Academy trusts · Regularity and propriety
Can an academy trust donate to another charity?
Academy trusts are often asked to support a good cause by adding to money raised for another charity. It can look like a small, kind gesture. In practice the answer turns on the trust's objects, and getting it wrong shows up in the regularity review. Here is how we think about it, and how pupil fundraising for the same cause can be handled properly.
A donation to a charity with different purposes falls outside an academy trust's educational objects, whichever fund pays it.
Regularity covers all income and expenditure. Paying from unrestricted or self generated income gives no protection, and there is no de minimis.
A pupil led appeal, collected clearly for the charity and passed on in full, can be treated as agency and kept out of the SOFA.
The question
Most academy trusts will meet a version of this at some point.
A local event, a community group or someone connected with a school raises money for a charity, and the trust is asked whether it can make a contribution of its own to the total. The amount is usually modest and the cause is usually a good one, so the request can be hard to turn down.
Three questions follow. Does the trust have the power to make the payment at all? How would even a small payment of this kind fall out of the regularity review? And if pupils raise money for the same charity, can that money be treated as agency rather than as the trust's income and expenditure?
The short answer. In most cases the trust should decline to pay from its own funds and offer to support a pupil led appeal instead. The rest of this insight sets out why, and what every academy trust finance team should have in mind.
Start with the power, not the approval
The first question is not whether the DfE would approve the payment. It is whether the trust has the power to make it at all.
An academy trust is a charity with educational objects, set out in its articles of association. A donation to a charity with different purposes, however worthy, falls outside those objects. That is true whichever fund the money would come from, including unrestricted income such as lettings, interest or income from inspection and other services.
A payment outside the objects is irregular in its own right, and DfE approval could not cure it.
The Academy Trust Handbook's framework for special payments, and its requirement to seek prior approval for transactions that are novel, contentious or repercussive, controls payments the trust has the power to make. It is a relevant second line of analysis, but here it is secondary. If you are replying to a governor or trustee, lead with the objects point. It is the clearest and most complete answer.
A simple order of questions
If not, stop. The trust has no power to make it, from any fund, and no approval changes that.
Outside objects: declineEx gratia, compensation and similar payments are subject to the Academy Trust Handbook's special payments rules and delegated limits.
Check limits and approvalsIf so, DfE prior approval is needed before the trust commits to it.
Seek approval where requiredCheck the register of interests and the related party transaction requirements before anything is paid.
Then proceed, and document the decisionDoes timing matter?
It is tempting to think a payment after the event is worse than one promised before it, because it looks retrospective. In fact the payment would be gratuitous either way. The trust would receive nothing in return and would have no obligation to pay.
It is the nature of the payment, not the fact that the event has already happened, that would make it ex gratia. A pledge made before the event would have exactly the same problem.
How it falls out of the regularity review
Yes, we would expect an auditor to pick it up, even if the amount is small.
The regularity engagement covers all of the trust's income and expenditure, not only spending funded by grant. So paying from unrestricted or self generated income gives no protection. Some trusts assume their "own money" sits outside the regularity framework. It does not.
| Point | What it means in practice |
|---|---|
| Scope | Regularity covers every source of income and every item of expenditure, whichever fund it sits in. |
| Size | A small amount may not, on its size alone, modify the regularity conclusion. |
| Nature | Regularity and propriety are assessed on the nature of a transaction, not just its value. A payment outside the objects is irregular by nature. |
| Reporting | We would expect to report it as an irregular payment in our findings to the trust. |
| Accounting officer | The accounting officer would need to consider it when preparing the statement on regularity, propriety and compliance. |
| De minimis | There is none. No amount is too small to be outside the objects. |
The propriety angle
Requests of this kind often come from people connected to the trust, such as a governor, trustee or member of staff who is also involved with the fundraising organisation. That adds a second layer.
If a payment were routed through that organisation rather than made directly to the charity, it could become a payment to a body in which a governor or trustee has an interest. That brings in the register of interests and the related party transaction requirements in the Academy Trust Handbook. Even where nobody gains personally, the appearance matters, and propriety is about how public money is seen to be used as well as how it is used.
Another reason to keep trust funds out of it. When a request comes through someone connected to the trust, check whether any part of the money would pass through an organisation they are involved with, and check the register of interests before replying.
Pupil fundraising: agency or income?
A pupil led appeal is a good alternative. The accounting question is whether the money raised belongs in the trust's accounts at all.
Where the trust simply collects money on behalf of the charity and passes it on, it is acting as agent. The money is not the trust's income, and it does not pass through the statement of financial activities (SOFA). We are comfortable with agency treatment provided all of the following conditions are met.
| Condition for agency treatment | |
|---|---|
| 1 | The appeal is clearly made for the named charity at the point of collection, so donors know where their money is going. |
| 2 | The trust has no discretion over where the money goes. |
| 3 | The trust adds no money of its own and does no matching. |
| 4 | The funds are passed on to the charity promptly and in full. |
| 5 | The funds are recorded in a balance sheet holding or creditor account, not in income. |
On that basis the money stays out of the SOFA, and any balance still held at the year end is shown as a creditor.
Agent
Collected for a named charity, passed on in full
- Donors give to the charity, through the trust
- No trust discretion and no top up
- Held in a creditor account
- Not in the SOFA; year end balance is a creditor
Principal
Raised into a general school charity fund
- Trust later decides which causes benefit
- Trust has control over the funds
- Recognised as donation income
- Held in a restricted fund until spent
The difference matters. If pupils raise money into a general school charity fund and the trust later decides where it goes, the trust is acting as principal. The funds are then the trust's income, held in a restricted fund, and the payments out become the trust's own expenditure.
Charities SORP 2026
The Charities SORP 2026 will apply to academy trusts' 2026/27 accounts. We do not expect the principal and agent position to change in substance. We will confirm this once the Academies Accounts Direction for 2026 to 2027 is published, and we will update this insight if anything changes.
What we would recommend
- Decline the payment from trust funds. Explain that the charity's purposes fall outside the trust's educational objects, so the trust cannot make the payment from any fund. Lead with this, rather than with the approval process.
- Offer a pupil led appeal instead. Supporting pupils to raise money for a cause they care about, through the curriculum or enrichment activities with modest staff time, should sit comfortably within the educational objects.
- Use the cleanest route for the money. Ask pupils and families to give directly through the charity's own online giving page or sponsorship forms. The money then never touches the trust's accounts.
- If the trust does collect cash, meet the agency conditions. Name the charity at the point of collection, add nothing, pass everything on promptly, and use a creditor account.
- Check the register of interests. Where the request comes from a governor or trustee, keep any payment well away from organisations they are connected with, and record how the decision was reached.
Need a second view?
We audit academy trusts across England and are happy to talk through a payment, a fundraising arrangement or a regularity question before it becomes a finding.
Contact Reckoner Audit.