Rehab charity reprimanded over financial failings

The former manager and a former trustee of a Birmingham rehabilitation charity have been disqualified, after a Charity Commission inquiry identified serious financial failings, including an unauthorised payments and unmanaged conflicts of interest

Livingstone House Mother of the Harvest Ministries was set up to rehabilitate people with alcohol and drug addictions, and has an annual income of between £500,000 and £600,000. It provides detoxification and care arrangements for men aged 18 to 65, using a Christian 12 step programme to encourage sober living.

The Commission’s inquiry began in July 2018, following the charity’s repeated failures to submit accounting information. The regulator also had concerns about the management of the charity.

This uncovered that there were serious issues in the financial management of the charity, including the repeated failure to submit accounting information correctly and on time. It was found that the former manager directly authorised their own salary, overtime and bonus payments from the charity’s bank account.

Investigators also found that the former trustee received unauthorised payments totalling £40,645, in breach of the charity’s governing document.

The charity also failed to manage conflicts of interest adequately and did not have a conflicts of interest policy in place.

Analysis of the charity’s bank statements showed that the charity paid £295,688 to a company specialising in addiction services whose only directors are the former trustee and manager. Accounting records did not include sufficient evidence to support these payments and no contract for the provision of services between the charity and company could be provided.

The inquiry also found, however, that the former trustee did not personally benefit from the payments made to the company, whilst they were a trustee.

The services provided by the company have since been taken over by the charity and there is no ongoing relationship between the two.

The inquiry concluded that there had been misconduct and/or mismanagement in the administration of the charity. The Commission disqualified the former manager for a period of four years and secured a voluntary undertaking from the former trustee that they will not act as a charity trustee or senior manager of a charity for a six-year period.

The Commission said since its intervention, new trustees have been appointed and the regulator has seen significant positive steps towards improvement. It issued the charity with an action plan aimed at improving governance and financial management, which has been fully implemented.

Amy Spiller, head of investigations at the Charity Commission, said: ‘The public rightly expects those in charge of charities to steward and guard funds carefully, for the benefit of the people their charity helps. Managing conflicts of interest robustly is therefore vital for charities to inspire trust.

‘Charities that put their purpose at the core of all they do and underpin this with robust governance and the highest standards of conduct, will serve their beneficiaries better.

‘I hope and expect that Livingstone House Mother of the Harvest Ministries will do this to continue driving forward positive change at the charity.’

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Charity inquiry Livingstone House Mother of the Harvest Ministries

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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