Implications of recent Charity Commission inquiries

Jamia Hanfia Ghosia Mosque (26 April 2022)

Inquiry over concerns about potential misconduct and/or mismanagement

Background – There has been an ongoing dispute about whether the trustees were validly appointed. This dispute started in March 2020 and the Charity Commission issued an action plan to the charity to ensure the dispute was resolved by 31 March 2022. However, the charity failed to implement the plan so the Charity Commission has opened an inquiry to examine:

• Administration, governance and management of the charity
• Whether there has been misconduct or mismanagement by the trustees.

Implications for charity sector – Ensure all trustees are properly appointed and that those appointments are recorded with the Charity Commission and (if applicable) Companies House. Also, if Charity Commission action plans are issued to your charity ensure they are implemented.

World Holocaust Forum Foundation, Kantor Foundation, Kantor Charitable Foundation (22 April 2022)

Inquiry opened after trustee, Dr Viatcheslav Kantor, was sanctioned by UK government.

Background – Dr Kantor has already been suspended as a trustee by the Charity Commission following his sanction under the UK’s Russia Sanctions regime. The Charity Commission believes that individuals subject to UK financial sanctions cannot discharge their duties as trustees. Two of the three charities have had their bank accounts frozen, meaning that funds cannot be accessed or moved without the Charity Commission’s prior consent. The inquiry has been opened to:

• Determine whether the charity can continue to operate.
• Consider whether the trustees have discharged their legal duties.

Implications for charity sector – If any of your trustees are sanctioned for any reason, consider their eligibility to continue as trustees and, in some circumstances, the charity’s ability to continue in operation.

Dream It, Believe It, Achieve It (7 April 2022)

Charitable funds were misapplied by two former trustees (Matthew & Emma Dimbylow) of the charity.

Background – The trustees employed a commercial lottery company to run a scratch card lottery, raising a considerable amount of money. An investigation was opened in 2017 as a result of concerns about the proportion of funds spent on fundraising. The lottery raised £6 million but the costs of raising this money amounted to £4.2 million. A further £1 million was paid to three different companies run by the Dimbylows from which they profited personally. In fact, only £300,000 was spent on charitable purposes that were unconnected to the couple. As a result of the Charity Commission’s involvement:

• Matthew Dimbylow has been permanently removed as a trustee.
• Emma Dimbylow has signed an undertaking not to act as a trustee again.
• Misapplied charitable funds have been secured by the Commission.
• A third trustee (appointed after the serious misconduct and misappropriation occurred) is in the process of winding up the charity.
• Two former trustees were found to have failed in their oversight of the charity.

Implications for charity sector – Trustees must ensure they are aware of all related parties so that they are aware if charitable funds are being given to such entities. A comprehensive conflicts of interest register is vital to assist trustees and senior staff in identifying whether payments are being made to related entities. Also, fundraising can be expensive so regular cost-benefit analysis should be undertaken. 

Humanity Torbay (25 March 2022)

Inquiry into political campaigning by the trustees.

Background – Humanity Torbay provided a drop-in centre for the local community. Concerns were raised with the Charity Commission about the charity’s use of its social media platforms. A statutory inquiry was opened in June 2020, which found multiple instances of misconduct, including:

• Trustees’ failure to maintain appropriate financial controls.
• Trustees’ failure to control and prevent inappropriate material being posted on social media in the charity’s name.
• Trustees’ breach of their legal duties regarding political campaigning and activity.

The charity has now been wound up and its founder and former CEO, Ellie Waugh, has agreed not to act as a charity trustee or hold any senior management posts with any charity for 4 years.

Implications for charity sector – It can be difficult sometimes for charities to stay politically neutral, but such neutrality is an important element of charitable status. As can be seen above, your charity could be forced to close if the charity displays its political views to the public.

The Charity Commission website (https://www.gov.uk/government/organisations/charity-commission) publishes inquiries undertaken by the Commission. It is worth looking at the website regularly to check whether your charity is affected by any inquiries or, indeed, any changes in legislation and/or guidance.