16 October 2015

Charity Commission finds no evidence of misconduct or mismanagement on the closure of Cumbrian boarding school

Alison Paines
Partner | UK

The Charity Commission has recently published its report following an enquiry into St Bees School, an independent day and boarding school operated through a charitable company.

The governors had become aware of diminishing student numbers over several years and, to allow investment in the school, had released permanent endowment to pay for bursaries and refurbishment of school buildings.  Nevertheless, the situation did not improve and the governors decided to close the school.

The Charity Commission received complaints following the announcement of the closure of the school alleging that there was mismanagement of the school by the governors and the decision making process was flawed.

After reviewing the situation, the Charity Commission decided that the decision to close the school was properly taken as the governors' had the power to do so and followed the requirements in the governing document to make decisions. Nevertheless, the Charity was exposed to the risk of public perception that the decision had not been properly made due to the way the parents and pupils were informed of the decision – an embargoed press release was leaked to parents and pupils.

The Charity Commission noted that:

  • The governors acted swiftly when the news was broken in breach of the embargoed press release.
  • The governors considered rescue plans offered by parents in good faith and that it was not prudent to take loans or cash donations which would not cover the forecast losses or liabilities if the school were to remain open.
  • Whilst the accounts complied with charity law, it would have been better if an expanded risks statement were included to reflect more accurately the financial position of the Charity.
  • Whilst a charity is under no obligation to release information and documents publicly, the Charity Commission considered that charities should be as transparent as possible and releasing background information may have helped parents to understand the decision.
  • The governors had properly reported the closure as a serious incident to the Charity Commission.  The Charity Commission highlighted that the guidance does not provide an exhaustive list of when a serious incident report must be made, but it will expect a report where a charity needs to take immediate action to avoid a serious or significant risk.

Overall, the Charity Commission was satisfied that the decision was within the reasonable range of decisions and that there was no mismanagement or misconduct. Whilst the governors could have reacted quicker or differently to the impact of the decisions, there was no evidence that they acted otherwise that in good faith. 

Alison Paines Partner | London, Cambridge

Category: Article

Client types: Charities and non-profit