Managing funding and income

Be cautious of running any live fundraising appeals if you know you’re going to close.

You should be open and honest with donors on the use of the funds and the wider context of the organisation. You should also make it clear to donors how funds will be used if the appeal raises too little or too much.

New donors may want to support you to continue certain activities. In this scenario, your trustees may need to consider whether to refuse a donation.

Trustees must only refuse donations if accepting them would harm the charity’s ability to achieve its objectives. Registered charities should also consider discussing this with the Charity Commission.

If you’re running an appeal which will fail due to the closure, the money should be returned to donors, unless they’ve agreed their money can be used for another purpose. New provisions in the Charities Act 2022 have made the rules around failed charity appeals simpler.

Learn more

Read the Charity Commission’s guidance on fundraising appeals for specific purposes.

Restricted funds can only be used for a particular purpose. You can’t fundraise for a specific cause and decide to use the money in another way. Examples of restricted funds could include:

• beneficiary gifts
• emergency appeals
• legacies or grants given for a particular project.

Charities in receipt of restricted funds are subject to liabilities if they don’t follow the funding restrictions imposed.

Speak to your donors about the status of any current grants or contracts. If you need to use their funding during the closure period or are reliant on its contribution to your general funds, you may need to renegotiate their use.

You could discuss moving the funded activity to another like-minded charity to continue delivery. If the donor won’t allow the funding to be used differently than intended, you may need to return the funds.

Learn more

• The Chartered Institute of Fundraising (CIOF) has more information on the difference between restricted, unrestricted and designated funds.

Some charities will have a ‘permanent endowment’. This is money or property that was originally meant to be held by a charity forever with conditions on how it can be used.

Usually charities will receive income from this investment or rent from the property or land.

The law allows charities to spend permanent endowment in certain circumstances. However, you may need to get permission from the Charity Commission.

Learn more

Read the Charity Commission’s guidance on:

• when you can spend, sell or transfer a 'permanent endowment'
• selling or leasing charity property.