On 4 June 2019 the Commission opened a compliance case. During the compliance case the Commission identified a number of regulatory concerns, including that the charity was not being administered correctly by its trustees and that two separate entities (the charity and the limited company) had become merged to some extent. The conclusion of the review included evidence of misconduct and/or mismanagement in the administration of the charity by the trustees at the time.
As part of the conclusion of a compliance case, the Charity Commission establish whether issues encountered including re-providing advice to the wider VCSE.
In this case the commission felt it appropriate to remind us that trustees are representatives of the charity they govern or the charitable funds they are responsible for, in the charity sector. Trustees must be aware of and act in accordance with their legal duties.
They remind us that making decisions is one of the most important parts of the trustees’ role.
Trustees must:
- Act within their powers
- Act in good faith and only in the interests of the charity
- Make sure they are sufficiently informed
- Take account of all relevant factors
- Ignore any irrelevant factors
- Manage conflicts of interest
- Make decisions that are within the range of decisions that a reasonable trustee body could make
It is important that charity trustees apply these 7 principles when making significant or strategic decisions, such as those affecting the charity’s beneficiaries, assets or future direction.
Further information can be found in the Commission’s guidance:
The essential trustee: what you need to know, what you need to do (CC3)
It’s your decision: charity trustees and decision making (CC27)
In addition , the commission prompts us to ensure tht the trustee board have a conflicts of interest policy in place to ensure that they are fully aware of their responsibilities and that any conflicts that do arise are appropriately managed.
Where a charity trustee has a conflict of interest they should follow the basic checklist set out in the Commission publication Conflicts of interest: a guide for charity trustees (CC29) and where necessary or appropriate take professional advice.
The law states that trustees cannot receive any benefit from their charity in return for any service they provide to it or enter into any self-dealing transactions unless they have the legal authority to do so. This may come from the charity’s governing document or, if there is no such provision in the governing document, the Commission or the Courts. Further information is available from Trustee expenses and payments (CC11). https://www.gov.uk/government/publications/trustee-expenses-and-payments-cc11
Trustees who receive an unauthorised payment or benefit from their charity have a duty to account for (i.e. repay) it. The Commission cannot relieve trustees from this duty.
Further details of this charity inquiry can be found here.