16 October 2015

Charity Commission works with an air ambulance charity to improve governance failings relating to a failed fundraising event, loan and lack of oversight by the trustees


 The Charity Commission has recently published a case report concerning its compliance case on The Air Ambulance Service (the 'Charity').
The Charity Commission's case focused on three areas:

  • Significant losses (around £111,000) suffered by the Charity following a failed fundraising event in 2012;
  • A large loan (£27,000) made to one of the charity's senior employees; and
  • A lack of oversight by the Charity trustees.

These issues raised potentially serious regulatory and governance failings at the Charity.

Fundraising event

The failed fundraising event in 2012 involved the charity buying up seats for the London premiere of The Bodyguard theatre production, which it hoped to sell to raise funds.
The Charity Commission found that the event was 'poorly planned and failed to apply proper project management methodology'. The trustees accepted that the management of the event was poor, but contended that it had nevertheless helped raise the Charity's profile and identify future donors.
The Charity Commission found that the; '….processes in place for managing the event were significantly inadequate and that this amounted to a serious failure on the part of trustees'.

Loan

The Charity Commission's report indicated that the legal basis for the £27,000 loan was unclear, and the trustees were unable to provide evidence of any advice they had received in relation the loan. Moreover, through its investigation, the Charity Commission discovered that the board of trustees had found out about the loan after it had been made by the Charity's chief executive and chairman.
The Charity Commission noted that the Charity had said that it had phoned its helpline to discuss the loan, but the Charity Commission's helpline only provides generic advice and if a charity requires a formal view, it should apply in writing.

Lack of oversight

The Charity Commission's report noted that the two incidents indicated that the Charity trustees had not exercised sufficient control over the chief executive and the chair.
The Charity Commission also found that that the chief executive and chair did not sufficiently involve the board of trustees as a whole and instead made strategic decisions themselves that should have been for the board to make. The Charity Commission noted that this amounted to a serious governance failure.

Action plan

As a result of its failures, the Charity Commission issued an action plan to the Charity trustees to improve the governance of the Charity. The action plan includes (amongst other aspects): reviewing trustee recruitment, providing training to trustees as regard their legal duties, reviewing existing risk management strategies and approval limits and updating processes for future fundraising.
Following the Charity Commission's recent meeting with the trustees, it noted that the Charity was making good progress.

Authors

Category: Article

Client types: Charities and non-profit