Can a charity refuse or return a donation?

England and Wales: This page sets out the position in full. Scotland: partly covered — the general duties that govern the decision are established, but OSCR has no guidance on refusing or returning gifts and Scottish law has no equivalent of the England and Wales power to make a moral payment; how a Scottish charity refuses or returns a gift in practice is not established. Northern Ireland: partly covered — CCNI’s powers over a mishandled donation are established, but it has published no guidance on accepting or refusing gifts.

Refusing is a powers question before it is an ethics question

Most writing about whether a charity can refuse a donation treats it as an ethics question — whether a good charity should take this money. The Charity Commission for England and Wales treats it first as a question of legal power, and second as a question of best interests. And its default is to keep the gift.

This page leans on two earlier ones. The Code rules are explained when you register with the Fundraising Regulator and adopt the Code. The conflicts register is kept when you adopt a conflicts of interest policy.

In the Commission’s words, verbatim: “As trustees, your principal duty is to further your charity’s purposes. Your starting point should be to accept and keep a donation offered or given to your charity… But sometimes you must refuse or return a donation, and in other circumstances you can decide that it is in your charity’s best interests to do this.”

So a good reason is not enough. You also need a power.

• To refuse. A general power to refuse a gift usually exists, subject to the governing document.
• To return. Giving back money the charity already holds is different. The power usually has to come from the governing document, or from the law for specific situations.
• Where there is no power. If the governing document gives no power and cannot be amended, the Commission’s authority is needed.
• Where a trustee benefits. If refusing or returning a gift would benefit a trustee or someone connected to one, the Commission’s authority is needed whatever the governing document says.

Returning a donation without a power to do so is a misapplication of charity property. That is the regulatory risk in refusing or returning a gift.

When must a charity refuse or return a gift?

The Commission’s guidance sorts gifts into three groups.

Where the guidance says you must refuse or return:

• illegal source or illegal condition
• donor lacking mental capacity
• property the donor cannot legally give
• where the donation's own terms require return

Where the guidance says you are likely to have to:

• purposes outside the charity's objects
• a valid legal claim or risk of claim
• conditions undermining independence
• disproportionate burdens
• unacceptable private benefit

Everything else is a best-interests balancing exercise. The trustees weigh the value of the gift against the risk of taking it. That risk runs both ways: refusing a gift can damage a charity’s reputation too. The decision, and the reasons, go in the minutes.

A gift you suspect comes from crime: do not give it back

This is the one place where the instinctive response is exactly wrong, and getting it wrong leaves a charity worse off than doing nothing.

You may suspect a donation is the proceeds of crime or terrorism. If so, the Commission’s guidance is: do not contact the donor, and do not return the money. Report it and take advice. Returning it could itself be an offence (Proceeds of Crime Act 2002, section 327(1)(d), read with section 340(3)).

Handing the money back feels clean. It is not. Write down what made you suspicious, and get advice before anyone speaks to the donor.

Due diligence before accepting a donation

The Code of Fundraising Practice adds a due diligence step. In its words: “You must carry out appropriate due diligence, proportionate to the size and nature of the donation, on the potential donor before accepting a donation.”

That is the Code’s expectation, not a statute. But the Code covers your fundraising whether or not you are registered with the Fundraising Regulator.

“Proportionate” is the working word. A small gift from a known supporter needs little. A large gift from a company or a stranger needs more, and the checks should be recorded.

When you feel you owe money but the law does not

An ex gratia, or moral, payment is one the trustees feel morally obliged to make but cannot justify as being in the charity’s best interests. It is a separate regime, and the Commission’s guide to it is CC7.

• Below set thresholds, section 331A of the Charities Act 2011 (England and Wales) gives trustees a statutory power to make the payment without the Commission. It has been in force since 27 November 2025.
• Above them, the Commission can authorise the payment under section 106.

A small group of named national museums and galleries cannot use the ordinary moral-payment power for certain property.

This is also the route when a will does not match what the person plainly intended. Examples are an unsigned codicil, or a change they documented but never made. CC7 gives worked examples of exactly that. It is not litigation.

Legacies and gifts with conditions

A legacy is a donation, so the same framework applies. The Code puts it plainly: “You will need to consider whether you can meet the conditions or use the legacy for the restricted purpose before you accept it… If you cannot… you should not accept it.”

Pursuing a legacy. CC38 says, verbatim: “Trustees have a general duty to act in the best interests of their charity. They have a duty to protect, and where necessary, to recover, assets belonging to the charity.”

A legacy that is validly due is such an asset. But the duty is balanced against cost and proportionality, and the Commission expects negotiation and mediation before court.

Most legacy disputes are not “charity proceedings” under section 115 of the Charities Act 2011 (England and Wales). So they do not need the Commission’s authorisation. Arguing about entitlement under a will against someone outside the charity is ordinary litigation. Only proceedings about the charity’s own internal affairs need authorising.

