Charity reporting: should charities have to disclose the identity of significant donors?

19 October 2016

It is proposed that the new Charities SORP will require charities to identify any material donations by the donor’s name and the amount. But could this deter some donors from giving? What is the right balance between transparency and privacy?

A few days ago Civil Society reported that the Charity Finance Group (CFG) is “concerned” about proposals for the new Charities Statement of Recommended Practice (SORP) to require charities to identify in their accounts any material donations – whether from individuals, companies or government – by the donor’s name and the amount given.

At first glance we might ask ourselves why CFG should be worried about moves to foster greater transparency and public confidence in the charity sector. After all, if there is nothing to hide, what is the problem?

But let us pause for a moment. Perhaps a donor might not wish to be identified simply because he/she does not want public attention or seek thanks for his/her philanthropy. After all, not every philanthropist likes to brag as much as Donald Trump does about how much money he/she has given to good causes.

Indeed, giving in private has a long and honourable tradition in the history of charity. For instance, I am reminded of the Sermon on the Mount:

“Take heed that you do not do your charitable deeds before men, to be seen by them … Therefore, when you do a charitable deed, do not sound a trumpet before you as the hypocrites do in the synagogues and in the streets, that they may have glory from men … But when you do a charitable deed, do not let your left hand know what your right hand is doing, that your charitable deed may be in secret …” (Matthew 6:1-4).

Similarly, giving anonymously ranks high in the “levels of giving” enumerated by Jewish scholar Moses ben Maimon in the Mishneh Torah. Likewise Islam encourages giving anonymously while also allowing for a mix of giving “in the night and in the day, secretly and openly” (Quran 2:274) on the one hand to fulfill a religious obligation without public reward while on the other hand setting an example for others to follow.

But giving discretely is not an exclusively religious concept. A donor of no faith might similarly wish to give purely for the sake of giving or out of an entirely secular sense of duty towards a fellow human and without any need or wish for recognition or reward.

So why has the Charity Commission proposed this change? And have we not been here before?

Well, yes. In 2012 Ray Jones, then the head of accounting policy at the Charity Commission, wrote an article aptly entitled "There can be exemptions in the quest for transparency". In it he stated that:

“Some might expect the SORP to require charities to publish the names of their major donors in their accounts. However, not all donors, particularly individual ones, would want the amounts they give to be in the public domain. On this issue, the SORP balances transparency and privacy by requiring the purpose of material gifts to be disclosed, but not the name of the donor.”

That sounds like a reasonable balance. Then and now. 

Of course, it remains important that charities take steps to ensure donations do not constitute the proceeds of crime and would not be reputationally embarrassing to the charity etc. But does the Charity Commission's proposal not go too far? Is there not any other – less crude – way of achieving the Commission's objectives?

We can only hope that the Charity Commission thinks long and hard before deciding to impose a reporting requirement of this kind. It would be a huge loss to the charity sector if some individuals and organisations were deterred from giving because they wanted to “do charitable deeds” outside the public spotlight and the media circus.

Chris Hook is an associate solicitor based in Newcastle upon Tyne. He provides specialist legal advice to charities, social enterprises and educational institutions on a wide range of charity, commercial and public law matters. You may also be interested in his other articles below.

Disclaimer: This article contains information which is necessarily general. It does not constitute legal advice. It is essential that, before proceeding with a particular course of action, you take specialist legal advice on any relevant considerations which may apply in your specific circumstances so that you can properly assess your options and any associated risks and benefits.

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