UK: Insight Into The Infiltration Of The Presidents Club

Last Updated: 12 February 2018
Article by Alison Paines and Chris Priestley

The Financial Times' infiltration and reporting of the Presidents Club men-only fundraising dinner has raised a number of questions for other charities which either organise or benefit from fundraising occasions.

The details of the event, at which female workers were harassed and propositioned by attending guests, have been widely reported and created debate in Parliament and more widely. In its wake, the Presidents Club, a registered charity and the occasion's organiser, has said it will close and the Charity Commission has launched an urgent investigation. Several charities which otherwise would have received funds from the occasion have announced their intention to decline or return funds from the occasion.

Even for charities not directly affected by this event, there are a number of lessons and action points:

Charities should consider the circumstances in which they will accept or, perhaps more importantly, refuse donations, and consider establishing statement of policy. Ultimately, responsibility rests with a charity's trustees (even where specific decision-making has been delegated to executive staff) and so it falls to trustees to consider when the acceptance or refusal of donations will be 'in the best interests of the charity'. Once accepted, donations become charitable funds and there may be limited circumstances in which it is possible to return funds without the approval of the charity commission. It is likely that charities will now want to revisit their due diligence and policies with regard to collaborations with third parties, the terms of event management or organising contracts and the detailed specifications for events. Indeed, the charity commission and the fundraising regulator published a joint alert in November 2016 reminding trustees of their legal duties and the need in particular (in the commission's own words) to have 'effective systems in place to keep control of the fundraising , and taking steps to properly protect the charity's interests , assets and reputation'.

In the Presidents Club case, the position may be complicated by the fact that funds were being raised by one registered charity (the Presidents Club) for onwards disbursement to other registered charities. In those circumstances, the prima facie duty for trustees of the recipient charities is to accept. However, their trustees also have a duty to exercise an appropriate degree of care in administering the charity. In respect of both donations and fundraising activity, this demands that they carry out reasonable and proportionate 'due diligence' on either fundraising activities or proposed donations. Clearly, either accepting or declining major donations in controversial circumstances carries potential reputational risk for a charity (the risk, on the one hand, that acceptance is seen to be compromising the charity's integrity and reputation, which may itself have wider consequences for long-term fundraising, as against the risk that refusal deprives the charity of much-needed funds). In those circumstances, charities can consider seeking the views of the Charity Commission (s110 Charities Act 2011, power to give advice) or an order from the Commission authorising a refusal (s105 Charities Act 2011, power to authorise dealings with charity property) or more rarely an order from the Charity Commission using the ex gratia procedure (s106 Charities Act 2011).

There is no one-size-fits-all response to a controversial donation; what is in a charity's best interests will depend greatly on the charity in question and the context. However all trustees faced with such a donation should consider whether there is a need to seek further guidance or authority from the Charity Commission, and whether the acceptance of the donation constitutes or would constitute a 'serious incident' to be reported.

One of the many troubling aspects of the Presidents Club case is the requirement that workers at the event were asked to sign a 5-page 'non-disclosure agreement'. It's debatable whether such NDAs would be enforceable in this particular case (given that the individuals were not given an opportunity to read or retain the agreement), but it raises a wider point for charities. The Fundraising Code requires that organisations have a complaints procedure, which must also apply to third parties fundraising on their behalf. Further, they must have a clear internal 'whistleblowing' policy, allowing staff and volunteers to report any concerns they may have regarding fundraising practice.

Thinking more broadly about obligations to workers, charities owe a duty of care to their employees and volunteers. They are also subject to the provisions of the Equality Act 2010, which includes a range of protections for a broadly-drawn category of 'employee' which includes workers supplied by an agency. Employment status has once again become a major source of litigation (including in the Pimlico Plumbers case, due to be considered by the Supreme Court in April, and the Uber litigation, which comes before the Court of Appeal in April). Employment status is a highly fact sensitive issue and the removal of employment tribunal fees in the summer of 2017 has already resulted in a sharp increase in the number of individuals willing to take steps to investigate and enforce their rights.

The Equality Act protects workers against conduct which has either the purpose or the effect of violating the individual's dignity, or of creating an 'intimidating, hostile, degrading, humiliating or offensive environment' for the individual. There are additional, specific protections against unwanted conduct of a sexual nature. While it is hard to see how the behaviour recently reported in relation to the Presidents Club dinner would not fall within those general descriptions, the Equality Act aims to protect 'employees' against the actions of their employer or colleagues, rather than third-party members of the public. There used to be provisions which rendered employers liable for harassment of 'employees' by third parties where – as seems likely to have been the case with the Presidents Club – the employer knew that its employee had already been harassed by a third party on at least two previous occasions. These protections were repealed in 2013, however, as part of a governmental 'bonfire of red-tape', and the Presidents Club story has led some to call for their reinstatement – any charity which organises public events of any kind (fundraising or otherwise) should stay abreast of any developments in this regard.

Charities should obviously ensure that their recruitment, employment and hiring practices adequately reflect their statutory liabilities. These include the general principle that employers cannot recruit exclusively from one gender (or, in the language of the Act, discriminate on the basis of a protected characteristic – which would also include race, nationality, age bracket etc). The exception is if there is a 'genuine occupational requirement' that a particular role is carried out by someone with specific characteristics (for example, a women's refuge seeking to recruit a female counsellor or – potentially – if an acting role required someone of a particular gender or ethnic background). In most fields, 'genuine occupational requirements' for (say) a specific gender or nationality are few and far between and will require weighty justification: for most roles, charities should offer equality of access and opportunity in recruitment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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