Charity donations: does your funding come from clean pockets?

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How can charities protect their brands going forward?

When an undercover sting by the Financial Times reported that hired hostesses were sexually harassed at the Presidents Club annual fundraiser at the Dorchester Hotel in London, it prompted its major charities to sever ties and The Charity Commission for England and Wales to launch an inquiry.

Over 30 years the event has raised £20m for children’s charities, including Cancer Research UK, NSPCC, Evelina children’s hospital and Great Ormond Street Hospital – which was one of the first to announce it would be returning all funds promised and received over the years.

Weighing up the pros and cons of accepting donations from suspicious sources has been long-standing challenge for charities – and opposing views have long polarised the sector. Of course, by donating corporations pay less tax; this fact alone can bring motivations into question. But then there’s the view that others may be guilty of attempting to redeem questionable reputations through charitable donations.

Disgraced producer Harvey Weinstein is reported to have given large sums of money to charities over the years, and it could be said that if the man himself hadn’t sparked the ‘rise-up-and-be-heard’ revolution the charities involved with the Presidents Club may have been more inclined to keep money that save lives rather than quickly returning it in order to avoid being tainted by the same brush. “And why should the people who need the money have to suffer?” I heard a TV presenter ask recently. “It’s such a shame charities have to give the money back.” His guest asked in return: “But did they really have any other choice after what’s been happening?”

In terms of brand affinity and perception, the answer is – no, they didn’t. Because just like any other brand, charities have images and reputations to uphold – even more so because of what they stand for, ethically, in the fragile time we’re now in. Returning the money with bold public statements of disapproval for the Presidents Club wasn’t just a morally understandable move. It was fundamentally damage control for brands’ reputations moving forward.

Fawcett’s ‘Fem-Washing’ campaign

In 2014, The Fawcett Society received huge backlash after The Mail on Sunday reported its £45 ‘ethically-produced’ T-shirts weren’t manufactured in the UK, as assumed, and in complete contradiction to the purpose of the movement were actually being made by Mauritian women paid 62p an hour and sleeping 16 to a room – double standard oversights that inadvertently branded the feminist movement with the very thing it stands against. Fawcett’s reputation – despite being a worthy organisation which later countered the Mail’s report with evidence claiming the shirt did conform to ethical standards – may be forever tainted due to its lack of preparation in the inerasable digital world.

It was a PR crisis which, much like the Presidents Club, reached political heights. Just as MPs were found to be in attendance at the fundraising dinner, then deputy prime minister Nick Clegg and then Labour leader Ed Miliband were photographed in Fawcett’s ‘This is what a Feminist Looks Like’ T-shirts, with Harriet Harman also wearing one in the House of Commons during Prime Minister’s Questions.

Reputational damage control versus due diligence

Although it is clear these are very different cases, both the President’s Club and Fawcett Society set out, in equally non-comparable ways, to raise money and awareness for highly worthy causes. But a lack of due-diligence from the charities involved resulted in the potential for a damning negative impact for their brand’s reputations.

Unlike a corporate brand that may just want to be perceived as more ethical, charities are in their essence ethical and values-based. They must operate with incredibly high levels of integrity to sustain the purpose of their brand. So if you’re a charity accepting donations that risk conflict with your core values, you’ll only create long-term harm to your reputation.

If the Mail on Sunday was able to fly to Mauritius to tour its factories, then one employee from Fawcett Society, Elle Magazine or Whistles could have made the trip too. Or at least investigated the manufacturing processes thoroughly.

However, far more strongly, I extend the question to the charities attached to the President’s Club over the years. If they had sent representatives to the fundraising dinners, could they have prevented all that has come to pass? Or, I could pose, did they already know?

In today’s ever-evolving millennial world, everyone is demanding truth, transparency and authenticity. And if the #MeToo revolution has shown brands anything (let alone charities) then it’s that they can’t hide or bury their heads in the sand, assuming or hoping that people and the press won’t notice if their business operations aren’t aligned with their publicised image and values. Because they will. And they’ll shout about it from the rooftops when they do.

So, what can you do?

We asked the SheSays membership how charities can up their game: remember that old saying ‘prevention is better than cure’? Do your due-diligence.

  • Get to know and adhere to all guidance from the Charity Commission, including ‘Know your Donor’ and Gov.UK’s ‘Charity Commission’s Compliance toolkit’;
  • Apply your core values and principles to everything your business says and does; every layer and business decision made - ‘be’ the essence of those brand values;
  • Ensure your donor is researched in proportion to the scale of the donation;
  • Monitor and verify the source, as well as end use of charitable funds;
  • Investigate all business procedures, practises, partners and third-parties;
  • Spend time and money in conducting investigations, including on-site inspections;
  • Invest in ‘reputation managers’ to avoid costly damage control. Newspapers may be destroyed, but bad news stubbornly remains in the digital ether;
  • Give trustees practical advice on carrying out proper monitoring and verification of the end use of funds;
  • From small to big issues, employ and regularly sit with legal teams to identify and discuss all concerns, risks and opportunities;
  • Pick up the phone, speak to everyone, get on planes, check everything;
  • In a nutshell, leave no stone unturned.

Hannah Swanston is creative director at Frank & Lively

This article was originally published in the charity issue of The Drum Network magazine series. You can purchase your copy here.

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