The most significant factor for charities entering fundraising or partnership agreements with companies is the potential risk to your reputation. The reasons for investing responsibly outlined in why do it also apply to purchasing, fundraising and partnership approaches.

Charities are coming under increasing pressure from stakeholders and media scrutiny to behave ethically and carefully select the companies they work with or buy from. Reputation risk is an area of concern for charities, whose name and brand is a valuable asset.

Increasing numbers of consumers are avoiding companies on ethical grounds, and some charities are concerned that they may also lose public support if they are linked to such companies.

Forming a commercial partnership with a company, such as for fundraising activities, can be a higher profile relationship than buying shares in the company, and so the potential reputation risks can be greater.

The Charity Commission states, “A successful partnership can raise both a charity’s income and profile. An unsuccessful one, where stakeholders perceive the charity to have “sold out”, can damage income and profile.

The Charity Commission conducted a study of Charities and Commercial Partners, which stated that, “Charities should consider establishing an ethical policy which clearly sets out the charity’s values…..Against the framework of their ethical policy, charities need to carefully consider whether a proposed commercial partnership is appropriate and in the best interests of the charity.”

It is important to consider the development of an ethical partnerships and procurement policy which sets out your:

• ethical commitments
• social, environmental and ethical criteria
• approach to positive screening, negative screening or engaging with companies
• process for making decisions