The Charity Commission has issued an official warning to the trustees of a Jewish grant-making charity over their financial management of the organisation.
In May 2017, the Commission opened a statutory inquiry into the Chesed Leyisruel Trust after it failed to submit accounts for more than two years.
The regulator scrutinised the Salford-based charity’s bank statements, which it said revealed “serious concerns” regarding two loans that the trustees had entered into.
A condition of the first loan required the charity to obtain a 100 per cent mortgage on the property it had bought with the money. However, no mortgage application was made and the property was transferred to a third party.
The second loan was made on the basis that the charity would buy a property and sell it at profit within six months before repaying the loan in full. That loan is currently outstanding, but no alternative financial arrangements are in place should the plan be unsuccessful.
The regulator said it was unclear whether trustees had “considered all relevant factors” before taking out the loans and it was concerned that the charity had not sought independent advice.
Its inquiry also found that record keeping and meeting practice at the charity were poor, and that trustees failed to act on previous regulatory advice regarding the submission of financial information.
The Commission has issued the trustees with an official warning setting out 10 steps that must be taken in order to rectify the misconduct and/or mismanagement uncovered by the inquiry.
The full 10 steps the Commission has told the trustees to take are:
- Update their contact details, in particular their email address
- Take steps to appoint a minimum of two additional independent trustees
- Inform the Commission of any changes in trusteeship to ensure that the register of charities is updated
- Hold and conduct an annual general meeting at least once a year
- Ensure that all decisions are made properly and where applicable professional advice should be obtained
- Ensure that all decisions are recorded properly
- Have in place an adequate and appropriate conflicts of interest policy
- Put in place and adhere to a grant making policy
- Put in place and adhere to an Investment policy
- Re-submit the accounts for the years ending March 2016 and March 2017, in a form which is compliant with the latest version of the Charities SORP
'Failed to live up to high standards'
The Commission said it will continue to monitor the charity’s progress, and expects to see evidence of the action taken within six months of the official warning being issued.
Amy Spiller, head of the investigations team at the Commission, said: “The public rightly hold charities to high standards, which these trustees have unfortunately failed to live up to. That’s why we’ve issued this warning to the trustees, which sets out clear steps they must take to put things right.
“We want to see charities thrive; that requires trustees to take their responsibilities seriously and consider all decisions appropriately. The trustees have demonstrated a willingness to address our concerns. I hope and expect that this will continue.”
The Chesed Leyisruel Trust was set up to relieve poverty in the Jewish community and to advance the Jewish faith. It has an income of £460,000.