Naomi Campbell, dodgy diamonds, and charity governance

So Naomi Campbell handed her dirty diamonds (allegedly a gift from Charles Taylor) to Jeremy Ractliffe, the manager of a children’s charity founded by Nelson Mandela. He declined to pass them on to the charity, as she apparently intended. Instead he kept them, in order “to protect the reputation of the NMCF, Mr. Mandela himself and Naomi Campbell, none of whom were benefiting in any way” (Reuters).

Several UK charities have faced similar – if less high profile – issues in relation to accepting donations from controversial people and organisations. See, for example, the “profoundly uncomfortable” issue of accepting funds raised by the BNP (Third Sector).

So are charities obliged to reject controversial donations? Not necessarily. Those ultimately responsible for the charity, its trustees, have an obligation to act in the best interests of the charity, and this will typically involve raising as much money as possible to deliver its objectives.

There may be times when trustees should, nevertheless, reject a donation. As the Charity Commission for England and Wales puts it:

“There may be occasions where it would be in the interests of the charity to decline a gift. If a donor, for example, were to insist that the charity adopt a particular policy or allow the donor to have a say in selecting beneficiaries, the trustees would have to consider very carefully whether it would be in the interests of the charity to accept the donation.”  (CC20)

In the same paper, the Commission warns charities against unwitting involvement in money laundering or other criminal activity. However, it has rather little to say about accepting donations from disreputable sources, such as funds that may ultimately be the proceeds of crime.

So it would be up to the charity to decide whether the benefits of accepting donations from undesirable sources outweigh the reputational damage that might result from them. It will typically be a difficult decision, as the charity will have to weigh the pressing interests of its beneficiaries against intangibles such as its own good name. For this reason, such decisions are often taken to the highest level – the trustee board.

In this particular case, it might be hard to see how a children’s charity could possibly accept donations linked to war crimes in Sierra Leone. Had the trustees been asked to consider accepting the diamonds, they no doubt would have decided instead to hand them immediately to the authorities. Unlike the manager, acting in a personal capacity, they would not have been able to give much consideration to the reputation of other individuals concerned.

 

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