Ethics: How is your charity doing?

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In the current social, economic and political climate it’s more important than ever that charities act ethically.

Whilst more people are in need of the benefits that your charity offers, it can be tempting to push the boundaries to provide them. Rising costs, limited resources and pressures on income for charitable organisations can prompt actions that are not sufficiently considered.

Your motivation may be to help, but the way you help and how you behave as you do it are vitally important.

All charities must proactively champion ethical behaviour, including respecting people’s dignity and rights, challenging inequalities and advocating diversity amongst their staff and volunteers.

Charitable organisations rely on public trust to function, so demonstrating that your charity is acting properly in all situations is vital to its success. We are living in a society of increasingly polarised views, where criticism is given freely. Don’t be an easy target for those who want to undermine what your organisation does or how it is run.

NCVO guidance

First, giving consideration to your charitable purposes is at the heart of determining if you are acting ethically. Whatever charitable activity you are planning should advance these purposes and be logically connected to this aim.

The National Council for Voluntary Organisations (NCVO) have published four principles charities should give regard to for best ethical practice. We believe that these are a good starting point to ensure your organisation is run with excellence…

Beneficiaries first: Everything your charity does should be for public benefit and in the interest of your beneficiaries.

Integrity: Your charity should uphold the highest level of institutional integrity and personal conduct. You should have systems that guarantee all decisions are robust and defensible, with no conflict of interest.

Openness: The wider public, including donors and supporters, should understand how your activities are affecting your beneficiaries and how your funds are being used. Prioritise transparency by complying with legal and regulatory requirements, where information about how you work is easily accessible.

Right to be safe: Everyone associated with your charity (inside and out) should be treated with dignity and respect. Cultivate a safe and supportive environment, where each person is encouraged to value their own health and wellbeing. Ensure that those working or volunteering for your organisation understands their role and are trained to meet these responsibilities.

Remember, these principles should be complimentary to existing sector codes, such as the Charity Governance Code, and are not a substitute for your own charity’s code of conduct. These are guidelines that build on the core legal and regulatory obligations that are essential for a functioning charity.

If you would like to explore the NCVOs guidance in more detail, click the button below.

Fundraising and donation concerns

When it comes to ethics, an area of particular scrutiny for charities is sources of funding. 

A donation can be money, land, goods, or other property given freely to a charity. Some organisations will be compelled to refuse donations if they feel they do not align with their purposes or will compromise their charity in some way (reputational or otherwise). However, representatives may be expected to rationally and legally justify their decision to refuse a donation in what can be a complex situation.

You must refuse a donation that comes from an illegal source or with an illegal condition. If you suspect your charity has received a donation from an illegal source, do not return it or contact the donor; follow legal guidance on this matter before you act.

You must also refuse or return donations:

  • where the donor does not have sufficient mental ability to make coherent decisions
  • that cannot be given to your charity legally, including examples where the donor does not own the property they intend to donate
  • that must be returned in certain circumstances, including where unused funds must be returned by a specific date

You may also need to refuse or return donations that:

  • do not apply to your charitable purposes
  • if accepted might result in a valid legal claim against your organisation
  • undermines your charity’s independence
  • brings burdens that outweigh its value to your organisation, such as an unaffordable mortgage or insurance
  • will benefit an individual or organisation specifically and unacceptably

Do not let the size of a donation cloud your judgement.

For grant funding, a funder will not usually receive anything in return but may attach terms and conditions for how the grant should be spent. Such stipulations made in these situations may be legally enforceable, so seek professional advice if you are in any doubt.

Hopefully, refusing or returning donations should only be a very rare occurrence (if ever). Most people are genuinely trying to help and even if there are circumstances where a donation might not be acceptable, you might be able to find a formal solution to make this possible.

Whilst you should be diligent in reviewing the donations offered to your charity, you are duty bound to act in the best interest of your charity and accepting donations is part of this. You will need the money to make your organisation financially sustainable.

Avoiding risks

Make sure you are avoiding any ethical risks associated with fundraising and donations by asking the following questions:

1. Do you already have a policy you could consult to assist your decision? If not, could you create one?

2. Do the donor’s activities fit with your charitable purposes and values? Will association with them affect your reputation?

3. How did the person/organisation obtain what they wish to donate?

4. What opinion do the other key decision makers in your charity have about the donation? Does this represent a sufficiently diverse perspective?

5. Do you require some professional guidance (legal or financial) to ensure you are making the correct decision?

Need some assistance?

Burton Sweet has a longstanding commitment to charities and civil society organisations, offering practical, professional and passionate support. We want to assist you, so you can deliver effectively for the communities you serve and show the good you do.

If you would like guidance on any of legal or financial aspects covered in this article, please contact us and a member of our team will be happy to help you.

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