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I was recently a participant in a group study, in which there was an option for participants to donate the gratuity offered to a charity. However, I received a message from a researcher today saying that this is not possible:

Earlier this year, you participated in our three-part study... we asked you if you would be willing to donate some or all of your £4 bonus to the charity Shelter.

However, we were recently advised by our Finance Team that this was not possible. It transpires that the University of Southampton has charitable status and, therefore, is prohibited by anti-money laundering regulations from making payments to other charities. Hence, we cannot transfer the donations to Shelter.

(quoted excerpt from researcher's message, bold emphasis mine)

I searched and found the Sanctions and Anti-Money Laundering Act 2018, a 2017 'Money Laundering Regulations' consultation, and a guidance page on the Law Society of Scotland. I cannot find an obvious or direct reference to inter-charity payments, but I am not sure if I am looking in the right places.

Are charities really prevented from 'making payments' to other charities? If so, what is the ostensible motivation for such a prohibition? Does it extend to every type of payment? I suspect the law may vary in Scotland, but I would be interested to understand the situation in any part of the United Kingdom.

  • If the question is unclear or needs more details please let me know and I'll be happy to improve. Cheers! :) – bertieb Sep 3 '18 at 14:11
  • Sounds like the university just needs to launder the money so it can't be traced back to them! LoL please don't do that that's terrible advice. Very interested to see the answer to this though. – dsolimano Sep 3 '18 at 15:10
  • This may be prohibited in the U.K. but in the U.S. there are certain kinds of charities (called private foundations) which a pretty much required to make donations to other charities. – ohwilleke Sep 5 '18 at 0:33
  • @ohwilleke: It's the same here; what charities can't do is divert money to unrelated expenditure (whether a school donating to a homeless shelter or a political fund paying for a rabbit's air ticket). – Tim Lymington Sep 6 '18 at 15:34
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It looks to me as if "money laundering" is a misunderstanding; though any organization has a duty to prevent this, charities have no special responsibilties.

However, charity law does in general terms prevent a charity from giving money to a cause that does not further the charity's aims. The Charity Commission's guidance says "Charities can only spend their money on projects or activities that support the aims stated in their governing document" (and although it goes on to outline exceptions, you still need to obtain the Commission's agreement to return a gift from a source you find objectionable, for example). The rationale is that people gave money to the University to further the cause of education; the researchers have no right to divert that money to Shelter (or another charity like the Roman Catholic Church) without the giver's consent. My experienced but non-expert view is that these payments would be a breach of the law, though they would probably be treated as a de minimis exception; you can't blame the University's legal team for insisting they should not be made.

  • Would the giver in this case be the original donor, or the study participant? From donor's perspective, does it matter if the study participant decides to take their stipend and spend it on a coffee or donate to whatever charity they choose? – sharur Sep 4 '18 at 16:24
  • As set up, the university is giving the donor's money to an unrelated charity (which is illegal) rather than to a participant as part of the study (which is legal). The study participant may of course choose to do what he wants with the money once received, and it is probably possible to set up something permissible that would have the same effect as this (ask a lawyer), but good intentions do not avoid legal responsibilities. – Tim Lymington Sep 4 '18 at 16:34

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