In today’s financial climate, every offer of funding or sponsorship is welcomed for charities – or is it? It may not be as simple as that
Over the past few years, there has been a snowballing of criticism and scrutiny over the sources of charity funding, with some organisations being condemned for accepting money from “tainted” sources. A key example is the Sackler Trust (which is connected with the fentanyl crisis in the US) along with companies associated with, say, gambling or fossil fuels.
No charity too small to care
These are high-profile cases that may not seem relevant if you are the trustee of a small sports club or local charity; however, the ethical dilemmas around funding are relevant to all trustees. Poor decision-making or due diligence around this can cause significant reputational harm, or damage your standing with service users, other potential donors or partners.
At the same time, charity trustees have legal duties to act in the best interests of their charity, which may include accepting funding that will keep it financially sustainable.
8 principles for approaching funding sensitivities
- Ask questions about the donor / sponsor / grant-giver and the source of their own funds.
- Consider how their activities fit with your own charitable purposes and values.
- Explore any reputational risk associated with the funding or the conditions attached to it.
- Avoid having a lone trustee or staff member concluding or agreeing to funding without wider discussion.
- Discuss the possibility of having a grant acceptance and reporting policy.
- Look at the diversity of your board and staff – a wider mix of backgrounds and views may help with spotting reputational risks around funding sources.
- Avoid the size of the potential grant clouding judgement.
- Get trustee training on these issues if you’re uncertain how to navigate them.
“It comes down to two basic principles: carrying out proper due diligence, and having processes and training in place.”
Help is available
There’s no doubt such a situation can be a difficult dilemma, but by following certain principles, trustees can steer a steady path between forces that may sometimes seem to be opposing ones.
In general, it comes down to two basic principles: carrying out proper due diligence, and having processes and training in place. A solicitor experienced in charity law can help with both aspects.
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