Setting up and running a charity – guidance

Ex gratia payments by charities (CC7)

What charity trustees must do if they want to make an ex gratia payment from charity funds.

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A charity might occasionally want to make a payment that does not support its aims, but which they feel is morally right. This is called an ‘ex gratia’ payment. Trustees must decide if there is a clear moral obligation to make the payment, and then apply for Charity Commission permission.

For example, someone’s will may leave money to be shared between relatives and a charity. If the person then drafts a will to include a new grandchild, but dies before being able to execute the will, the charity may feel morally obliged to give some of its share to the grandchild.

This guidance explains the procedure trustees need to follow. Once the trustees have decided they want to make a moral payment, they can apply online for the commission’s approval.