A statutory inquiry has been launched by the regulator into the possible "financial mismanagement" of the charity Hospice Aid UK.
The charity was set up 12 years ago to provide grants to UK hospices and promote the care and treatment of the sick and dying.
The Charity Commission today said it is looking into the proportion of funds applied directly to charitable purposes. It said that there is a low level of charitable expenditure which could have a damaging impact on the public trust in the charity.
The regulator also said it is investigating whether the charity is being used for private advantage and expressed concerns about the financial management of the charity by the trustees. It raised further concerns about Hospice Aid UK’s decision to enter into a contract with a direct marketing company.
The Commission said it will examine the issues in detail to determine if there has been any misconduct or mismanagement.
According to Hospice Aid UK’s 2013 accounts, the total annual income was £264,000, of which just £63,000 went towards charitable activity, meaning fundraising costs were 76 pence in every pound.
In 2012 the charity’s income was £132,000, of which just £53,000 went towards charitable activity, meaning fundraising costs were 60 pence in the pound.
On its website, Hospice Aid UK claims to be the only UK charity to support “all hospices” who apply for funding. “We give support where and when it's needed,” it said.
“We have provided support in all types of ways, whether to help buy specialist equipment, cover hospice running costs, supply emergency funding or in other areas that can be difficult to get funding for.
“We are driven by our determination to increase awareness of how reliant hospices are for funding, but we couldn't do this without public support,” the Hospice Aid UK website said.
Concerns were first raised about the charity in January, 2014. The inquiry was formally opened on 28 August 2014.
Hospice Aid UK released a statement this afternoon expressing 'dismay' at the inquiry.
"In response to the press release posted on the Charity Commission's website, the trustees of Hospice Aid UK wish to put on record that they have at all times acted in accordance with professional advice and are dismayed that contractual arrangements with a direct mail company, which have been accepted by the Charity Commission in respect of other charities, are being questioned now in relation to Hospice Aid UK," the statement said.
"The trustees are confident that they can give reasonable explanations to the questions raised by the Charity Commission in due course. They will fully cooperate with the Charity Commission and are grateful to the Commission for stressing that any inquiry 'is not in itself a finding of wrongdoing'. We look forward to working with the Commission towards a positive outcome."
A spokesperson for the Charity Commission said they were unable to comment further on the inquiry.
