Charity merchandise sales donation agreements
Agree the donation calculation, campaign scope, customer wording, payment records and oversight before launch. A seller promoting sales-linked donations is normally a commercial participator, requiring a written agreement and fundraising statements. Coordinate the separate sourcing arrangements with Cambridge China Bridge.
Identify the seller making the promise
This guide covers charities in England and Wales. Charity Commission guidance defines a commercial participator as a business or person stating that money from selling goods or services will be donated to charity. A merchandise seller advertising sales-linked donations normally fits that description.
Identify the business making the public promise and paying the donation. Record separately who buys from the factory, imports the merchandise and sells to customers. Use sourcing agent or seller to clarify the procurement role before drafting the fundraising arrangement.
Put the agreement in place before launch
The charity must enter into a written agreement containing all legally required details before fundraising begins. Have the draft checked for the applicable requirements rather than treating a purchase order or logo permission as the complete fundraising agreement.
As a practical drafting checklist, agree the parties, campaign dates, products, sales channels, donation calculation, payment schedule and reporting format. Address changes, early termination, outstanding donations and remaining printed stock. Agree permission to use the charity’s name and logo, approval of campaign materials and a process for correcting statements. Have authorised representatives sign the agreed document.
Define the donation and customer statement
Commercial participators must make fundraising statements identifying the charity and explaining the proportion, total amount or estimate to be donated from the commercial activity. Agree customer wording alongside the calculation. Avoid leaving the promise at ‘a share of proceeds’ without explaining what the charity will receive.
Specify whether the calculation uses each item sold, sales revenue or profit. Define how VAT, discounts, delivery charges, returns and cancelled orders affect it. If profit is used, agree which costs can be deducted. Explain any campaign limit or conditions in the proposed wording. Test the formula against sample transactions before approving packaging, product pages and advertisements.
Record the trustees’ decision and product checks
The partnership and the decision about what the charity receives must be in the charity’s best interests. Charity Commission guidance calls for proportionate due diligence. Check the seller’s reliability, finances, fundraising approach and fit with the charity’s values. Record why the expected benefit justifies the risks and who will oversee the arrangement.
For China-made goods, ask for a product specification, an approved printed sample and the agreed inspection evidence before releasing charity-branded production. The existing promotional merchandise guide covers product compliance and branding responsibilities. Keep the product approval file alongside the fundraising agreement so trustees can assess both the goods and the public promise.
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Reconcile donations and act on problems
The charity must regularly monitor its fundraising agreements. Commercial participators must keep relevant books, records and documents and make them available to the charity on request. Arrange access to sales and adjustment records that allow your charity to check the donation calculation.
Appoint a charity contact to compare campaign sales, refunds, calculated donations and bank receipts at agreed reporting points. Review live advertising against the approved wording. Agree how missing reports, late payments, complaints or incorrect claims trigger escalation, correction or a pause. At campaign close, reconcile the final payment and confirm what happens to remaining stock carrying the charity’s name.
Frequently asked questions
Does a seller donating sales income need an agreement?
A seller promoting sales-linked charitable donations is normally a commercial participator. The charity needs a written agreement containing the legally required details before fundraising starts.
Can the seller just say ‘a share of proceeds’?
Agree a statement identifying the charity and explaining the proportion, total amount or estimate donated. Define the calculation so customers and the charity can understand the promise.
What should we agree about returns and discounts?
Define how refunds, cancelled orders, discounts, VAT and delivery charges affect the donation. If it depends on profit, agree allowable deductions and the records needed to check them.
Can trustees leave all checks to the seller?
The charity must regularly monitor the agreement. Give a charity contact responsibility for checking customer wording, sales reports, donation calculations and payments, with escalation to trustees.