A business you’re uneasy about offers £5,000. A donor’s money looks like it came from somewhere you’d rather not ask about. Someone gives generously, and a family member later rings to say they weren’t themselves.
The instinct in each case is that refusing is the safe, responsible choice. Both regulators say otherwise. The Code of Fundraising Practice allows refusing or returning only in exceptional circumstances, and the Charity Commission’s position is blunter still: your starting point should be to accept and keep a donation, because donations are how your purposes get delivered.
So the question isn’t whether you can justify accepting. It’s whether you can justify turning down money that belongs to your beneficiaries.
If this is live because something is sitting in your inbox right now, that’s what a governance conversation is for.
When you have no choice
Some donations you are legally obliged to refuse or return.
Illegal sources or illegal conditions. Money from criminal activity, or a gift with an unlawful condition attached.
There’s a critical detail here that runs against instinct. If you suspect a donation came from an illegal source, do not return it and do not contact the donor. Handing it back may itself cause problems, and tipping off the donor is worse. Follow the Commission’s due diligence guidance, report it, and take advice on what happens next.
Lack of capacity. Where the donor did not have the mental ability to decide to donate. You are not expected to assess every donor. You are expected to notice – an amount wildly out of character, confusion about what’s been agreed, a family member raising a concern – and to stop.
Property that cannot legally be given. Where the donor doesn’t own what they’re donating.
Terms that require return. A grant agreement saying unused funds go back by a certain date, for instance.
When you probably shouldn’t accept
A second group where the Commission says you are likely to need to refuse or return. A donation that:
falls outside your charity’s purposes; would create a valid legal claim or a risk of one; comes with features that undermine your independence, such as a condition that trustees agree key decisions with the donor; brings burdens that outweigh the benefit, like land with an unaffordable mortgage or property too expensive to insure; or involves unacceptable private benefit, such as a donor of property keeping significant rights to use it.
In most of these, there’s a middle option worth trying before refusing: talk to the donor. The Commission actively suggests working with them to loosen restrictions, align the gift with your purposes, or reduce private benefit to something incidental and reasonable. A donation that can’t be accepted as offered can often be accepted as renegotiated.
The earlier that conversation happens, the easier it is. Discussing conditions before a gift is finalised is straightforward; unpicking them afterwards is not – which is one reason legacies with conditions are so difficult.
And if you accept a donation with conditions, you must follow them and be able to show you did.
An offer on the table and no policy behind you?
Working out who has authority while the donor waits is the worst possible time. A free Charity Consultation will help you settle the process before the next awkward gift arrives.
Check you actually have the power
This is where charities skip a step. Deciding it’s in the charity’s best interests to refuse or return is not enough on its own – you need a legal power to do it.
For refusing, charities usually have a general power under the law. Check the governing document anyway, because it may contain a specific power, or provisions that stop you from refusing at all.
For returning, the power normally comes from the governing document – either a general power to do anything conducive to the charity’s purposes, or a power to dispose of the charity’s property. If there’s no appropriate power, or you’re unsure whether the one you have covers it, the route is to change the governing document.
And if you’ve decided returning is in the charity’s best interests, you don’t have the power, and you can’t change the governing document to get one, you must obtain Commission authority. The same applies where the decision would benefit a trustee or someone connected to one, and where there’s a conflict of interest you cannot manage.
Take advice if any of this is unclear. That includes working out whether you’re even in a return situation – with online platforms, the platform’s terms may be what governs it.
Returning is a bigger decision than refusing
The Commission is explicit that returning can be more significant, because by then you may have spent the money or built it into your plans.
Three additional questions apply. How long has passed since the gift. What the return would do to your funds, activities, commitments and budgets. And whether you can actually afford it.
There’s also a practical option most small charities don’t know about. If you need more information before deciding, you can ringfence the donation – separating it from general funds while you work it out – rather than either spending it or returning it prematurely. Weigh the advantages against how long you intend to hold it, and take advice on the accounting.
Speaking of which: returning funds may have Gift Aid and other tax consequences, and how the return appears in your accounts needs specialist input.
Two situations with their own rules
Ex gratia payments. Where you feel a moral obligation to return or waive a donation, have no legal power to do it, and can’t justify it as being in the charity’s best interests. Separate procedures apply under CC7, and sometimes Commission authority is required.
Failed appeals. Where you raised for a specific purpose and either raised more than needed, not enough, or circumstances changed so the purpose can’t be achieved. Specific legal rules apply, and in some circumstances you must apply to the Commission. This is why an appeal should say in advance what happens to surplus funds.
Making the decision, and recording it
This is an ordinary trustee decision and the seven principles apply. The Commission’s own list of factors is worth working through: the value of the gift and what it would achieve, the financial loss from refusing, the short and long-term impact either way, how far the donation conflicts with your purposes, the risks of refusing, the risks of accepting, and whether reputational damage would be short-lived or lasting.
Consulting others is proportionate in some cases, but the Commission is clear on two points. Don’t assume you know what supporters or beneficiaries think. And whoever you consult should understand that trustees make the final decision.
Your decision may differ from what another charity’s trustees would decide. That’s fine. What it must be is informed, reasonable, and supported by evidence rather than by how anyone feels about the donor.
The Commission may look into your decision if you can’t show you acted within your powers, complied with your duties and governing document, weighed the relevant factors and ignored the irrelevant ones, and reached a reasonable decision in the charity’s best interests. All four of those live or die on the minute.
One more step: consider whether refusing or returning a donation needs reporting as a serious incident.
Anonymous donations
You can accept them. What you need is awareness of suspicious features and adequate safeguards around them.
One concrete threshold worth knowing: report a serious incident to the Commission if you receive an anonymous donation of £25,000 or more.
The policy that saves you the argument
The Code requires decisions to be made by trustees or in line with a policy trustees have set, so the policy is what stops every uncomfortable £200 becoming a board matter.
Six things: who decides, and what can be settled below an agreed value. The test, written as a question. What triggers due diligence, by value and by circumstance. What staff and volunteers do when something feels wrong – which is to escalate, not decide. How the charity checks it has the power before returning anything. And how decisions get recorded.
Review it regularly. A page is enough.
Charities that get into difficulty here are rarely the ones that made the wrong call. They’re the ones who can’t show they made a call at all.
If you need the policy written and the process agreed rather than another article about it, a one-off governance project will get it done.
