Charity Commission double defaulter inquiry brings £25m to account

The Charity Commission has accounted for some £25m of charity income as a result of its pre-inquiry and class inquiry work into ‘double defaulter’ charities in the past year

Double defaulters are charities that have defaulted on their statutory obligations to meet reporting requirements by failing to file their annual documents for two or more times in the last five years.

Between April 2017 and March 2018, the regulator conducted compliance work involving 80 charities who came into this category.

As well as approximately £25m of charity income relating to 56 charities being accounted for, a further 24 charities were found to have ceased to exist or did not operate and were therefore removed from the register of charities.

The class inquiry also exercised statutory powers to freeze over £50,000 of unprotected charity funds.

The Charity Commission says further enforcement action is being taken against five charities, which were part of the class inquiry during this period, as a result of additional regulatory concerns and/or persistent defaulting. These are each now subject to separate inquiries into their governance and activities.

They include Cymmer Workmens Hall and Institute, where the class inquiry identified issues regarding substantial levels of non-primary purpose trading that the charity had undertaken and accounts not being prepared to the required standards, as well as King’s Church Brentwood, where the class inquiry identified that there were no properly appointed trustees managing the charity and that over £50,000 funds held in the charity’s account were vulnerable to fraud or theft.

Three charities which supplied outstanding annual documentation and accounting information to the class inquiry have since defaulted again on their obligations to supply annual accounts to the Commission. Further enforcement action is being taken against The Great Generation, The Dorset Attention Deficit/Hyperactivity Disorder Support Group, and the Moss Side and Hulme Community Development Trust.

Harvey Grenville, head of investigations and enforcement at the Charity Commission, said: ‘Trustees of registered charities with an annual income of over £25,000 are under a clear legal duty to ensure that their charity’s accounts and annual returns are submitted to us on time.

‘Too many trustees are still failing to file on time or properly notify us when a charity has been wound up.

‘This report should serve as a reminder to other trustees that failure to comply with these duties is regarded as mismanagement by the Commission and can result in regulatory action against a charity or its trustees.

‘Trustees who persistently breach this duty and are unwilling to mend their ways face the very real threat of removal or disqualification.’

Charity Inquiry: double defaulter charities between April 2017 – March 2018 is here.

Report by Pat Sweet

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