Saying no to money that is lawful, fits your charitable purposes and comes from a reputable funder is one of the harder decisions a board makes. The Charity Commission’s starting point is that trustees should accept donations, so turning one down needs a reason that holds up. “It would pull us off course” can be that reason, once the board has tested the offer on three things: what it really costs, what risk it brings, and what it does to the charity’s reputation.
The test is hardest to apply when money is tight, and the offer is real, which is when it is needed. A charity that takes every offer that fits its purposes on paper can end up doing work its strategy never chose, funded on terms it never weighed.
Weighing an offer that does not fit your priorities? The decision is much easier when the board has already agreed what the charity is for. That is what our strategy work settles. See how we work on charity strategy.
When saying no to money is a board decision
An offer that would change what the charity does, who it serves or where its capacity goes is a strategic decision, and strategic decisions belong to the trustees. The Charity Governance Code expects board decisions to be made with regard to the charity’s financial resources and the board’s appetite for risk. A fundraiser or chief executive can bring the offer and a recommendation. The yes or no is the board’s.
Testing fit is easiest before an application goes in, and why grant applications fail covers that stage. Offers still arrive that nobody tested: a funder approaches the charity directly, a partner proposes a joint bid, or an application written in a hurry succeeds. Each of those reaches the board as money already on the table.
Where the legal question ends and this one begins
Some money has to be refused, and some probably should be: money from an illicit source, money for something outside your purposes, or money with a condition that trustees agree key decisions with the donor. Those cases have their own rules, set out in why refusing a donation is harder than you think.
Money that passes all of that still falls under the Commission’s guidance on accepting, refusing and returning donations, because the guidance confirms that a grant can be a donation. Its starting point is to accept. It also lists what trustees should weigh against that: the risk of reduced support, and harm to the charity’s reputation with its supporters and beneficiaries, and with other funders, staff and volunteers. A strategic no calls for the same kind of weighing, applied to an offer that would take the charity somewhere it has not chosen to go.
Does the money pay for what it asks
Start with the full cost. A grant that covers the direct delivery of a project and nothing else leaves the charity paying for the management time, premises, systems and reporting that the project uses. Why winning grants can leave your charity worse off sets out how to work that cost out. If the offer does not cover it, the charity is subsidising the funder’s project from somewhere else.
Then ask what the money displaces. A new project still draws on the time of the people who would otherwise be working on the charity’s priorities, and on trustee attention at every board meeting. Capacity is a financial fact, and a charity that is already at its limit pays for new work by doing less of something else.
The plainest test is to name the priority the money serves. On a one-page strategy, there are two to four of them. If the offer serves one, the conversation is about terms. Where it serves none, the charity is being paid to do something other than what it agreed to do, and the board should say so in those words.
What the risk looks like when the grant ends
Every grant ends, and a good deal of the risk in taking one sits at that point. If the offer would become a large share of the charity’s income, the board is also deciding how exposed the charity will be when it stops. The Governance Code expects boards to keep the sustainability of their sources of income under review, and leaning on one income source is a problem the charity carries long after the award.
Look at what would outlast the money. Staff recruited for the project, service users who come to rely on it, equipment or premises bought with restricted funds, and a funder’s expectation that the charity will keep the work going all remain when the grant does not. Reserves can buy trustees time when a grant is not renewed, but they cannot carry a service the charity was never able to afford.
Contracts and service agreements need particular care. The Commission’s Charity Sector Risk Assessment 2026 records sector concerns about rising delivery expectations within fixed budgets on government contracts, and advises due diligence before entering new service delivery agreements. Read the terms on payment, reporting, clawback and liability before the board decides, and take advice on anything the board does not fully understand.
Finding it hard to say no because too much rests on one funder? The e-book Charity Income That Doesn’t Depend on One Source explains why income stays fragile in small UK charities, what happens when you rely on too few sources, and how to start building income as a connected system.
What saying yes or no does to your reputation
Taking the money carries a reputational cost when the work it pays for sits outside the charity’s priorities. Beneficiaries may see a service they did not ask for. Supporters may wonder why the charity has moved into a new area. Other funders, reading the next annual report, may see a charity that follows the money. And if the new work stretches the team until something is delivered badly, the damage reaches the work the charity is known for.
Independence is part of reputation too. The Governance Code expects boards to support the charity’s right to speak out about its mission, even when that is unpopular. A funder does not need to attach a formal condition for its money to make a charity quieter. If accepting would make the board hesitate before saying something the charity ought to say, that hesitation is a cost the board should weigh.
Declining carries a reputational cost of its own, with the funder concerned. That cost is real, and it can be managed. A clear no, given early, with a reason tied to the charity’s priorities, gives a funder something to work with and leaves the door open for a better fit later. Withdrawing late, or giving a reluctant yes followed by poor delivery, gives them less.
What sits between yes and no
The Commission’s guidance suggests negotiating the terms of a donation to manage the risks it raises, and the same approach works for an offer that pulls the charity off course. What the board should take back to the funder is a single question: what would need to change for the money to serve the charity’s priorities?
Sometimes the answer is to redesign the offer. The funder may accept a different group or area, a longer timescale, a budget that includes support costs, or lighter reporting. Taking part of the offer is another route, such as a smaller pilot in place of a full programme. Some funders will hold an offer open, or point to a later round with a better fit. And where the work belongs elsewhere, suggesting a partner organisation better placed to deliver it can help both the funder and the people the work is for.
If reactive funding decisions keep pulling the charity off course, that is what our fundraising strategy work is for.
How the board should decide and record it
Bring the offer to the board with the three tests set out: what it costs in full, what it puts at risk, and what it would do to the charity’s reputation either way. Include what the funder said when the terms were discussed. How trustees make decisions that hold up covers the principles the board needs to be able to show it followed.
Record the reasons in the minutes. The Governance Code lists minutes that capture the rationale for decisions among its suggested evidence of good decision-making, and a refusal is a decision that can be questioned later by a trustee who was absent, a new chief executive, or the funder itself. A short record of what was weighed answers those questions without reopening the argument.
Then turn the decision into a rule for next time. If the board has decided the charity will not take funding for a particular kind of work, write it into the strategy as a boundary, in the same way that work the charity has stopped is kept stopped. The next similar offer can then be answered quickly, and the board’s ownership of that boundary is clear to everyone who has to apply it.
When the board is split over a specific offer, the pressure to decide quickly can push it into a yes it has not tested. Someone outside the room can help the board work through the cost, the risk and the reputation before it answers. Book a free 30-minute call.
