Charities Should Rarely Return Tainted Donations

Here in the United States, the public and media don’t think twice when a nonprofit decides to cut ties with a donor by returning money tainted by association with the donor.  We almost expect it, once scandal takes hold.  We are a lot more puritanical that way.  Here is what the National Academy of Sciences said earlier this year regarding a NY Times expose suggesting the Sackler Family — the poster pharmacists for opioid addiction — donated to nonprofit researchers in an effort to influence the reporting of scientific research outcomes about opioid use:

A New York Times article focuses on donations received by the National Academy of Sciences between 2000 and 2017 from the Sackler family.  As the scale of the opioid epidemic in this country became clear, the NAS Council decided to freeze the use of these funds in 2019.  We are deeply troubled by the human tragedy of the opioid epidemic, and are committed to responsibly disposing of, or repurposing, these funds.  The news article suggests that the donations from the Sacklers presented a conflict of interest for the National Academies’ studies on chronic pain, opioid use, and ways to combat the opioid epidemic. The Sackler funds were never used to support an advisory study on these issues.  It also is important to note that these funds were donated to the NAS, not the National Academy of Medicine.  

We have been transparent about the Sackler funds, listing them in our annual treasurer’s reports and elsewhere. The National Academies have many checks and balances to protect the integrity, independence, and objectivity of our evidence-based study process, including welcoming public comment on committee nominees, our long-standing peer-review procedure, and our updated conflict-of-interest policy.  Ensuring that volunteer committee members remain aware of and adhere to our policies on conflict of interest and disclosure is an essential part of our process. The NAS Council has explored several options, including returning the funds. There are a range of contractual, legal, and practical considerations that affect our ability to return or repurpose the funds. Doing so in an ethical and transparent manner will be the most important consideration. 

Meanwhile, the Chair of the Charity Commission for England and Wales takes a dim view of charities that give in to “squeamishness” and return donations.  In a lecture yesterday entitled “Philanthropy Past, Present and Future, Orlando Fraser KC reminded listeners that the law “generally expects charities to accept monies where they are available, in order to deliver on their purposes for the public benefit, and not to refuse or return them without very good reason.” He calls the practice of returning donations irrational and advocates pragmatism over idealism:

One example of materially irrational decision-making would be when it is apparent that the motivations for a return or refusal are simply the personal worldviews or preferences of the relevant trustees, rather than the best interests of the charity.  Demonstrative personal squeamishness around sources of philanthropic funding may benefit the sense of righteous progressiveness of a trustee or charity executive, but it will most likely not serve the beneficiary reliant on the services a charity provides.  Such attitudes harm not just the beneficiaries of the individual charity, but risk undermining charitable giving by high-net-worth individuals overall.  I mentioned earlier Dame Stephanie’s view that we should develop greater openness about wealth, and about giving, in the UK. Making conversation about giving more common, more acceptable, less embarrassing.  I agree with this. And it starts with celebrating, rather than shaming, those who do give.  Remember, the immediate alternative to high-net-worth individuals giving generously to charity, is high-net-worth individuals not giving generously to charity, and keeping their wealth to themselves and their families.  If you care about the distribution of wealth, encourage those with wealth to distribute it a little more vigorously.

I think Fraser takes the view most charitable beneficiaries would take.  If nothing else, the speech gives cover to nonprofits who resist cancel culture’s demand, sometimes, to cut off noses to spite faces.  

darryll k. jones