Pippa Garland: Charities should expect to get called out if the company they keep is inconsistent with their values

Organisations should think about their charity law obligations when entering into partnerships with others whose interests may diverge from their own mission

Pippa Garland
Pippa Garland

For the Science Museum, it was out of the frying pan and into the (coal-fuelled) fire, when it announced its new partnership with Adani Green Energy.

As was quickly picked up by press and protesters, the company is a subsidiary of the Adani Group, which has major holdings in coal. For a charity that had only just unglued protestors against its partnership with Shell from its railings, it was a punchy move by the museum. The headlines generated may well make other trustees think twice before engaging in similar partnerships.

The overriding fiduciary duty of charity trustees is to promote the purposes of the charity for the benefit of the public. Trustees also have a legal duty to protect the resources and reputation of the charity.

So before entering into a partnership, charities should undertake due diligence, which should aim to uncover any issues that could potentially damage the charity’s reputation.

An extreme example would be The Sackler Trust: a number of arts institutions, including the National Portrait Gallery, renounced grants from the trust as a result of its connection with Purdue Pharma, the company behind the painkiller OxyContin, which is facing lawsuits over its alleged role in America’s opioid crisis.

However, in the context of today’s level of scrutiny, trustees should be starting to think more broadly about whether the partner’s values are aligned with the charity’s.

When taking decisions about a partnership, trustees must act in the best interests of the charity, taking into account all relevant factors. They must weigh up the obvious benefit of receiving funds and support for their charitable mission, with the risks arising from a partnership.

Trustees should also consider whether the partnership could damage the charity’s ability to meet its objectives. The Royal Shakespeare Company eventually dropped its sponsorship deal with BP following threatens of boycotts from groups of young people, as well as the resignation of Mark Rylance, who had been an associate artist with the RSC for 30 years.

The Science Museum has been firm that it retains curatorial control over sponsored exhibitions, but a Freedom of Information request revealed its agreement with Shell included a clause that stopped the charity and trustees making statements that could damage the reputation of the sponsor.

When it comes to partnerships with fossil fuel companies in particular, trustees should consider whether it is consistent with their position on the climate emergency. The view that charity partnerships allow fossil fuel companies to “greenwash” is a common one, and any potential wider harm arising from this should be carefully balanced by the trustees against the public benefit.

Where bad publicity and press attention goes, regulatory action is often not far behind. The most recent Annual Complaints Report from the Fundraising Regulator revealed that complaints about corporate fundraising had increased dramatically, from 108 to 2,504.

At a time where the public increasingly expects charities to live by their values, trustees will need to be able to justify to the Charity Commission why a partnership is in the best interests of the charity.

The commission’s recent inquiry into the National Trust’s report that drew attention to links between some of its properties and colonialism and slavery commented that the charity’s actions “did generate strongly held and divided views, and in light of this, it is reasonable to conclude that the Trust’s planning and approach did not fully pre-empt or manage the potential risks to the charity”.

This is in the context of an inquiry that concluded the trustees had fulfilled their legal duties and responsibilities, and where the National Trust had arguably gone above and beyond – consulting a panel of 2,000 members before commissioning the report.

If this is not enough to fully pre-empt and manage risk, then it is hard to see what would be – and with charity partnerships increasingly the target of complaints, trustees should tread very carefully if they know that they will prove controversial.

Pippa Garland is a partner at the charity and social business team at law firm Russell-Cooke

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