Keeping your fundraising ethical
- Jennie Gillions
- Mar 18
- 7 min read
Charities closing… People being made redundant… Demand for our services increasing… There’s no question that our sector needs all the money it can get.
BUT - not all money is ‘good’ money; even in these most desperate of times it’s vital that your fundraising is ethical, and won’t harm you or the people who need you. The rest of this blog looks at what you need to be doing to stay legal and safe.
I’ll be perfectly honest - it isn’t always easy, and it takes work. But it’s worth doing right, and there are plenty of people at Fair Collective who can help if you need more guidance.
Why I’m writing this
I’ve worked in voluntary sector fundraising since 2008, specialising in Trusts, statutory, Lottery and philanthropy, and have navigated my fair share of ethical dilemmas. I’ve seen ethical fundraising done well, and I’ve watched in horror as it’s done dangerously badly. Since going freelance in 2022 I’ve worked with several charity leaders to develop robust ethical policies and due diligence guidance.
What do we mean by ‘ethics’?
‘Ethics’ is a misnomer, really; the dictionary definition of ethics is ‘moral principles governing behaviour or conducting of activities’, but ethical fundraising is less about morals and more about protecting the charity - balancing your financial needs against potential reputational risk and legal complications. You’re looking for funding
that’s legal,
that your staff and trustees feel comfortable accepting,
that doesn’t make you seem hypocritical, and that you can justify to your stakeholders (the people who benefit from your charity, your social media followers, your other donors, etc.).
This attitude can seem a little cynical for values-driven people, but it’s more comfortable if we translate it as protecting the people who need your services. If you run into trouble, they lose out.
The trustees are legally responsible for your fundraising, so ultimately the decisions about what money you do and don’t take rest with them.
Why is ethical fundraising so important?
Reputations take a long time to build, but they can disappear very quickly if you approach, or accept money from, the ‘wrong’ donors/funders. If your reputation goes, you can lose partners, other donors and the trust of your beneficiaries.
Let’s say a refugee charity accepts a 5-figure donation from someone without checking their background. It turns out that the donor has been publicly racist, and is trying to repair their own reputation by donating to the charity and telling the world that’s what they’ve done. The charity is now publicly associated with someone its beneficiaries and partners wouldn’t trust, and other donors probably wouldn’t like. Think about the amount of work the staff and trustees have to do to fix this - answering complaints and queries from donors and beneficiaries, managing PR, navigating the relationship with the donor, possibly giving the money back… Even then, some of the damage might be irreparable.
This is a worst-case scenario and might seem too extreme, but it happens. You can see why it’s not worth the risk!
The rules
I’ve seen plenty of policies that combine solicited fundraising with unsolicited gifts, but this doesn’t work; there are technically no rules about what you choose to solicit, but the Charity Commission DOES set rules for unsolicited donations.
The trustees’ starting point should be to accept and keep donations. It is deliberately difficult to refuse a donation and even more difficult to give one back, so please don’t assume that you can simply hand back donations if the donor’s behaviour unexpectedly clashes with your charity’s values. You must be able to prove that refusing/giving back a donation is in your charity’s ‘best interests’ - again balancing your need for money against any reputational or legal damage the donation might cause you.
Determining your red lines
The details of developing your policies aren’t for this blog, but as a minimum it’s good to think about money you absolutely wouldn’t risk taking. Obviously illegal money (from criminal activity, etc.) is a no-no, but otherwise your red lines depend on what your charity exists to do, and therefore what’s likely to make people lose faith in you. For example:
an environmental charity deciding not to take money from BP or Shell, because no amount of money could make up for the perceived hypocrisy
a health charity refusing to work with tobacco companies, because tobacco companies actively damage health and therefore go against the charity’s objects
charities choosing not to solicit individuals who donate to political parties whose policies damage the charity’s beneficiaries
Remember that you can choose who to solicit, but the Charity Commission guidance gives you less choice over who can donate to you unsolicited. You must be able to show that a donation would do you more harm than good before you can refuse or return it.
