The Charity Commission (“Commission”) has announced a new statutory inquiry into the Captain Tom Foundation, “After identifying concerns about the running of the charity, including the independence of the charity from the family of the late Captain Sir Tom Moore and businesses linked to them. ” https://www.gov.uk/government/news/regulator-announces-statutory-inquiry-into-the-captain-tom-foundation
The investigation will consider whether the trustees have:
- been liable for mismanagement and/or misconduct in the administration of the charity and whether, as a result, the charity has suffered financial loss, including through any private benefit not authorized to one of the current or previous directors;
- adequately managed conflicts of interest, including with private companies related to the Ingram-Moore family;
- have complied with and fulfilled their duties and responsibilities under the Charities Act.
The Commission may extend the scope of the investigation if additional questions arise
The investigation marks the latest high-profile example of the Commission’s focus on benefits for charity directors and conflict management.
The Commission has not reached any conclusions at this early stage, but the issues raised are a useful reminder to directors of charities to ensure good governance to protect the reputation of their charities.
- Benefits for Charity Trustees and Related Persons – Trustees of charities (and persons or organizations related to them) may not benefit from their charity in exchange for the services they provide to it, unless authorized to do so by the constitution of the charity, the Commission or the courts. All benefits must be in the best interests of the charity and properly considered and reported in accordance with Commission guidelines.
In practice, it can be difficult for directors of charities to determine the “reasonableness” of a particular benefit. The outcome of the investigation and the Commission’s summary of its prior engagement with the charity regarding the compensation of a related person (and former trustee) provides useful insight into what does and does not qualify as reasonable or justifiable in the eyes of the Commission.
- Management of conflicts of interest and loyalty – Charity directors are required to manage conflicts as they arise by following the Commission’s four-step checklist (report, delete, manage and record the conflict). This applies to conflicts of interest (for example, where a trustee or a person related to them has an interest in a proposed arrangement) as well as conflicts of loyalty (where the trustees have competing obligations to the charity and another person or organization).
The investigation demonstrates the importance of strong decision-making and record-keeping by a trustee in the event that issues are raised by the Commission in the future.
Where risks are not properly considered or managed, the Commission has broad protective and enforcement powers, including ordering the removal of a director of the charity or barring him or her from to act in the future, to restrict the use of the charity’s bank accounts, to demand repayment of any unauthorized benefits and/or the liquidation of the charity.
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The Charity Commission has opened a statutory inquiry into the Captain Tom Foundation, after identifying concerns about the running of the charity, including the charity’s independence from the late family Captain Sir Tom Moore and related businesses.
