With charities such as museums and galleries relying increasingly on donations to supplement public grant funding, this report summarises the issues faced and best-practice management of the risks associated with donations as a source of income.

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Museums and galleries, and many other organisations, rely increasingly on philanthropic donations, due to the reduced availability of public grant funding. Donations carry unique risks as a source of income and there have been high-profile cases of the damage that can be caused if these risks are not well managed.

We reviewed the systems and policies relevant to donations management that are in place across museums and galleries sponsored by the Department for Digital, Culture, Media & Sport (DCMS). Museums and galleries generally have a good understanding of issues involved in managing donations, but the extent to which this has been developed into formal procedures and processes varies.

Our report summarises the legal, financial, reputational and dependency risks associated with income from donations, and the relevant regulation. It outlines elements of best practice in three key aspects of managing these risks:

  • Governance, including policies, trustee awareness and involvement and ethics committees;
  • Risk management processes, including due diligence, decision-making procedures, record-keeping and resourcing; and
  • Staff and other stakeholder management, including training and engagement with donors.

Our review did not identify any evidence of a significant inappropriate donation being accepted in the sector or of a breach of money-laundering legislation. There is, however, scope for museums and galleries to adopt more of the best-practice procedures and to learn from those generally considered to be leaders in the sector.

As the work on this report was undertaken when DCMS was called Department for Culture, Media and Sport, the name has not been updated in the report.

4 August 2017