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Charities making donations to other VCSE organisations. Can we do that?

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Many charities across Norfolk have recently received donations in response to the pandemic.  We have received several enquiries from trustees asking if they can make donations to help community support groups and local charities which are helping vulnerable local people through the Coronavirus crisis. 

An interesting question and an altruistic thought – but there are important constraints on being able to do this. CAN’s Community Development Officers have considerable experience in advising on all aspects of governance – call us on 01362 698216 or email [email protected]

Let’s do a quick Q&A based on some actual enquiries we’ve received recently. 

Example 1 

Q. Our committee would like to use some of our funds to make donations to a couple of local charities and community groups, but there’s no reference to this in our governing deeds. Could we simply take a committee vote?  Will we be covered? 

A.  That’s a very altruistic and creditable aspiration. Unfortunately, it’s not quite that straightforward! 

  • The key point here is that you must make sure you don’t breach the terms of your charitable trust. 
  • Grants have been awarded to support your activities.  The money can only be used for the activities you applied for it to cover, which will have been in keeping with furthering your charity's objects. 
  • Unless the governing document makes specific provision for making donations the committee must only use their assets to carry out activities that further the trust’s objectives.  
  • Another challenge is where the money has come from.  If the money you are considering donating has been applied for from a funder, you can only use it for the purposes outlined in your original application.  
  • If the allocated money came from fundraising activities then, again, you can only use it for the purpose it was raised – because those who donated to it did so with the understanding that it would be used for a specific cause, and not for something entirely different. 
  • Further, if the money came from income generated by your activities, again, as a charity, your income should be spent on activities that further your objectives.   
  • Essentially, the funds must be used for the charity and prescribed objectives. If you can justify that, you’re in the clear! 

 

Example 2 

Q.  Our committee would like to make a small donation to a national charity. Can we do this, even though that charity is based outside our community?  And anyway, is it true that one charity can’t donate to another charity? 

 A.  Again, this is laudable, but unless there is provision to do so in the governing document, you must only use your assets to further the charity’s objectives.  The same guidance applies as for the previous example.  You could hold activities that meet your charity objectives that fundraise for another cause, but you must be clear about this. (For example, a Village Hall - whose objects are to provide opportunities for recreation - can organise a community coffee and cake event where the proceeds will go to another cause.  The key is to be clear about where the funds are going). 

Advice from the Government and the Charity Commission 

The government advises:  

“Your charity can fund another charity as a way of meeting its charitable purposes. You must be sure that this is in your charity’s best interests. This includes checking that any money you give is used as you expected it to be.”   

Read more here

Managing your charity’s resources responsibly  

Chapter 7 of the Charity Commission’s guidance document ‘The essential trustee: what you need to know, what you need to do’  states Trustees must “make sure the charity’s assets are only used to support or carry out its purposes.”   

Remember, you can always ask CAN for advice. Call 01362 698216 or email [email protected]