Manor Building Preservation Trust (“the charity”) was incorporated with Companies House on 24 June 1999 and registered with the Commission on 14 June 2004. It was struck off the Register of Companies and removed from the Register of Charities (“the Register”) on 5 January 2021. At the time the inquiry was opened there were four trustees in office and three of them were family members. The scope of the inquiry included whether the charity’s objects were being met and that the charity was operating for the public benefit in particular due to the apparent extent of private benefit issues.
As part of the inquiry process, the charity commission looks at whether this case has highlighted any wider learning for the charity sector.
The commission reminds us that trustees have a legal duty to ensure that their charity’s funds are applied solely and reasonably in furtherance of its objects. To comply with their legal duties, trustees must keep records and an adequate audit trail to show that the charity’s money has been properly spent on furthering the charity’s purposes for the public benefit.
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 in the trustee expenses and payments (CC11) guidance, which can be accessed here.
In addition, the commission causes us to remember that trustees have a legal duty to act in the charity’s best interests when making decisions as a trustee.
If there is a decision to be made where a trustee has a personal interest or other interest, this is a conflict of interest and trustees won’t be able to comply with their duty unless you follow certain steps.
For example, if you are a trustee, you would have a conflict of interest if the charity is thinking of making a decision that would mean:
- You could benefit financially or otherwise from your charity, either directly or indirectly through someone you are connected to
- Your duty to your charity competes with a duty or loyalty you have to another organisation or person
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 guidance can be accessed here.