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The Presidents Club: Are charities allowed to return money?

Following the reports of sexual harassment of women working as hostesses at the men-only dinner held by The Presidents Club, some of the charities that would have benefited from the money raised have released statements.For example, children’s hospital Evelina London, has said it will not accept funding from The Presidents Club, and will also return previous donations, while Great Ormond Street will also give back money donated to it from these events in the past.Can they do this?Fundamentally, the trustees of charities must demonstrate that they are acting in the interests of the charity – the rules do not make it easy for them to express their disapproval.When it comes to refusing donations, the rules are quite strict – they have to demonstrate that refusing money is in the commercial interests of the charity, so for example, you could point out that major donors had contacted the charity to say they would not support the charity in the future if it didn’t reject the money.If there isn’t a clear financial imperative, the refusal would have to be cleared with the regulator, the Charity Commission, or the Attorney General.Further complications”Returning donations which have been accepted is more legally complicated,” the Charity Commission said in a statement.”Depending on the terms of the donation and how the funds were raised, the Commission may need to authorise such returns and charities should seek the Commission’s advice.”So returning historical donations is more complicated, but not impossible. The Charity Commission might count that as what it calls an ex gratia payment, which are payments that would not directly aid the charity’s beneficiaries.The charity’s trustees would have to demonstrate to the Charity Commission that making such payments would be in the interests of the charity. So, in this case, the children’s hospitals would have to show that accepting money from an event at which women had allegedly been harassed would get in the way of their mission to help in the treatment of sick children.And there are two other complicating factors in this. The Presidents Club, as a charity, could refuse to take the money back, in just the same way as the hospitals could refuse to accept it. If that happened the Charity Commission would probably have to get involved.The other problem is that The Presidents Club is closing. “We will be working to ensure that the Presidents Club Charitable Trust is properly wound up and that any remaining or returned funds are dealt with correctly,” the Charity Commission said.Chris Rowse, a partner in charity law at Russell-Cooke solicitors, told Reality Check that because The Presidents Club was structured as a charitable trust, if it gives away all its money it can be wound up very quickly, which would make it impossible for any money to be returned.But he added that the structure means that the trustees would be personally liable if there were any legal claims made against it, so giving away all the assets could be a mistake. “If I were advising The Presidents Club I’d want to have some money in the bank for some time to come,” he said. Culture Minister Margot James confirmed to BBC Newsnight that the government is looking into whether the dinner at The Dorchester broke the law.

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Source: BBC News

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