Regulator could crackdown on ‘irrational’ donation rejections, chair warns

Charity

The Charity Commission could intervene if trustees reject philanthropic donations due to “personal squeamishness”, the regulator’s chair has warned.

In a lecture at the University of Kent yesterday (9 November), Orlando Fraser said that while the regulator would mostly respect trustees’ acceptance, refusal or return of a donation, it could intervene if the decision-making was “materially irrational”.

He said this included situations where trustees had rejected or returned donations due to their “personal worldviews or preferences” being incompatible with those of the donor, rather than acting in the best interests of the charity.

“Demonstrative personal squeamishness around sources of philanthropic funding may benefit the sense of righteous progressiveness of a trustee or charity executive, but it will most likely not serve the beneficiary reliant on the services a charity provides,” Fraser said.

He added that these attitudes also risked undermining charitable giving by high-net-worth individuals overall.

Fraser noted that the law generally expects charities not to refuse or return donations “without very good reason”.

He acknowledged that some situations could call for a charity to reject or return monies, such as instances involving illegal donations or where there was great reputational risk that could harm an organisation’s service users.

Fraser also said the regulator would publish guidance early next year to “compel trustees to think more carefully about returning or refusing donations”.

He said this guidance would encourage charities to examine their relationships with donors to consider what improvements they could make to their engagement.

“I truly believe that people with substantial incomes can and should be persuaded to give more – perhaps even just a little bit more,” he said.

But Fraser noted that this change would not happen through shaming wealthy individuals into donating, saying: “Voluntary giving should not be coerced – in fact, it cannot, if it is to be sustainable.”

The regulator is also developing a programme to better promote its data on charity funding and impact, he said.

This will help philanthropists choose who to give to or see the impact of their donations and will provide “more concrete data” on how philanthropic sources are giving to the sector, Fraser added.

Commenting on the speech, Ian MacQuillin, director of the fundraising think tank Rogare, said: “I’d question why he felt the need to make that point now in such rhetorical language.

“And I’d ask what evidence he has that ‘irrational decision-making’ has suddenly become a bigger problem than it might have been previously – so big that it now requires regulatory intervention.”

MacQuillin said this highlighted the need for charities to have robust gift acceptance and refusal policies.

“Get those right, and charities can make sound ethical decisions on whether to accept or refuse a donation – taking into account myriad factors, such as reputational risk – without inviting trustees to give their worldview one way or another,” he said.

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