23 September 2019 - Article
The Charity Commission has published its final report in relation to the Garden Bridge Trust, which cancelled plans to deliver the publicly funded “Garden Bridge” in August 2017 and is now in the process of being wound up. The report is the second published by the Commission, an initial case report having been released in February 2017. Both reports run alongside the review by Rt Hon Dame Margaret Hodge MP released in April 2017 and the investigation by the National Audit Office conducted in 2016.
The Garden Bridge Trust
The Garden Bridge Trust was established as a charitable company in 2013 in order to deliver Transport for London’s high profile “Garden Bridge” project. Public funding for the bridge consisted of £60m in contributions to the charity from the Department of Transport and TfL (£20m of which was a loan repayable to TfL). The charity also received non-public funds from grant-making charities, corporations and individuals. The charity intended to use the funds to construct the bridge and oversee its maintenance once the bridge was built.
In December 2014 the Garden Bridge Trust was granted conditional planning permission to build the bridge from Westminster and Lambeth Councils (being the councils on the north and south side of the bridge’s intended location on the River Thames). One of the conditions of the planning permission was that the charity obtain Mayoral guarantees to underwrite the maintenance of the bridge, should the charity fail. The charity received approval for the guarantees in June 2015.
In May 2015, the Garden Bridge Trust announced that it had selected a joint venture between Bouygues Travaux Publics and Cimolai as the main contractor to construct the bridge. A construction contract was signed between the charity and the joint venture in March 2016.
However, after a change of administration and in response to Dame Margaret Hodge MP’s review, the Mayor of London announced in April 2017 that he would not provide the guarantees. Without the guarantees, the charity was not able to fulfil the requirements of the planning permission and the project was effectively ended.
The Commission’s Report
The Commission’s final report concludes that the trustees of the Garden Bridge Trust complied with their duties as trustees under charity law. The Commission does not criticise the decision of the trustees to enter into the construction contract and emphasises that the Commission’s role is not to determine whether a decision is “right” or “wrong” but whether it is in the range of decisions a reasonable trustee body could have made.
The Commission notes that the Garden Bridge Trust was a very particular type of charity, specifically set up to deliver a publicly funded project, but flags the following issues raised by the Commission’s review which may have wider implications for the charity sector and especially for charities that use public funds:
1. The risk of undermining public trust
The report suggests that charities that use public funding are subjected to both the high expectations of the public regarding the use of public funding as well as the high standards required of all charities. Although there was no mismanagement of the Garden Bridge Trust, the expenditure of public funding without delivery of any visible benefit risks undermining public trust. Trustees of these types of charities should ensure that they have systems in place to monitor and respond to the risks involved in using public money and delivering infrastructure projects and demonstrate a high level of transparency, accountability and a willingness to engage with the public and other stakeholders.
2. The requirement for charities to maintain independence
Charities responsible for delivering projects like the Garden Bridge take on responsibility for the major operational risks inherent in large infrastructure projects. As charities are required to act independently, this can create the difficult situation where a charity has a high level of responsibility and risk while the body ultimately responsible for funding the project, the government, lacks the requisite control over the use of those funds.
Going forward, the Commission has accepted that more guidance is needed to ensure that trustees setting up a charity to deliver a public project are fully aware of the risks, their duties and their responsibilities as trustees. Trustees should also consider whether an independent charity is the most appropriate vehicle to deliver the project.
The Commission’s report emphasises that charities undertaking large public projects should ensure that their trustees have the appropriate skills and experience to be able to govern the charity effectively. These requirements are true of all charity trustees, but major projects require a greater level of oversight and control in order to manage the inherent risks. Trustees will need to ensure that the board as a whole has the skills to manage and respond to these risks and make informed reasonable decisions.
4. Transparency and Accountability
The Commission notes that the Garden Bridge Trust failed to file annual reports on time, filing accounts for the year ending March 2017 143 days late. This was based on advice the trustees were given at that time, but the report is clear that regardless of the advice given to trustees, the failure to file accounts is a default in reporting requirements and represents a failure of trustees to meet their legal duties.
In more general terms, the Commission reports that accountability should not be considered as the provision of information only – charities should engage with and consider the views of those they are accountable to. In particular, charities that use public funding should be aware they may be held to higher levels of responsibility and accountability by both the public and the Commission going forward.