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Update on Charity Commission inquiries

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By Emma-Jane Dalley, Anne-Marie Gregory, Alistair Robertson and Rachael Kemp


Published 12 May 2022


Over the last three months there have been a number of Charity Commission inquiry reports published. 
  • unauthorised benefits to charity trustees;
  • failure to identify and manage conflicts of interest; and
  • failures to have in place adequate financial safeguards.

These inquiries are a reminder to all trustees that they must be aware of and act in accordance with their duties.  Where they fail to do so, the Commission may take action.

The three cases highlighted below demonstrate the Commission’s approach to:

  • political campaigning and/or activity; and
  • concerns in relation to safeguarding and the findings of other regulators.

It also a reminder that the Commission may take action to recover unauthorised trustee benefits in certain circumstances.

Dream It Believe It Achieve It

This charity was established by a former Paralympian and his wife, with objects to educate young people, promote amateur sport and to relieve disability  The founder and his wife were both trustees along with two other individuals.  The Commission received complaints from members of the public and identified reports in the press of irregular activity concerning expenditure and fundraising. The Commission identified regulatory concerns regarding the charity’s governance which were not addressed or explained by the founder and his wife.  This led to the Commission opening an inquiry.

The Commission found serious mismanagement and/or misconduct in the administration of the charity, noting significant breaches of trust.  In particular, the Commission found that:

  • significant funds were paid to companies run by the founder and his wife which constituted unauthorised trustee benefits;
  • there was a failure to manage conflicts of interest;
  • a minimal amount of funds raised had been used to further the charity’s charitable objects; and
  • the un-conflicted trustees had not fulfilled their statutory duties or been actively involved in the administration of the charity.

This case stands out because the Commission subsequently took action in the High Court to recover misapplied funds, which had been paid to companies run by the founder and his wife and which constituted unauthorised trustee benefits.  A settlement was reached by mediation and the Commission exercised its powers to permanently remove the founder as a charity trustee.  His wife gave an undertaking not to act as a charity trustee in the future.

Humanity Torbay

Humanity Torbay’s activities included the provision of a drop-in centre for the local community giving them education/advice on health, wellbeing, housing, employment and referrals to local food banks.

The Commission found that there had been misconduct and/or mismanagement in the administration of the charity.  There were a number of findings in relation to the charity and its failure to keep proper accounting records which meant that there appeared to be very little control and oversight of income and expenditure by trustees. Additionally, this case also focused on a breach of trustees’ legal duties and responsibilities regarding political campaigning and activity.

The founder of the charity set up and controlled a Facebook page in the charity’s name and, despite advice and action plans from the Commission, continued to use the social media platform which contained the charity’s name and registered number to post political statements.   The trustees’ failure to control and prevent inappropriate material being posted on social media pages in the name of the charity was considered to be evidence of misconduct and/or mismanagement in the charity’s administration by the trustees.

This case acts as a reminder that charities cannot have a political purpose nor undertake political activity that is not relevant to, and does not have a reasonable likelihood of supporting the charity’s purposes.  The Commission’s guidance on this can be found here.

It is also a reminder that trustees must have adequate oversight and control over all material published in the name of the charity, which includes social media.

Hope House School Limited

This charity operated a small independent school for children with special educational needs.

The Commission opened an inquiry into the charity in relation to whether:

  • the financial controls of the charity were adequate, and its funds had been properly expended solely in furtherance of its charitable objects;
  • the trustees had exercised sufficient oversight and control of the charity;
  • potential conflicts of interest and connected party transactions had been properly managed; and
  • there had been any unauthorised trustee benefit.

This is an example of a case where an Interim Manager was appointed to the exclusion of the trustees due to the potential risk to the charity’s assets and mismanagement and/or misconduct by the trustees.  It was found that the financial controls policy of the charity had been breached by one trustee and there was inadequate supervision of the administration of the charity by the remaining trustees, which led to unauthorised personal benefits and misapplication of charitable funds. 

The Commission was also alerted to an Ofsted inspection undertaken on the school operated by the charity.  The outcome was that the main school and the charity’s residential facility received inadequate ratings with a number of causes of concern, including in relation to safeguarding.  The Commission chose to reopen and extend the inquiry to look at issues of safeguarding.

While the Commission does not investigate matters related to educational standards in independent schools, it was concerned that the trustees may not have been discharging their safeguarding duties to protect the charity’s beneficiaries from harm.

The Commission concluded that the trustees had not acted to adequately address the concerns identified by Ofsted. Some steps had been taken to improve safeguarding practices and training but there remained inadequacies regarding risk assessments, health and safety and the school site. The trustees’ failure to address these issues in a timely manner constituted misconduct and/or mismanagement in the administration of the charity.

The Commission’s approach to the involvement of another regulator (Ofsted) and its approach to concerns in respect of safeguarding is of interest and it is a reminder that safeguarding remains a key priority for the Commission.

The appointment of the Interim Manager contributed to the improvement of the charity’s overall financial position and, as the charity was still considered viable, helped to ensure it could continue providing education for children with special needs.  It serves as a reminder that the Commission is prepared to appoint an Interim Manager and the importance of an effective trustee body able to control the administration of its charity with the appropriate policies and controls in place to aid that function.  If in doubt, charity trustees are advised to seek advice when necessary and take steps to regularly review the charity’s policies, processes and procedures.

How we can help

Our experts can assist charities with understanding their duties and responsibilities, including by providing bespoke training.  We can also assist charities in putting in place appropriate policies, systems and procedures, including

  • advising on governing instruments and appropriate updates;
  • policies on conflicts of interest, expenses and compliance frameworks;
  • safeguarding of vulnerable adults and children;
  • regulatory regimes and inspections by regulators including the Care Quality Commission and Ofsted;
  • review and stress testing of systems and controls including oversight frameworks.

We can also assist charities who are:

  • subject to regulatory action by the Charity Commission;
  • responding to inspection reports, including factual accuracy representations; and
  • responding to notices to impose conditions on registration.