The Charity Commission will take no action against the trustees of Society Network Foundation, even though it found that the Foundation’s accounts were not Sorp-compliant and that it varied the use of a government grant without obtaining written permission.
Because the charity is in the process of winding itself up, the Commission said it would not be proportionate to take any regalatory action against it.
Yesterday the Commission published its operational compliance report on Society Network Foundation, in which it considered potential concerns relating to connected party transactions and the apparent transfer of a restricted grant into unrestricted funds.
The Commission looked into these issues after being alerted to them by Civil Society News earlier this year.
Payments of consultancy fees
The charity’s 2013 accounts showed that the charity’s trading company, Big Society Network, paid a total of £76,100 in consultancy fees to its directors Steve Moore and Lucy Windmill and to Martyn Rose, chair of the charity.
This was on top of the £161,183 it paid out in staff costs for an average of seven full-time staff.
The Charity Commission concluded that there were no regulatory concerns with regard to the payments that Steve Moore and Lucy Windmill received for services they had provided to Big Society Network.
Regarding the payment to Martyn Rose, the charity’s chair, the Commission found that his involvement with BSN predated the establishment of the charity and so there was a potential conflict of interest there. However, it added: “The charity’s governing document includes a provision allowing the remaining trustees to authorise such a conflict if it in the charity’s best interest.”
Transfer of restricted funds
The Commission also scrutinised the apparent transfer of part of a restricted Cabinet Office grant - just under £40,000 - into general funds. The grant was menat to be spent on the Get In childhood fitness project but the project never launched.
The Cabinet Office is currently trying to recover £34,000 from Society Network Foundation but the charity insists that it was told at a meeting that it could use the unspent grant in this way.
The Charity Commission noted that the charity is currently in dispute with the Cabinet Office about this, and said this put the matter outside the Commission’s jurisdiction.
But nevertheless it added: “We are critical of the trustees for proceeding to spend the grant funds on general purposes based on a verbal discussion, without obtaining written confirmation that the terms of the grant had been varied.
“Were the charity to continue operating, we would be monitoring its compliance with charity law and our guidance.”
'Not proportionate to take action'
The Commission concluded that as the Foundation intends to wind up, it would not be proportionate to take further regulatory regarding the charity’s failure to submit Sorp-compliant accounts.
“Also, given that the principal cause of concern is a matter of contractual dispute, it is outside our jurisdiction and therefore we did not take regulatory action with regard to that issue.
“However we provided the trustees with regulatory advice, including on conflicts of interest, the importance of submitting Sorp-compliant accounts and on managing restricted funds.”
Response from trustees
The trustees of Society Network Foundation issued the following statement: “The trustees welcome the publication of the Charity Commission’s report, which on all the issues relating to the Society Network Foundation that the Commission was asked to consider has confirmed that there was no inappropriate conduct on the part of its trustees and no matters of regulatory concern were identified.
“As the Commission has decided that there is no basis for further investigation it has closed its case. The trustees thank the Commission for its prompt review and publication of its findings.”
