Victoria Robinson

+44 (0)1733 887775 vjrobinson@greenwoodsgrm.co.uk

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All in the line of duty

Charity / 02 November 2021

In September, the Charity Commission announced the result of their statutory inquiry into Lincolnshire-based ‘The Alternative Animal Sanctuary’, to investigate serious concerns about the charity’s governance and finances.

What the Commission found was a litany of mismanagement, relating to poor finances, a lack of oversight in a financially irresponsible chairperson and inappropriate management of conflict issues. Furthermore, between 2008 and 2020, less than 20% of the £10million raised with a fundraising agency actually went towards charity purposes, which was not made clear to donors when the donations were sought.

Ultimately, the Charity Commission decided the charity should be wound up, as the several and severe nature of the breaches inhibited the charity’s ability to operate and the underlying problems could not easily be resolved. The remaining funds were distributed to similar charities in the Lincolnshire area and the chairperson was disqualified for the maximum period available of 15 years, whilst one other trustee was disqualified for 10.

The Charity Commission has the power to make a trustee personally liable to indemnify the relevant charity, in certain circumstances, for any loss caused by a breach of duty; however, they opted not to do so in this case.

The outcome of this case shows trustee duties not to be bureaucratic tedium, but rather necessary safeguards against misconduct. Trustees are responsible for understanding and complying with their fiduciary and statutory duties as well as ensuring that the charity is solvent, well run and that duties are always fulfilled with genuine and honest intention or motives.

Duties and responsibilities include:

a. Only pursuing the objects for which the charity was established as set out in its governing document (this even excludes pursuit of alternative charitable aims)

b. Compliance with the charity’s governing document and the law. This requires awareness by trustees of relevant law applying to their charity as well as adhering to their founding document when acting. Staying up to date with the relevant Charity Commission guidance and, where appropriate, taking legal or other professional advice is necessary. It also means keeping up-to-date statements of account and updating the charity register with the Commission.

c. Acting in the charity’s best interests. Ensuring that trustees do not place themselves in a position where their loyalty to the charity and their personal interests may conflict or where they can make a profit or receive a benefit from their position unless properly authorised and it is in the charity’s best interest. Practically, this can be satisfied with a proper conflicts policy and making balanced decisions with fellow trustees.

d. Managing resources responsibly. Ensuring that assets are used only in support of the charity, that undue risks are not taken, and that appropriate checks and balances are enacted to mitigate the risks that any one trustee can expose the charity to.

e. To act with reasonable care and skill. Trustees must ensure the time and energy contributed to their role is appropriate. This could include preparing for and actively participating in any trustee meetings.

f. To ensure accountability. Trustees should be able to demonstrate the charity is complying with the law and that there is a clear delegation of responsibilities within the charity.

If you are a trustee, or are considering taking on a trustee role, and would like further information on your role and responsibilities and how best to ensure compliance with them, please do get in touch.

 

 

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This update is for general purposes and guidance only and does not constitute legal or professional advice. You should seek legal advice before relying on its content. This update relates to the prevailing circumstances at the date of its original publication and may not have been updated to reflect subsequent developments. If you have general queries about our updates, please email: mailinglists@greenwoodsgrm.co.uk

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