Charity Checks! Are you operating within the rules?
- AuthorTim Field
A Charity Commission reminder - Trustees must not be paid for their services as a trustee – read on and ensure your charity does not fall foul of the charity commission rules
As if Prince Andrew was not surrounded in enough controversy at the moment, the Charity Commission has just released a report into its findings relating to one of his charities, the Prince Andrew Charitable Trust (Charity).
The investigation centred around payments totalling £355,297 that were made to one of the Charity’s trustees. The payments were said to be made to the trustee for work he undertook as a director of three of the Charity’s subsidiaries. It should be noted that all of this money has now been repaid to the Charity.
The investigation and its findings, however, still act as a reminder to trustees that they cannot either profit from their position as a trustee, or be employed by the Charity unless certain strict conditions are met. For a trustee to be paid to act as either a trustee or a director of a trading company, the charity must first either seek the permission of the court, the charity commission, or, the charity’s governing document must contain express permission.
Whilst undertaking the investigation the Charity Commission was able to identify a number of other areas of concern within the trustee's management of the Charity. It is no doubt these additional failings that led to a situation whereby a trustee could receive such a large unauthorised payment.
Strong governance is fundamental to the successful operation of a charity and trustees should review and consider their own governance structures on a regular basis.
The Charity Commission investigation highlighted the following issues that it considered led to the trustee receiving the unauthorised payment:
- A failure with the charity to manage conflicts of interest;
- A failure to show that an open and fair process was followed before the trustee in question was appointed director of the subsidiaries; and;
- A failure to provide any evidence to demonstrate that the trustee’s appointment provided value for money for the charity.
The Charity Commission was further critical of the Charity’s trustees as they had a lawyer as part of their board. When investigating a charity and the actions it has taken, the Charity Commission will take into account any special knowledge, skill or profession that the trustees hold.
Those professionals acting as trustees should give careful consideration to the actions being taken by the Charity, they must ensure that the minutes of any decision clearly demonstrates their involvement where the matter is pertinent to their profession.
As a general point, the Charity Commission would, in any event, expect all trustees to act in accordance with Charity Law.
If you have any concerns about the way in which your charity is operating or concerns over your duties as a trustee contact Tim Field at Birkett Long on 01206 217366.