The Charity Commission has opened a statutory inquiry into a Jewish Orthodox charity, Combined Funds Limited, and frozen its bank accounts, after finding concerns about potential conflicts of interest.
The regulator initially opened a compliance case into the charity in 2017 following concerns that it had been operating for a prolonged amount of time without having registered.
It notified the trustees of the charity, which has an income of over £700,000 and net assets over £6.5m, and they have since submitted an application to register.
During this engagement, the Commission assessed the charity’s financial accounts and bank records and identified “a number of serious regulatory concerns over the governance and administration of the charity”.
The Commission said it is concerned in particular about potential conflicts of interest and connected party transactions, given that the three trustees of the charity are all related and in eight of the charity’s nine trading subsidiaries the sole director is also a trustee of the charity.
In addition, the charity has no formally agreed grant-making policy in place, even thought grantmaking is its main activity.
Therefore it is unclear how beneficiaries are selected, whether any due diligence is carried out or whether there are appropriate processes in place to monitor the end use of the funds.
As a result of its concerns the Commission has made an order under Section 76 of the Charities Act to the charity’s bank, restricting any application of the charity’s funds without the prior written approval of the Commission. The charity’s registration application is currently on hold pending the outcome of the inquiry.
The inquiry will look at whether the trustees have ensured that:
- any trading carried out by the charity or its trading subsidiaries is compliant with current legislation;
- the charity has adequate control systems in place and that the trustees are responsibly and prudently managing the charity’s resources and financial affairs;
- any loans or investments by the charity have been properly protected and authorised and have been made in the charity’s best interests;
- conflicts of interest and transactions with connected parties have been adequately managed;
- the receipt of any payments and benefits to trustees and connected parties have been validly authorised in accordance with the provisions of the charity’s governing document;
- how the charity has managed its relationship with its trading subsidiaries, ensures the relationship is in the charity’s best interest and that its interests in the trading subsidiaries are properly protected.
It will also consider the extent to which the charity operates for the public benefit, and the extent to which the trustees are responsible for any failings or weaknesses in the administration of the charity.
The inquiry was opened on 27 March. The Commission will publish a report after it has conducted the inquiry.
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