Personal values shouldn’t come into it
I can’t emphasise this enough: it’s the charity’s values that matter, not the personal feelings of its staff or even its trustees. You’d expect people within a small charity to be aligned with its values, but problems arise when staff and trustees conflate their own views with what’s best for the charity.
For example, a secular environmental charity that exists to protect biodiversity has a trustee who is personally against gambling. The fundraiser wants to apply for 6-figure Lottery funding, but the trustee says no.
There is nothing in the charity’s objects about gambling and, though the leadership acknowledges the mental health and financial harm gambling can cause, a stance on gambling is not why people use or support the charity. If the trustees agree to dismiss this big funding opportunity because of personal feelings, it sets a precedent for other personal feelings to cloud the charity’s strategic direction and drastically reduce funding opportunities. This is not in the charity’s best interests.
Without robust, sensible policies the charity is also running the risk of its ‘ethics’ changing every time there’s a new trustee or CEO.
Your charity’s ethics are YOUR charity’s ethics
It’s tempting to use another organisation’s policies as your template for speed, but beware of copying and pasting. You need to be able to explain to staff, volunteers and beneficiaries why you reject, or steer away from, certain funding, and you can’t do that with someone else’s list. I know it seems like a faff, but taking some time to develop your own unique policies means you’ll get something that works, keeps you in line, and suits your USP.
Due Diligence
Due diligence is the set of processes that help you stick to your policies, for example:
the legal checks you must carry out,
how you research your prospects to make sure they’re safe for you, and
the steps you take if one of your donors becomes risky for your reputation.
Again, these should be unique to your charity. Your due diligence will depend on your resources, your IT capabilities, what your charity does, your trustees’ risk appetite…
The good news is that the Charity Commission says due diligence should be ‘reasonable’. In practice this means you can set a financial threshold under which you won’t do due diligence because it would take more time than it’s worth. So you wouldn’t check your regular monthly givers, for example, other than making sure you have their personal details for processing donations, and you can leave third party sites like CAF and JustGiving, trusting that they do their own checks.
At a minimum, you must know who your donor is to keep yourselves safe from fraud/illegal financial activity - you must have a name, and the name and bank account must match.
My advice is to draft your due diligence documents after you’ve agreed your policies, because without your finished policies you won’t know what you’re testing. However, it is an iterative process, and what you absolutely can’t do is assume you’ll only need to do these things once. Laws change, the socio-political climate changes, your strategy changes… and if your ethical fundraising processes are out-of-date, you’re putting yourself at risk.
It’s a good idea, I think, to review your due diligence processes once a year, and your policies every two years - or at the very least, as part of any strategy refresh.
Does bigger money mean bigger risk?
I’ve put this specific question in because it always gets asked, and it’s not as simple to answer as you might think. If you’re a charity with an average £250,000 annual turnover and a philanthropist gives you £200,000 then yes, there’s more risk - that person could be perceived to have a huge amount of influence over what you do, so they need to be squeaky clean throughout the term of their support AND I’d suggest you need a written agreement that says they won’t skew what you exist to do.
But let’s say your turnover is £500,000 and someone you’ve decided is safe to be associated with donates £50,000. Is that riskier than if the same person gave £5,000? I don’t think it is. You can do so much more with that £50,000, so your justification for accepting it is pretty simple.
I’d suggest you keep a close eye on the donor in either circumstance though - if it’s likely to be a long-term relationship, refresh your due diligence on them once a year. I have been involved in a situation where a donor’s reputation was damaged and they contacted the charity to jointly develop a mitigation plan, but that requires an unusually trusting relationship.
In an ideal world, you’ll feel comfortable sharing an ethical statement with your bigger donors so they appreciate your stance.
Testing it out
If you want to start thinking about policies, test out some scenarios.
For example, take one of your bigger individual givers and think about what you’d do if the donor was convicted of a criminal offence.
Or perhaps you’ve identified a trust that’s perfectly aligned, but one of its trustees has been publicly offensive in the past about your beneficiary group. Would you go for it?
There are no right or wrong answers, and there will always be grey areas, but if you keep the ‘best interests of the charity’ in mind at all times, playing around with ‘what ifs’ can be valuable for honing your ethical direction.