New guidance on when trustees should accept, refuse, or return a charitable donation

Sarah Furness, Partner

In March 2024, the Charity Commission published, mostly welcome, guidance on accepting donations.

The guidance confirms that the “starting point” for charity trustees should be to accept and keep donations offered to or given to their charity and any decision to depart from this must be made in the best interests of the charity.

In certain circumstances donations must be refused or returned as follows:

• they are from illegal sources or come with illegal conditions.
• a donor did not have the mental capacity to decide to donate.
• the donation cannot legally be given i.e. some-one is gifting property they do not own.
• under the terms of the donation, it must be returned in certain circumstances. For example, a grant agreement says the charity must return any unused funds by a particular date.

Trustees are also likely to need to refuse or return a donation in other circumstances. For example, if the donation:

• is given for purposes that fall outside a charity’s charitable purposes.
• would result in a valid legal claim or risk of claim against a charity if kept.
• has features or conditions that may undermine a charity’s independence. For example, the donation comes with a condition that would require its trustees to agree key decisions with the donor.

It may of course be possible to renegotiate the terms of a donation if it hasn’t already been made. There may also be separate considerations for trustees relating to failed fundraising appeals, contractual grants and ex gratia payments.

Trustees must consider their legal duties and responsibilities along with their charity’s governing document and any relevant internal policies. A full record of all decisions taken should be made and consideration should be taken as to whether to report the return or refusal of a donation as a ‘serious incident’ to the Charity Commission. It is mandatory to report as a serious incident an anonymous donation of £25,000 or more. There may also be tax considerations at play and we would therefore recommend full advice is taken before any charitable donations are refused or returned.

Do not hesitate to get in touch with any questions.