RESOURCES

A Donation Policy: Do You Have One?

Donation policies are guidelines adopted by organizations- often charities-which rely on donations, which policies govern the donor-donee relationship and the general handling of donations received. The policies typically include provisions for the basis of the acceptance or refusal of donations, instances where donations may be returned, and procedures for due diligence on prospective donors. The importance of having and relying on such policies lies in the benefit of certainty and uniformity within the organization in relation to donations. Donation policies help to cultivate transparency and trust, ensure legal and ethical compliance, increase operational efficiency, and allow for the mitigation of  risks.

Transparency and Trust

Donation policies set out clear guidelines for donors in relation to the kinds of donations which an organization will accept, as well as donor guarantees, including anonymity and information about the use of the donation. While these assurances may exist in practice in an organization without an active donation policy, having them set out in writing will foster a greater relationship of trust and confidence between prospective donors and receiving organizations.

The implementation of these policies also helps to avoid uncertainty and confusion. Though donation policies generally have similar provisions, no two will be the same.  They may differ in the types of donations accepted, guarantees given to donors, due diligence procedures, as well as in other matters. By creating a policy to be used in a specific organization, its responsible officers can customize the provisions to best suit their abilities and needs.

Legal and Ethical Compliance

The laws of different countries will contain varying provisions guiding the conduct of such organizations within their jurisdiction. In the United Kingdom, the conduct of charitable companies is governed by the Charities Act (2011). The Charity Commission is the regulatory body tasked with regulating charities, with the goal of ensuring that the public can support local charities with confidence. The Commission’s website contains guidance for charity trustees in many areas, including managing charity finances, managing conflicts of interest in a charity, charity boards & governance, and fundraising.

In like manner, Jamaican charities are governed by the Charities Act (2013), which established the post of the Registrar of Charitable Organizations. The Registrar is tasked, inter alia, with keeping a Register of local registered charities and amending the Register where necessary. However, before an organization can be included in the Register, it must first be registered with the Department of Cooperative and Friendly Societies (DCFS) which approves it as being fit to conduct charitable activities. 

The Charities Act (2013) outlines procedures to be followed by charitable organizations in a variety of circumstances, including duties in relation to management of the organization. By incorporating provisions of the law into donation policies, and acting in accordance with them, charities can be confident that the law will protect them in the event of legal claims that may be brought against them by aggrieved donors.

Additionally, implementing donation policies allows charitable organizations to avoid possible ethical dilemmas that may arise. These policies often include provisions stipulating that donations will not be accepted where there is a conflict of interest, or where one is likely to arise. Further, donation policies may provide that donations will not be accepted from persons lacking capacity to donate (vulnerable persons), as well as in instances where donations are being made to create some hidden benefit or privilege, or if the donations originate from (or are suspected of originating from) criminal sources. 

Operational Efficiency

Not only do donation policies help to streamline the donation process, but they also help to reduce the administrative burden. Such policies typically outline the accepted methods of donation. However, some go as far as to provide specific instructions for donating. For instance, a donation policy may provide whether donations are acceptable in cash or that cash donations above a certain amount must be transferred electronically. 

In addition, these policies may provide a list of checks and balances for gifts which need to be assessed before being accepted. For example, where personal property is being offered as a donation, a charitable organization may outline the following questions to be answered to determine whether to accept it:

  1. Does the property further the organisation’s mission? 
  2. Is the property marketable? 
  3. Are there any unacceptable restrictions imposed on the property? 
  4. Are there any carrying costs for the property for which the organisation may be responsible? 
  5. Is the title/provenance of the property clear? 

By providing a set manner of assessment for various categories of donations, the administrative burden on the organization is lessened, and prospective donations can be reviewed with ease.

Risk Management

Lastly, the implementation of a donation policy may help such entities to mitigate risks that are likely to arise. This may be achieved by avoiding acceptance of problematic donations such as where the donations impose certain restrictive conditions on the donee, or the means of assessing whether it may have a possible negative impact on the organization’s reputation, and where the burden of accepting the donation outweighs the associated benefit. By enacting a policy which prescribes the refusal of donations of this nature, organizations can protect themselves from the ethical, financial, and reputational risks associated with them.

To conclude, by incorporating a comprehensive, detailed donation policy, charitable organizations in Jamaica will not only enhance their operational efficiency and ensure their compliance with legal and ethical standards, but also safeguard their reputation, and financial health.

Peter Goldson is the Senior Partner of Myers, Fletcher & Gordon, Attorneys-at-Law. He was assisted in the preparation of this article by Jada Harding, a Summer Intern with the firm. Peter may be contacted via peter.goldson@mfg.com.jm or www.myersfletcher.com. This article is for general information purposes only and does not constitute legal advice.

This article is for general information purposes only and does not constitute legal advice.

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