs of the charity. I've witnessed occasions when a major donation was nearly rejected for reasons that had little to do with the charity. This is another reason why a written policy is essential. It is important to establish some criteria for making decisions and to determine what the relevant factors are.
Ultimately, the decision about whether to accept or reject a donation has to lie with the trustees, not the chief executive, although trustees should refer to the policy to provide them with clear guidance.
NG: I agree that these decisions are for the trustees to make. But it means that large charities need to have some fairly nimble governance in place to be able to arrive quickly at well-informed decisions between scheduled board meetings. Where there is the potential for controversy, things must be turned around quickly; any fallout, such as bad press coverage, needs to be addressed just as quickly. Your point about personal prejudices is spot on - that is why it is so important for all of the trustees to be involved in the decision.
DR: We try to stay nimble by including a clear process of delegation in our policy. As chief executive of the organisation, I am authorised to accept all donations up to a certain size. For anything larger or controversial, I consult the chair.
If we ever consider refusing a donation, we refer it to our scrutiny committee. This comprises a small number of trustees and can turn things around very quickly by email. Only a very large donation, about which the committee feels unable to reach a conclusion, would ever go to the full board.
Neal Green is a senior policy adviser at the Charity Commission
Dave Roberts is chief executive of the charity Alcohol Research UK