The Charity Commission has given a charity where one of the founding trustees was accused of using funds for personal benefit seven months to recruit more trustees.

In an operational compliance case report into NC TLC Trust, published last week, the Commission also raised concerns over conflicts of interest at the charity. There were only two trustees, who were husband and wife, and one of the trustees was also working as the charity’s chief executive.

The Commission was alerted to the charity, NC TLC Trust, which is based in Northampton, by two concerned individuals, one a member of staff and one a volunteer, who alleged that a founding trustee was using the charity’s funds for personal benefit.

On looking into the charity, the Commission found that, despite governing documents prohibiting trustees from doing so, one of the founding trustees was claiming a salary for acting as its chief executive. The Commission states that there was no record of consent sought from the Commission to allow this, and that there was no open and fair competition for the role.

The Commission also found concerns relating to the charity’s governance and financial controls. It says that cash collected in boxes “was not counted and recorded properly, (making it difficult to account for the charity’s incomings and outgoings overall)”. It also found that there were no controls on the claiming of expenses and no awareness of managing conflicts of interest.

The Commission was also concerned that trustees were not aware of the charity’s governing document or their duties as trustees.

The regulator wrote to trustees in February 2014, outlining its concerns. Trustees appeared to co-operate and agreed to look into financial discrepancies. Two additional trustees were appointed, as part of more “robust governance procedures”, and one of the original trustees resigned. The charity told the Commission that other trustees would be appointed and financial controls implemented.

However, one of the new trustees resigned “because of the difficulty he was having in implementing new financial controls”. He also alleged that “the trustee that had resigned was still continuing to make decisions that should have been for the trustees to make”.

A meeting was arranged in July 2014, with the two trustees and two additional people who were helping the trustees to improve the charity’s governance. An action plan was drawn up with deadlines for expected improvement. Two deadlines passed without being met and the Commission experienced difficulty in contacting the charity. It says that it then discovered that the two people helping the charity had “left as they had no confidence in the charity”.

The action plan was reissued, but then not complied with. The Commission said it “was left with no evidence that the charity would be administered correctly”.

A formal notice was sent to the charity in February 2015, advising trustees that they needed to appoint more trustees, or consider winding the charity up.

The charity told the Commission it is “now actively looking to recruit new trustees”, and comply with its original action plan. It has been given a limited window in order to do this, and the Commission continues to monitor the situation. The Commission says it wants “to be assured that robust governance systems, including strong financial controls, are in place”.

Allegations 'disproved'

In a statement, the charity’s chair Kevin Smith said that allegations made against the charity have been “disproved” and that it “immediately rectified” the situation of not following procedures - where a trustee was also working as a chief executive.

The statement says that NC TLC has now been in regular contact with the Commission to confirm the action plan and deadlines for completion, and has now appointed three new trustees to “provide specific skills to aid development of the charity and its operations”.

Smith said: “We were initially very concerned that the report was to be published but fundamentally the allegations have been disproved and what remains are improvements that we can make to help our charity be more efficient in its operations. It’s important for us to assure the many people that support us that we have continued to support the families who rely on us throughout the Charity Commission operation and we have used funds donated to us in a responsible way”.

He added that trustees are confident that the action plan will be concluded within its agreed August deadline.

The charity is currently 58 days late in filing its 2014 accounts with the Commission, and filed its 2013 accounts 87 days late.