Regulator investigates local charity body that loaned CEO £200,000

16 Apr 2024 News

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Civil Society Media

The Charity Commission has opened a compliance case into a local charity infrastructure body, which loaned its chief executive over £200,000 to expand its storage facilities on her land.

Data for the financial year ending 31 March 2023, filed with the regulator, shows the Essex-based charity loaned CEO Tracy Rudling a total sum of £206,000.

Community360 is an umbrella organisation for the voluntary sector in Colchester, which Rudling has led since 1992.

Within the year, Rudling paid interest from September to March of £3,500.

The charity said the loan has been repaid in full as of the end of March 2024, and has yielded an additional £11,600 for the charity in interest generated.  

A Commission spokesperson said: “We have an open compliance case into Community360 in relation to concerns that have been raised with the Commission which we are still assessing.”

Several of the charity’s trustees have recently stepped down, and Community360 said it was currently recruiting for new trustees.

Charity: Loan to CEO was granted ‘to allow us to expand’ facilities

A spokesperson for Community360 told Civil Society they had granted Rudling a loan “in order to allow us to expand the facilities that enable us to deliver vital work across our communities”.

They said the loan “has now been fully paid back and has also financially benefitted the charity via above market rate interest payments”.

The spokesperson said that for the past 20 years Rudling has provided free commercial storage facilities for Community360 on her land.

After Community360 decided that it would need to expand these storage facilities to meet growing demand, Rudling agreed to let the charity expand further onto her land in 2022.

However, Rudling “felt strongly as the landowner that it should not be the responsibility of the charity to invest in this development”.

The board subsequently agreed to grant a short-term loan to Rudling, which she has repaid in monthly instalments.

“The loan was funded solely by unrestricted income generated reserves that are ringfenced for future growth opportunities to further our charitable goals, and not from investment from our valued partners,” the spokesperson said.

“This has allowed Mrs Rudling to continue to provide philanthropic support via the use of her land, and to enable C360 to increase its revenue through the interest contribution from loan repayments, which has been inflated above standard market interest rates at the request of Mrs Rudling to further support her desire to financially give back to the charity. 

“To date, the short-term loan agreement has seen significant benefit to the local people we serve, including allowing the charity to expand its car park and lease more buses to provide vital transport, and increase storage space for furniture items that are given to beneficiaries in need of support through our essential living fund.”

Recruiting trustees

The spokesperson also said the charity is currently recruiting for trustees after several stepped down recently.

“As with any financial decision taken, due diligence processes were in place at the time of the agreement of this loan and we are committed to working closely with the Charity Commission and all other partners to ensure we are upholding our core values of openness and transparency,” they said.

“While the scope of work we are providing to vulnerable people has grown significantly over the last few years, several of our trustees have stepped back from their roles, but they will remain firm friends and continue to support our charity in other ways.”

Total income at the charity was £4.24m in 2022-23 and expenditure was £4.15m. The income included £3.13m from 96 government grants.

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