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Guidance on charity fundraising due diligence and a simple donor compliance checklist, plus guidance on gift acceptance, anonymous donations, scams and sanctions, with the Charity Commission Know Your Donor and other donor compliance checklists at the end. We also have a charity due diligence checklist.
Fundraising due diligence is the process of assessing the legitimacy, credibility, and ethical practices of organisations and individuals involved by carrying out checks to ensure that the donation complies with legal and ethical standards.
The fundraising due diligence you may need to carry out depends on you and the donor but here's a simple donor compliance checklist.
The Charity Commission has published much more detailed donor due diligence guidance, such as it's Know Your Donor and other compliance checklists; see below.
You cannot accept funding from a donor where it would not be in the best interests of your charity. For example, if a donor wanted to fund something outside of your charitable objects, or to impose unreasonable conditions or for any other reason that would not be in your charity's best interest.
And if you do but need to refund it, it's not quite as simple as it might sound. You may also need to consider issues, such suspicious donations, or managing large anonymous gifts, or those from vulnerable individuals. If you need any of these fundraising policy templates, you can download an Acceptance & Refusal of Donations, Refunds and Ethical Fundraising policies by logging in and asking the AI bunny nicely.
Fundraising due diligence is not something that applies only to donors. For example, when working with commercial fundraising companies. Charities must carry out appropriate due diligence to ensure that companies fundraising on their behalf are operating in line with the Fundraising Code, and have appropriate oversight and training. The Fundraising Code Section 7.3: Monitoring that fundraisers are meeting the code.
In the event your due diligence uncovers a significant problem, you must be mindful of your obligations to report major incidents to the Charity Commission and, if appropriate, the Fundraising or other regulator; see below.
When carrying out donor due diligence, be mindful that charities are at risk from attempts to breach sanctions and scams and, donations from anonymous donors, may pose a particular risk. Outlined below are how these should be managed, with detailed procedures contained in the Charity Commission Compliance Toolkit.
Donations through collection tins and online platforms are often anonymous and any donor may remain anonymous if he or she chooses to. The Charity Commission 'know your' donor principle does not mean charities cannot accept anonymous donations and doing so is perfectly acceptable providing charities look out for suspicious circumstances and put adequate safeguards in place.
Trustees will take reasonable and appropriate steps to know who the charity's donors are and will not accept a donation where the risk to the charity is assessed to be greater than the benefit of having the funds donated.
With the crisis in the Ukraine both the Commission and banks are focussing much more on the risk of breaching sanctions. This is a complex area as the sanctions applied can be to individuals, organisations or even countries, the sanctions applied vary and other countries also apply sanctions. In some circumstances a charity may obtain a licence from OFSI or rely on an exception in the legislation.
However, other than those exemptions, it is against the law to receive money, goods or economic resources from, or send these to – an individual or organisation subject to financial sanctions. In the event of any grounds to suspect the charity may be involved, or may become involved with a sanctioned individual, organisation or work in a sanctioned country, the first step is to read the OFSI guidance below, then seek and comply with their advice.
There can be no absolute guide to what may be suspicious, but indicators are where significant sums are being donated, particularly if this is unusual, in cash or from overseas. Moreover, any prospective donor who wishes cash to be forwarded in advance or for the charity to pay some of the donation to a third party will always be considered highly suspicious.
The following situations may indicate higher risks:
Listed below are the fundraising donor due diligence compliance checklists and guidance from the Charity Commission E&W and other regulators.
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This fundraising donor due diligence article and compliance checklists are for general interest only and does not constitute professional legal or financial advice. I'm neither a lawyer, nor an accountant, so not able to provide this, and I cannot write guidance that covers every charity or eventuality. I have included links to relevant regulatory guidance, which you must check to ensure that whatever you create reflects correctly your charity’s needs and your obligations.
In using this resource, you accept that I have no responsibility whatsoever from any harm, loss or other detriment that may arise from your use of my work. If you need professional advice, you must seek this from someone else. To do so, register, then login and use the Help Finder directory to find pro bono support. Everything is free.
