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Alzheimer’s charity spent nothing on charitable activities, finds Commission report 3

Governance | Niki May Young | 6 Apr 2011

Alzheimer’s UK Research Eduation and Care Ltd (Alzheimer’s UK) “had become nothing more than a fundraising vehicle”, the Charity Commission stated in its report into the governance and use of funds at the five-year-old charity.

Alzheimer’s UK was registered in 2006 as a grantmaking organisation which would promote research into the cure for Alzheimer’s, educate the public in the early detection, treatment and control of the disease, and relieve the suffering from Alzheimer’s disease. But not one of these objects was fulfilled and no grants were delivered. The statutory inquiry instead found that 92 per cent of its funds were spent on fundraising mail shots and the CEO’s salary.

In the two financial years ending 31 March 2007 and 31 March 2008, the charity had raised £351,495 from mail shots, but had spent some £321,000 on administration of the mail shots and £40,000 on the CEO’s salary, making a loss of almost £10,000.

The trustees “did not question the low level of funds spent on charitable activity”, said the Commission, advising that in a meeting with the regulator in 2008 the trustees had advised that “loss leading at this stage was inevitable”. Shortly after this meeting one trustee tendered their resignation, leaving the charity with only two trustees, one less than required, rendering decisions taken after that point invalid.

In March 2009, when the charity requested permission to begin another fundraising campaign, the Charity Commission instead ordered the charity to wind up, having received no accounts since year end 31 March 2008 and with the trustees having failed to find a third member of the board.

The charity failed to keep the Commission advised of its progress on the wind up despite reminders, and by February 2010, it fell into receivership, owing a trade creditor over the £32,458.84 in the charity’s bank accounts, preventing the funds going towards charitable purposes.

The appointment of acting CEO, Rosemary Stevens, who launched the charity and remained in this position throughout its existence, was criticised in the report. Her position was frowned upon by the Commission which noted that no competitive process had been undertaken for her role as acting CEO. Although this is not legally necessary, a replacement permanent CEO would have been expected. She had previously been a trustee of AFRAD, (Alzheimer’s Foundation for Research into Alzheimer’s Disease), which itself had been subject to a Charity Commission inquiry due to the low level of funds raised being applied to charitable activities. That inquiry led to new independent trustees being put in place.

Acting CEO employed partner

Stevens employed her partner, Keith Roberts as director and company secretary at Alzheimer’s UK and used him as second signatory for the charity’s cheques until he resigned in January 2008. The Commission found that the trustees were not aware of Roberts' appointment and had not even met him.

Stevens also appointed two companies she was previously affiliated with through AFRAD to provide services to the charity.

The two private companies were owned by one proprietor whom she had also been involved with at a third Alzheimer’s organisation - the FSA regulated Alzheimer’s Association UK, where the proprietor was founder and Stevens was again the acting CEO. The FSA suspended this organisation from acting as a charity for three months in 2005 and then shut it down.

In the case of Alzheimer's UK, the Commission found that the trustees had not taken part in any of the negotiations for contracts to select the two companies.

“Every charity needs an effective trustee body which has control over the administration of the charity and acts as a whole,” concluded the Commission, “Trustees must ensure that their charity has adequate financial and administrative controls in place and that the funds of their charity are applied for the benefit of the public, for which it has been set up.”

None of the Alzheimer's charities mentioned above should be confused with the Alzheimer's Society or Alzheimer's Research UK

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