Museums and galleries should update donations policies and procedures more regularly and improve public access to their positions on fundraising and donations, according to a National Audit Office report for the Department for Digital, Culture, Media & Sport.
The report about DCMS museums and galleries, called Due Diligence Processes for Potential Donations and based on a study of eight museums or museum groups that report to the department, says the NAO found generally good awareness of the risks and issues around donations management in the museums and galleries featured.
But "written policies and procedures did not always reflect actual practice, either through being out of date or being insufficiently detailed", according to the report, and "there was also a lack of information in the public domain in terms of many of the charities’ ethical positions on fundraising and donations".
The report says that grant-in-aid from the DCMS to its museums and galleries fell from £444m in 2012/13 – or 52 per cent of the sector’s income – to £393m in 2015/16 – 45 per cent of total income.
This coincided with an increase in the amount raised from legacies, donations and other voluntary sources, from £147.7m in 2012/13 to £182m in 2015/16.
The report says that increasing pressure to generate revenue through donations can ramp up the possibility of damage to reputation and dependency on voluntary income, and bring potential legal and financial risks, such as breaching the Proceeds of Crime Act or failing to follow through with a promised donation.
"This could have a damaging impact for the charity itself and its trustees, who could be challenged on whether they have met the requirement to act in the charity’s best interests," the report says.
It adds that some charities have written donations policies, but in other cases "written policies either did not exist or were under development".
The report says: "The good donations policies we saw set out a clear ethical position in respect of donations along with the principles which would be used to guide decisions taken by a charity on whether to accept or reject them.
"A clear policy can encourage clarity and consistency of internal decision-making and reduce the risk of accepting donations from inappropriate sources."
Of the 16 DCMS museums and galleries, only four had published their donations policies publicly, says the report, and it was not always clear when some of the policies had been updated and whether they had been reviewed.
The report says there is therefore "a risk in some cases that the written policies do not reflect the charity’s latest ethical position on acceptance of donations, or current best practice in the sector".
Despite this, the report says no evidence was found of a "significant inappropriate donation" being accepted in the sector.
The report also highlights some examples of good practice in donations policies, such as clear guidelines on how donations are dealt with, information on types of donation that are prohibited and staff training in practical and legal policies concerning donations.
Some museums got trustee approval for donations policies, says the report, some got advice from internal auditors on the quality of the donations policies and others drew on trustees’ knowledge of potential donors, according to the report.