Age Concern received unwanted publicity when a man accidentally left some money in a coat that he had given to the charity. Mathew Little reports on the lessons of the episode for the voluntary sector in general.
Charities work so hard to secure donations that the idea of handing them back again smacks of the first sign of madness. But that is just what Age Concern East Cheshire did when it returned £1,200 to a man from Macclesfield.
His wallet had been found in the pocket of a hooded top donated to the Age Concern shop in the town. Despite being legally entitled to keep the money, the charity was adamant that it didn't want to benefit from what it believed was an inadvertent donation.
But even though it tried to follow accepted procedure to the letter, the case turned into a PR disaster after it was accused of money-grabbing in media reports.
"We took legal advice," says the chief executive of Age Concern East Cheshire, Madelyn Bridge. "If the wallet had been left in the charity's offices it would have been considered lost property and been given to the police.
"But because it was left with other donations in one of our shops, it became the charity's property, for which the trustees were responsible."
Neither wallet nor top contained any form of identification, so the money was counted in the presence of a witness and banked separately from the rest of the shop's takings. "We were hoping that somebody would come back into the shop to claim it. It was never our intention to keep the money," says Bridge.
But then two months elapsed and no one tried to reclaim the money. The charity was about to advertise the find when a local man came into the shop saying he had made the "donation" by mistake. But he couldn't say how much money he had left in the pocket or describe the distinctive wallet that contained the notes.
Unsure if he was the rightful owner, the shop referred the matter to its board of trustees. But the man went to a local newspaper, which printed his story after he accurately described the wallet to a reporter. When he confirmed this description to the shop, staff gave him back the money.
But the damage had been done. The perception remained that the charity had only returned the money through gritted teeth after being embarrassed by some bad publicity.
One visitor to the charity's online message boards slammed the "Age Concern meanies who think it is appropriate and fair to keep money given to them in error".
Lekha Klouda, chief executive of the Association of Charity Shops, says many charities have established policies on what to do if they find large amounts of money in donated clothes. Like Age Concern, most will place the money in a separate bank account and treat it as a donation if it is not claimed within a couple of weeks. Sometimes they will place a note in the window asking people to come forward.
But Klouda says charity shops can be cast in the role of hard-nosed penny-pinchers because of the ad hoc nature of donations. There is no paper trail, so it is hard to verify who the rightful owners really are. "It is difficult because there are genuine cases," she says. "But there are also fraudsters who see it as a opportunity to apply pressure to the charity to refund cash that wasn't theirs in the first place. It is a balancing act - the charity has to make sure it isn't being taken for a ride. There are plenty of examples of that."
But the Age Concern case is not the only example of charity shops' reliance on the generosity of the public landing them in trouble. In 2002, the British Heart Foundation faced a similar media storm when a bike worth £1,200 was sold for £10 after the owner left it inside a foundation shop in Edinburgh to keep it safe from thieves.
Understandably, the owner wasn't happy, but the charity held firm, saying it had to work on the assumption that any goods left inside the shop were intended to be donations.
"Even with valuable items, we have to assume people want to give them to us," says field operations manager Diane Locke. "It's not rare for us to receive jewellery, diamonds and pottery of value."
Klouda agrees. "Donation is a conscious decision," she says. "Charity shops could not have a policy to return goods when requested. The sheer volume of donations is enormous."
The charity shop is not the only arena where donations are challenged by members of the public or where charities are the targets of emotive claims from people trying to reverse a gift.
More than 40 per cent of the income of the top 10 charities comes from legacies, but some are contested by relatives on the grounds that they are legally entitled to some of the charity's share because of their financial vulnerability - for example, a widow left homeless by her late husband's gift of his assets to a charity.
Such cases are not common - of the 2,700 new legacies received by the RNLI in 2003/4, six have been contested - and they are usually resolved by means of an out-of-court settlement.
"We try to look sympathetically on these cases," says a spokeswoman for the RNLI. "We try to establish if someone has a basis for a challenge, particularly if they are financially dependent on the deceased.
"In those cases, we would get our solicitors involved and reach a compromise, and avoid going to court at all costs. We want to receive a donation, of course, but not at the cost of leaving someone in dire straits."
But charities with large legacy income streams also have to fend off plaintive appeals from people who feel they have a moral right to a larger part of a will given to a charity.
Jenny Franzmann, deputy legacy manager with the RSPCA, says these entreaties are common but very rarely acceded to. "We frequently deal with requests from people who think that money should have gone to a neighbour or a friend rather than us," she says. "But if it's not in the will, we can't agree unless there are extenuating circumstances that give us a moral obligation. The authorisation ultimately rests with the Charity Commission."
A moral obligation can arise if the charity by mistake receives a larger gift than the deceased intended, but not if relatives merely feel hard done by.
As the commission says: "The testator has a right to dispose of his property as he chooses, and the fact that the relatives are disappointed not to receive the money is not in itself a reason for trustees to feel any moral obligation towards them."