Image courtesy of Michael Jastremski

January 23, 2018; Financial Times

In the United States, it is still somewhat rare to see a nonprofit return a donation; when they do, the decision is basically up to the board. That is not the case in Great Britain, where an undercover reporter at the Financial Times revealed last week that a fundraising dinner given by a large and venerable charity, the Presidents Club, was deliberately set up as an opportunity for powerful men to prey on young women. In the days since, the many charities that benefited from Presidents Club fundraising have had to deal with the backlash that comes with this kind of controversy.

The Times reporter, Madison Marriage, explained,

[The dinner] is for men only. A black tie evening, Thursday’s event was attended by 360 figures from British business, politics and finance and the entertainment included 130 specially hired hostesses.

All of the women were told to wear skimpy black outfits with matching underwear and high heels. At an after-party many hostesses—some of them students earning extra cash—were groped, sexually harassed and propositioned.

The event has been a mainstay of London’s social calendar for 33 years, yet the activities have remained largely unreported—unusual, perhaps, for a fundraiser of its scale.

Within 24 hours of the story’s publication, the Presidents Club announced it would close. A statement clarified that “remaining funds will be distributed to an efficient manner to children’s charities, and then it will be closed.” The government announced that David Meller, a non-executive director at the Department for Education who helped organize the event, had resigned.

The charities that received money from the Presidents Club and the intended recipients of their remaining funds are now in a bit of a sticky situation. British law does not allow charities to simply return or refuse money to make a statement about their values, as many US charities have done.

The BBC explained,

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.

The Charity Commission, however, has been  vague about what the recipients of Presidents Club money should do. Rather than offering blanket approval for organizations wishing to reject the money, they advised caution for the dozens of charities whose associations are now tainted:

Depending on the terms of the donations and how the funds were raised, there may be restrictions on whether a donation can be returned and the Commission may need to authorize such returns. Charities should seek the Commission’s advice about whether our authorization is required in their specific case. Trustees may wish to seek their own legal advice. The Commission does not expect trustees to return funds raised for charitable purposes in the circumstances but understands if they wish to consider doing so.

So far, of the 19 organizations who have been given money by the Presidents Club, two said they would send the money back, four said they would accept no future donations, two said they would do both, and ten have made no comment. The Youth Sports Trust reserved judgment, saying they would accept no future funding if the allegations are “found to be correct.”

The question of whether to accept or reject the donations forces charities to confront their own tolerance or support of power-based sexual misconduct. The dinner was not an innocent event that got out of hand, and the men were not rogue actors at an otherwise respectable gathering. The event was billed as “the most un-PC event of the year.” The Financial Times revealed that “[Auction] lots included a night at Soho’s Windmill strip club and a course of plastic surgery with the invitation to: ‘Add spice to your wife.’” Caroline Dandridge, who runs the agency that supplied the hostesses, told the girls, “You just have to put up with the annoying men and if you can do that it’s fine.” The Daily Mail reported that her agency’s website has closed, but prior ads from the agency, Artista, feature girls in tiny shorts and schoolgirl outfits, suggesting that the Presidents Club deliberately contracted with an agency that sells time with sexy women to raise money for children, year after year.

Stephen Lee, a professor of voluntary sector management at the City University of London, said of the values associated with charities:

[They] lie at the heart of what constitutes acceptable charitable behavior; their absence or their active denial makes the behavior unacceptable. This is why charities are so protective of their reputations. These are reputations that are hard won and which are put at risk, as in this case, in an instant. This is why The Great Ormond Street Hospital and other beneficiaries of the Presidents Club are right to refuse current donations and to return previous ones (despite some arguing it is “regrettable” to do so). Acceptance of these donations would be, in themselves, a moral outrage and offensive to the values that sustain and legitimize all charities.

Some have argued that the charities should keep the donations because, after all, it’s for the children, and the charities have put it to good use. Because of Britain’s more difficult restrictions around returning donations, it may be that the majority of charities end up keeping the money. In that case, their silence and the weak protections offered by the Charity Commission will serve as an answer when people ask how this kind of thing can still happen in 2018.—Erin Rubin