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Charity Business owner is also manager of one of its client charities

Finance | Tania Mason | 13 Jan 2012

One of the owners of Charity Business, the outsourcing agency that collapsed this week, is also the general manager of a benevolent charity that is one of Charity Business’s biggest clients.

Val Austin, a shareholder and until last month a non-executive director of Charity Business, joined the Electrical and Electronics Industries Benevolent Association (EEIBA) in October 2010 as general manager.

Three months later the charity outsourced its finance function to Charity Business.  Earlier this week, Charity Business advised its 200-odd charity clients that it was to wind itself up and that they had 28 days to collect their records from storage.

EEIBA’s chair Jim McArthur told civilsociety.co.uk today that the charity met Austin through Charity Business when it started investigating the possibility of outsourcing its finance function.  She then joined as general manager and soon afterward the board opted to give the contract to Charity Business.  He added that the board was aware of the possible conflict of interest in Austin’s position as general manager of the charity and part-owner of Charity Business, but took steps to ensure this was adequately managed. 

“Certainly the board and presidential team gave that very careful consideration and at the end of the day they thought there could be a potential conflict," McArthur said. But Austin formally declared her interest in Charity Business to the members of the charity's presidential team, and they worked closely with Austin after Charity Business was appointed to ensure the relationship had the best chance of success, he said.

"And really over the last year or so we’ve been fairly happy with the service that we’ve received, from both Val and Charity Business," said McArthur. "She’s had a lot of support from us.”

He confirmed that the board will hold an extraordinary general meeting next Wednesday to consider its options in relation to how financial processing is done going forward.

Richard Overy, who was head of operations at Charity Business, told civilsociety.co.uk that EEIBA was Charity Business’s second-biggest client. He said that it seemed Austin suspected that the company might fold last week, “as she emailed the office for a copy of EEIBA’s data, and over the weekend asked our IT support company to change passwords for our systems”.

McArthur said he was not aware of this and so couldn’t comment. But he added that the charity had not migrated all its systems over to Charity Business because it wanted to take the outsourcing process slowly, a step at a time.

“We would like to stress that EEIBA is not financially or otherwise exposed to Charity Business," he said. "Our day-to-day activities and welfare functions are unaffected, therefore while this may present the charity with an administration hiccup, we are able to deliver our services and carry on our business as normal.”

Charity Business staff considering phoenix operation

Overy added that Charity Business’s staff have been working unpaid this week to try to find a way to transfer data and paperwork either back to the clients or to a new organisation.

Overy said: “I’ve only been with Charity Business since August, however I have a lot of sympathy for our clients. We are looking at different scenarios including using third parties and indeed a phoenix organisation – but we know we have a very short window of opportunity and we expect to able to say something to former clients either later today (Friday) or early next week. The message is not to panic at the moment, the former staff are committed to helping you, albeit unpaid.”

Val Austin is also the wife of Charity Business’s CEO and founder, Mark Freeman. Freeman appears to be set to unveil a new entity, called Mark Freeman & Associates. A website, at mfreeman-assoc.com, features a countdown clock that suggests the site will go live at 9.30am on Monday.

Neither Austin nor Freeman have returned calls from civilsociety.co.uk.

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