The Commission gathered evidence that the charity was acting outside its objects and that there were financial irregularities in the way that it operated its bank account. The Commission attempted to resolve these issues by issuing the charity with a formal action plan in March 2010. The trustees however failed to cooperate and following significant engagement with them, as a result the Commission opened an inquiry on 9 December 2011.
The charity was advertising a loan to charity scheme on its website called ‘Re-Give’ which was set up as an Industrial and Provident Society and registered with the Financial Services Authority. It was intended to be an online platform where UK organisations with a social purpose could publicise their activities and invite ‘returnable donations’ or loans directly from the public. The Commission found that the charity’s activity in developing this scheme may not have been exclusively charitable. The inquiry found a lack of other charitable activity.
The inquiry found failures of governance and management within the charity with a failure to keep adequate records of the charity’s decision making. In the inquiry’s view there was only one trustee (the chair of the charity) with effective control of the charity. The trustees were not able to show satisfactory evidence of adequate financial controls, with a lack of segregation of charitable funds from personal funds and evidence that personal funds had been paid through the charity’s accounts to enhance the charity’s cash flow when applying for grants.
The Commission’s inquiry, in a report published today, concluded that there were serious governance and management failings at the charity. There was evidence of serious mismanagement and misconduct within the charity and that the trustees had failed in their duties and responsibilities.
The inquiry’s conclusions included:
the trustees had failed to follow regulatory advice and guidance given by the Commission and there was a lack of adequate governance or management policies, procedures or processes to adequately address the regulatory concerns raised
the trustees did not adequately segregate charitable funds from other funds and there were few if any financial controls over spending – they did not exercise proper financial management over the charity’s funds
that unsatisfactory final accounts had been submitted to the Commission
in the commission’s view, the information and responses given by the chair of the charity were inadequate, unclear or vague. The other trustees did not provide information to the inquiry and there were strong indications to suggest the chair was in a position of significant influence and control, if not in sole control of the charity.
there was little evidence that the charity was being operated exclusively in furtherance of its objects – The charity had failed to demonstrate it had undertaken any charitable activity for at least two years or that the Re-Give initiative was exclusively charitable.
The Commission removed the charity from the register on the 14 December 2011 as it was not clear that what it had been doing was charitable and more recently that it was not operating.
The Commission had concerns regarding the last set of accounts submitted by the charity, so it used its powers to freeze the accounts and ensure the remaining funds were correctly applied for charitable purposes. The Commission also referred the case to the police due to concerns about personal funds being used to show case flow when applying for grants and due to the unsatisfactory final accounts.
Michelle Russell, Director of Investigations, Monitoring and Enforcement at the Charity Commission, said:
Charity trustees have the responsibility and the duty to only act in the best interest of their charity, they must ensure that their own personal interests are not put first. We expect trustees to follow our guidance on financial controls and ensure that there is the correct separation of their personal funds and those of a charity.
Only one of the trustees in this case appeared to be in control of the charity, all trustees have the same collective responsibilities and duties as charity trustees. Where one trustee is dominant and takes sole control of a charity, we often find this leads to poor governance and failure to get even the basics of good governance right.
Trustees are expected to be aware of their obligations and responsibilities, our guidance on being a trustee can be found in The Essential Trustee: What you need to know (CC3) which is published on the Commission’s website.
The full report is available on GOV.UK.
Notes to editors
- The Charity Commission is the independent regulator of charities in England and Wales. To find out more about our work, see our annual report.
- Search for charities on our online register.
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