Large Donations Policy & Strategy
Large Donations Policy & Strategy
Executive Summary
Quick Decision Guide:
- CHF 5K-80K → Accept (if <20% budget) + Publish donor name
- CHF 80K-200K → Spread over years OR reduce to 20%
- CHF 200K-1M → Propose foundation model
- >CHF 1M → Endowment structure only (capital separate, only returns flow)
Always Reject:
- Political parties
- Media companies (Facebook, Google News, etc.)
- Donor demands editorial control
- Pharma companies (frequent fact-check subject)
- Donors involved in active fact-checks
1. Legal Framework (Switzerland)
Tax Deductibility for Donors
Federal Tax:
- Maximum deductible: 20% of net income
- Example: Income CHF 500,000 → max. CHF 100,000 deductible
Cantonal Taxes:
- Most cantons: 10-20%
- Zurich: 20%
- Zug: 20%
- Geneva: 20%
Example: Donor with CHF 1M income can deduct max. CHF 200,000 (20%). If they donate CHF 500,000, only CHF 200,000 is tax-deductible.
No Legal Limits
Swiss law has NO cap on donation amounts. Donors can give CHF 1M, 5M, 10M - but only a portion is tax-deductible.
Anti-Money Laundering
For very large donations (CHF 100,000+):
- Verify donor identity
- Document source of funds
- Report suspicious transactions to MROS
2. IFCN/EFCSN Requirements
What IFCN requires:
- Publish all funders above threshold
2. Prove financial independence
3. No conflicts of interest
4. Editorial firewall - no influence on fact-checks
Typical thresholds among IFCN members:
- Publish donors above CHF 1,000-5,000
- Extra transparency for donors above CHF 10,000-50,000
- Written editorial firewall agreements
Examples from IFCN Members:
Full Fact (UK)
- Publishes all donors over £1,000
- Policy: "No funder has any influence over our fact-checking"
FactCheck.org (USA)
- Publishes all donors over $1,000
- Maximum: Single donor may NOT finance >10% of budget
Correctiv (Germany)
- Publishes all donors over €5,000
- Rule: No single source may exceed 20% of budget
3. Risk Analysis
Credibility Risks by Donation Amount:
| Amount | Risk Level | Notes |
|---|---|---|
| CHF 10K-50K | Low | No problem with transparency |
| CHF 50K-200K | Medium | Needs clear governance rules |
| CHF 200K-1M | High | Could be >20% budget → dangerous |
| >CHF 1M | Very High | Almost certainly >50% → toxic for credibility |
Specific Risks:
4. Solution: The 20% Rule
Add to Bylaws:
1. The association finances itself through:
- Grants (Innosuisse, Gebert Rüf, etc.)
- Donations from individuals and organizations
- Services (within nonprofit regulations)
2. Transparency:
a) All funders above CHF 5,000 are published annually
b) Annual report with detailed financial overview
3. Independence:
a) No single funder may finance more than 20% of annual budget
b) Donors have NO say in fact-checks whatsoever
c) Editorial Firewall must be in all agreements
4. Exceptions:
Competitive public funding (Innosuisse, SNF, etc.) exempt
from 20% rule when secured through academic partner.
5. Foundation Model (for CHF 1M+ donations)
When someone wants to donate very large amounts:
Option 1: Separate Foundation
- Donor establishes own foundation with CHF 1M+
- Foundation funds FactHarbor long-term at <20% annually
- FactHarbor remains independent
- Advantage: Foundation can fund other projects too
Option 2: Endowment Model
- CHF 2M+ as capital stock in FactHarbor Foundation
- Only returns (3-5%) flow to association → CHF 60-100K/year
- Advantage: Sustainable, never >20% of budget
Option 3: Matching Fund
- Donor matches other donations up to CHF 500K
- Example: For every CHF 1 donated, major donor gives CHF 1
- Advantage: Encourages diversification automatically
6. Governance Safeguards
Independent Ethics Advisory Board
Establish:
- 3-5 independent experts (journalism, academia, ethics)
- Task: Monitor independence
- Authority: Can reject donations if conflict of interest
Donation Rejection Policy
Examples:
✗ Meta/Facebook donates CHF 500K → REJECT (fact-check subject!)
✗ Political party donates CHF 100K → REJECT
✅ Philanthropic foundation donates CHF 100K → OK (with transparency)
✅ Tech company outside media CHF 50K → OK (e.g., SAP)
Conflict Management Process
When large donation arrives:
Step 1: Due Diligence (Board)
- Who is the donor?
- Any conflicts of interest?
- Is source of funds clear?
Step 2: Ethics Board Review
- Automatic for >CHF 50,000
- Recommendation: Accept / Reject / Conditions
Step 3: Transparency Protocol
- Document donation
- Sign firewall agreement
- Prepare publication
Step 4: Annual Review
- Is diversification adequate?
- Does donor exceed 20% threshold?
- Exit strategy needed?
7. Implementation Steps
Before First Large Donation
Milestone: Amend Bylaws
- Add § Transparency & Financing
2. Codify 20% rule
3. Define Editorial Firewall
4. Get General Assembly approval
Milestone: Prepare Documentation
- Donation contract template (with firewall clause)
2. Donor due diligence form
3. Rejection letter template
Month 2: Website
- Create "Our Funding" page
2. List all funders >CHF 5,000
3. Explain independence principles
When Donation Arrives
Step 1: Initial Conversation
Clarify: Motivation? Expectations? Accept 20% rule? Accept transparency?
