This November we’re taking a deep dive into gift acceptance and due diligence. In this article, our CEO, Kerry Rock, looks at who’s responsible for making decisions about gift acceptance and how to work that into your policy.
When it comes to due diligence for significant gifts, who’s responsible for deciding where the risk is and where the balance is when accepting a gift? Really the buck stops with your trustees. The Charity Commission states:
“the law requires trustees in deciding whether or not to accept or refuse a particular donation, to consider which course will, taking an overall view, be in the charity’s best interests.”
Although your trustees may decide to delegate this decision-making to fundraisers or the chief executive, these delegations must be clear and agreed upon in writing in the gift acceptance policy. Different types of gifts might be reviewed by different people in your organisation and your policy should include triggers so that larger donations or contentious donations are referred to senior staff. All your procedures need to be clear so your staff are aware of the policy and know when a gift needs to be referred. That’s why it’s really important that there’s good training during the implementation phase.
Charity Commission guidance states that trustees must:
- Act in the best interests of your charity
- Manage the charity’s resources responsibly, which includes protecting and safeguarding its reputation
- Act with reasonable care and skill
A good gift acceptance policy will have these principles embedded in it. Your policy is there to protect your charity’s reputation and act in its best interest while enabling you to achieve your charitable objectives.
CC20 Guidance for gift acceptance advises that:
- Most charities should know, at least in broad terms, where the money they are being given comes from and should be confident that donations are from reputable sources.
- Trustees should also be able to identify and be assured of the provenance of substantial donations
- A good, open and transparent relationship between a charity and its donors is essential for building trust and confidence. People need to understand what the charity is there for and the due diligence processes and research that are going to be undertaken as part of this respectful relationship.
CC20 guidance also stipulates that trustees need to have effective processes in place to provide adequate assurances about the fidelity of donors – particularly substantial donors. This means that if you’re not sure who a donor is, you need to take steps to identify them, so you can verify the credentials of the donation.
There should be assurance on the provenance of funds and the conditions attached to them. This is the basic principle of knowing your donor; understand who your donors are, where they are coming from and what their objectives are. This doesn’t mean you have to question every donation or know lots of personal details about every donor but you do need to have that basic principle in place.
Other guidance
The Code of Fundraising Practice states that you must take reasonable steps to assess and manage any risks fundraising poses to your charitable institution’s activities, beneficiaries, property, work and reputation. It also reminds you that you must meet the Proceeds of Crime Act 2002, which applies to money or property that has been gained through criminal behaviour, even if that behaviour is legal in another country.
At Prospecting for Gold, we have over 25 years of experience helping charities and non-profits meet their fundraising goals. If you have a question about corporate fundraising, email info@prospectingforgold.co.uk and we’ll happily help.