Gift horse or poisoned chalice?

Last week, HEFCE published the Review of Philanthropy in UK Higher Education which was, perhaps  surprisingly, an upbeat and optimistic document and for that reason alone warrants a mention in a blog that I readily concede too often finds itself focussing on the depressing and the gloom-filled. Typically, though, I am going to concentrate on what is arguably the most depressing and gloom-filled aspect of the report, namely the risks that can arise in the context of donations.

One of the recommendations of the report is that all institutions should have “clear processes and governance mechanisms for acceptance of gifts as part of their normal ethical and risk management frameworks. These must be underpinned firmly by the organisation’s values, which should guide any decisions relating to the acceptance or otherwise of specific gifts.”

So when should institutions look a gift horse in the mouth?  Here are some of the scenarios that should raise alarm bells:

  • The identity of the donor or the source of the funds is not clear. At their worst, these could indicate issues around money laundering, terrorism or proceeds of crime. At best, failure to investigate these issues can lead to damage to reputation and loss of goodwill amongst other prospective donors.
  • The gift is a bribe, i.e. an inducement or reward offered, promised or provided in return for commercial, contractual, regulatory or personal advantage, or gives the appearance of a bribe. Sometimes the desired quid pro quo may be obvious, but in other cases the connection may be less evident, especially where there is more than one university department involved. The age old problem of right hand not knowing what the left is doing can give rise to the appearance of bribery even if none in fact exists, so a mechanism to check across all a potential donor’s interactions with the institution is important.
  • The gift is outside the institution’s charitable objects. As charities, universities and colleges must act only in furtherance of their charitable objects. A donation that involves setting up accommodation for the homeless, for example, supports a great cause, but sadly not the university’s cause and so would need to be modified or declined.
  • Accepting the gift would damage the reputation of the institution, because of the donor’s own reputation or activities. Aligning the institution with donors who match it in terms of values and aims should reduce this risk, although it will almost certainly also reduce the pool of potential donors.
  • The gift is otherwise not in the best interests of the institution. This might for example be because it has conditions attached with which the institution cannot and should not comply. The conditions might seek to direct or restrict the scope of academic enquiry to deliver a particular result, e.g. endowing a Chair in Middle Eastern Politics on condition that the incumbent approaches his work from a pro-Palestinian or pro Israeli perspective. Alternatively, the conditions might require the institution to pursue lines of enquiry that have no academic value.

So there are quite a lot of scenarios in which the allure of extra cash may need to be resisted for the greater good. The challenge will be in implementing an approach to donation vetting that is proportionate but comprehensive in an age where fundraising is more important than ever.

Smita Jamdar
Partner and Head of Education
For and on behalf of SGH Martineau LLP
DD: 0800 763 1332
M:  07909 925946
F: 0800 763 1732
International DD: +44 870 763 1332
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