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Charity with £422m assets spends more on management fees than cause

13 Feb 2017 News

The Bank of England

A £422m charity set up to pay off the national debt has said it expects to close down and spend all its money paying off government debt, but has made no payments this year except a number of fees to investment professionals, auditors and trustees.

The National Fund was established in 1927 with a gift of £500,000, and was intended to accumulate money on the stock market until it had sufficient funds to pay off the national debt. It said five years ago it intended to close. Its most recent accounts still say it is likely to shut down, but it has "no timeframe" to do so.

The repayment of the national debt is a charitable activity. The fund's objects say that it exists until it is able to pay of the entire national debt, although the trustees have an option to pay off a part of that debt.

The fund, which filed accounts for the year to 5 April 2016 last week, has spent 89 years growing larger, but in all the years for which there are available accounts, its only expenditure has been on professional fees and investment management.

The fund has a single corporate trustee, Barclays Fiduciary Services (UK) Limited, which this year received £360,000 in management fees.

The charity’s investment managers received another £808,000 in fees although the charity then received a £951,000 rebate.

A decision to seek to close the fund was taken a number of years ago. In 2012 the charity said it would seek permission to close from the Attorney General. However the fund remains open, and there is no indication of when it will close.

“The trustee is in dialogue with the Charity Commission and Office of the Attorney General regarding the future of The National Fund,” this year’s accounts says.

“At this stage it is felt that the most likely outcome will be that the fund will be liquidated and payment made to the National Debt Commissioners although the timeframe for this is not known. If this occurs then the fund will be de-registered as a charity and will cease to exist.”

The National Debt Commissioners, whose purpose is to reduce the national debt, include the Chancellor of the Exchequer and the governor and deputy governors of the Bank of England. They stopped meeting in 1860, although they recently reconvened in 2016.

The charity’s likelihood of paying off the national debt is remote. The UK national debt is currently growing at the rate of three National Funds a week, and stands at £1.82 trillion.

However in charitable terms the fund is very large. Accounts filed last week show the fund’s assets have now grown to £422m, although this is a drop from £439m in the previous year.

The charity’s investment assets are not recorded as such on the Charity Commission website. If they were, it would be the 21st largest charity by investment assets in the UK.

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