Step 2: Due Diligence
Check: Conflict of interest? Legal source? Exceeds 20%? Political/media connections?
Step 3: Ethics Board (for >CHF 50K)
Consult 2-3 external advisors minimum
Step 4: Decision
Accept (if all criteria met):
- Sign contract with firewall
- Receive donation
- Publish on website
Reduce:
- Example: Donor wants CHF 200K, budget is CHF 500K
- Proposal: Accept CHF 100K (=20%) OR spread over 2 years
Restructure (Foundation Model):
- Example: Donor wants CHF 2M
- Proposal: Separate foundation gives CHF 60K/year
Reject:
- Irresolvable conflict of interest
- Donor wants editorial control
- Unclear source
- Political party/media company
8. Example Scenarios
Scenario 1: Tech Billionaire - CHF 500,000
Context:
- FactHarbor budget: CHF 400K
- Donor: Swiss tech entrepreneur
- Problem: CHF 500K = 125% of budget → TOO HIGH!
Solution Options:
Scenario 2: Pharma Company - CHF 100,000
Context:
- Donor: Novartis/Roche
- Problem: Pharma is frequent fact-check subject!
Scenario 3: Anonymous Donor - CHF 50,000
Context:
- Private person wants anonymity
- Problem: Contradicts IFCN transparency
Solution:
Scenario 4: Government - CHF 200,000
Context:
- Swiss federal office funding
- Problem: Government as funder is critical!
Distinguish:
9. Donation Contract Template
FactHarbor Association ("Recipient")
[Donor Name] ("Donor")
§ 1 - Donation
Amount: CHF [AMOUNT]
Purpose: General activities ☐ / Specific project ☐
§ 2 - Editorial Firewall (CRITICAL!)
The Donor acknowledges:
a) NO say in selection, execution, or evaluation of fact-checks
b) Recipient may fact-check ALL topics, including Donor
c) Donor will not influence editorial decisions
d) Violation → Recipient may return donation
§ 3 - Transparency
a) Published on website (name/amount) if >CHF 5,000
b) Mentioned in annual report
☐ Full name ☐ "Private individual" (only if <CHF 50K)
§ 4 - Tax Receipt
Recipient issues receipt. Recipient is nonprofit.
§ 5 - No Quid Pro Quo
No expectation of services in return.
§ 6 - Return Right
Recipient may return if: conflict discovered, violates 20% rule,
or other problems.
§ 7 - Law: Swiss law, jurisdiction [LOCATION]
[DATE]
_____________ _____________
Donor President FactHarbor
10. Monitoring & Reporting
Quarterly Review
Every Quarter:
- List all donations >CHF 5K
- Calculate percentage of each donor
- Check if anyone >20%
- Identify risk donors
- Update website
Annual Report
Website: "Our Funding" Page
Include:
Principles:
- 20% Rule
- Editorial Firewall
- Transparency (publish >CHF 5K)
- Diversification (min. 5 sources)
Current Funders (example):
Institutional Funding (65%)
- Innosuisse Innovation: CHF 400,000
- ETH Zurich Partnership: CHF 50,000
Foundations & Donations (25%)
- Foundation A: CHF 80,000
- Individual B: CHF 50,000
- Company C: CHF 20,000
Small Donations (10%)
- 234 donors: CHF 65,000
Total: CHF 665,000
11. Long-Term Strategy
Year 1-2: Grants First
- 70% Institutional grants
- 20% Foundations/Medium donations
- 10% Small donations
Year 3-5: Diversify
- 40% Institutional grants
- 30% Foundations/Partnerships
- 20% Earned income (services, licensing)
- 10% Small donations
Year 5+: Sustainable
- 30% Endowment returns
- 30% Institutional grants
- 20% Earned income
- 20% Many small donations
Diversification Steps:
- Combine multiple grants (Innosuisse, Gebert Rüf, Google, Prototype Fund)
2. Corporate partnerships (tech companies, NOT media) - each <CHF 50K
3. Small donor campaigns (1,000 × CHF 50 = CHF 50K)
4. Earned income (workshops, API licensing, consulting)
Summary & Quick Reference
✅ DOs
❌ DON'Ts
Standard Response to Large Donors
For credibility as an independent fact-checking organization,
no single funder may finance more than 20% of our budget
(IFCN Code of Principles).
With our current budget of CHF [X], we can accept maximum
CHF [20%] as direct donation.
Alternative models:
- Distribution over multiple years
- Establishing supporting foundation
- Matching fund model
Your support means a great deal. We're confident we can find
a solution that matches your intent while preserving our
independence."
Checklist Before Accepting
□ NOT media company?
□ NOT political party?
□ NOT involved in active fact-checks?
□ Source clear and legal?
□ Contract with firewall ready?
□ Publication planned?
□ Ethics board consulted (>CHF 50K)?
□ Board approved?
□ Monitoring system ready?
All checked? → ACCEPT ✅
Related Pages:
- FactHarbor Bylaws
- Funding Sources
- IFCN Signatory Application
- Governance Structure
- Transparency Policy
Document Owner: Board of Directors | Review: Annual
For Questions:
- Legal counsel for contracts
- IFCN for best practices
- Other fact-checkers for experience