The Charity Commission says poor governance lay behind the majority of cases it identified for compliance and investigatory work in 2016, including high profile cases regarding fundraising and financial abuse, and says the role of the board of charity trustees is not an ‘optional extra’ in a charity but an essential precondition for good management
The Commission’s annual report on its work tackling abuse and mismanagement says it used its powers on 1,248 occasions (2014-15: 1,200), and also opened more operational compliance cases. These totalled 1,327 compared to 1,182 the previous year.
The regulator says it also removed significantly more trustees to protect charities from abuse. In total the regulator issued 14 people with a notice of intention to remove them, compared to four the previous year. Eight of these trustees were removed.
Michelle Russell, the Charity Commission’s director of investigations, monitoring and enforcement, said: ‘This report demonstrates the need for trustees to get a real grip on their duties and do the basics better.’
In total, the regulator undertook almost 450 monitoring visits and almost 1,000 detailed scrutiny of charities’ accounts. As part of this work the Commission undertook a programme of work to test the financial resilience in charities, looking at 10 charities deemed to be in financial distress. This found that trustees who took early steps to address these difficulties and explored a range of different options were able to achieve better results for their beneficiaries.
The Commission’s analysis shows that in 2015-16 concerns about financial abuse and/or financial mismanagement issues featured in 46 new statutory inquiries and 34 completed statutory inquiries.
There were 227 new operational compliance cases, and 235 completed operational compliance cases, as well as 116 new monitoring cases. The regulator also recorded 15 whistleblowing cases.
In 2015-16 concerns about fraud, theft or the misapplication of funds featured in 10 new statutory inquiries and four closed statutory inquiries. There were 267 new operational compliance cases and 279 completed operational compliance cases, as well as 69 new monitoring cases.
The Commission received 496 reports of serious incidents (RSIs) over the year as well as 18 whistleblowing cases.
The regulator also carried out work identifying charities in default as regards supplying their annual return and accounts. This identified what it called ‘a worrying trend’ that some charitable incorporated organisations (CIOs) are already failing to submit their financial returns after registration.
It also says a number of charitable companies had not filed accounts as they were in liquidation or administration. Commission research suggests that charities that last declared an income of below £5,000 were more likely to be in non-compliance with their returns.