The fundraising rules around wills are strict. Assembled from the Code and the Commission’s legacy guidance, they are:

• no fundraiser drafts, or is involved in drafting, a will that benefits them — the Code prohibits it outright
• any offer of a personal legacy to a fundraiser is disclosed
• where the charity pays for someone’s will, payment does not depend on the charity receiving a legacy or being made executor
• where the charity pays for someone’s will, the solicitor acts solely for the person making the will and confirms that in writing
• no one connected to the charity witnesses the signing

Where a relationship with a supporter is exploited, the Code provides for a disciplinary process.

This legacy position is assembled from CC38, CC7, the Commission’s donations guidance and the Code. The Charity Commission has no single guide to administering a legacy. That absence is itself a finding: there is no one document to check your process against.

A gift with conditions becomes a restricted fund

If you accept a gift with conditions attached, you take on the conditions too. The gift becomes a restricted fund, and the charity has to be able to spend it on the stated purpose. So before accepting, check that the charity can do what the donor wants.

If not, the Code says you should not accept it. Once you have, the accounting is covered when you record your first restricted grant. Keeping the fund separate is covered when you set up restricted fund tracking for the award.

Scotland and Northern Ireland: the gaps in guidance

Scotland: the duties apply, the guidance does not exist. The general duties in section 66 of the Charities and Trustee Investment (Scotland) Act 2005 govern a decision to accept or refuse a gift. They govern any trustee decision in the same way: act in the charity’s interests, consistently with its purposes. OSCR’s guidance on specific conflicts, such as Israel–Gaza and Ukraine, applies the same test.

But two things England and Wales has are missing in Scotland, and both absences are real:

• No OSCR guide dedicated to accepting, refusing or returning donations was found.
• No moral-payment power. A full-text search of the 2005 Act (Scotland) for “ex gratia” returned no results. There is no equivalent of sections 106 and 331A of the Charities Act 2011 (England and Wales).

So this page does not set out how a Scottish charity refuses or returns a gift. Do not read the England and Wales steps across. If the question arises, ask OSCR directly or take advice from a Scottish charity-law practitioner.

Northern Ireland: the powers exist, the guidance does not. CCNI has published no guide on accepting or refusing donations. This guide searched its full list of guidance and found none.

But CCNI does have formal powers over a mishandled donation, under section 33 of the Charities Act (Northern Ireland) 2008. They need an inquiry to be open first, under section 22.

• Protective powers are available where CCNI is satisfied of misconduct or mismanagement, or that the charity’s property needs protecting. Either is enough. They include freezing a transaction and restricting what the charity may accept or pay.
• Corrective powers need both: misconduct or mismanagement, and a need to protect property. They include removing a trustee.

The Code applies in Northern Ireland by voluntary sector agreement. The “accept and keep” starting point is general charity law, but CCNI has not restated it in its own guidance.

The gift acceptance policy

A gift acceptance policy is the charity’s written rule for deciding which gifts to accept, refuse or return. It lets the board decide quickly and the same way each time. It should say:

1. Who decides — and which gifts go to the full board.
2. What checks are done before accepting, in proportion to the gift.
3. The three groups above, and the factors weighed in the third.
4. The power the charity relies on to refuse, and to return.
5. The crime rule: do not contact the donor, do not return, report and take advice.
6. Conflicts: any decision that could benefit a trustee or connected person goes to the Commission.
7. Legacies and wills: the Code’s rules, and who handles a legacy once notified.
8. Records: each significant decision minuted, with reasons.

Template: Gift acceptance (planned).

This is the last step in the hub. With the policy adopted, what you raise has to be accounted for and reported, which is where the money and accounting hub picks up.

Common mistake: assuming trustees can refuse any donation they dislike

Ethical fundraising debate frames refusal as the virtuous default. The Commission’s starting point is the opposite: “Your starting point should be to accept and keep a donation offered or given to your charity.” Refusing needs a power and a best-interests justification.

Common mistake: returning a suspicious donation to the donor

It feels like the clean thing to do. For proceeds of crime or terrorism the guidance is the opposite — do not contact the donor and do not return the money. Report it and take advice. Returning it could itself be an offence (Proceeds of Crime Act 2002, section 327(1)(d), read with section 340(3)).

Common mistake: a fundraiser being involved in drafting a will that benefits them

Close relationships with supporters develop over years. The Code prohibits it outright. It also requires any offer of a personal legacy to be disclosed, and provides for a disciplinary process where a relationship is exploited.

Worked example

Tollgate Youth CIO is offered a large donation by a company whose business conflicts with Tollgate’s purposes.

The answer is not automatic either way. The gift is not illegal, and nothing about it requires refusal. So the trustees weigh it. On one side, the value to the young people Tollgate serves. On the other, the risk to its reputation with families and funders — and the reputational risk of being seen to turn money down.

Before deciding, they check two things. Their constitution gives them a power to refuse. And no trustee is connected to the company, so nobody benefits from either answer. They decide, and they minute the decision and the reasons, whichever way it goes.