Two married trustees of a charitable higher education college were also employed by the college in paid roles as its principal and marketing manager, despite its governing documents giving no provision to pay such trustees.
And despite the fact that the Charity Commission opened a statutory inquiry into the college and found evidence of unauthorised payments to the couple, a decision was made not to seek repayment because the remuneration was below market rate and deemed reasonable for the services they provided.
The Commission’s investigation into AA Hamilton College (pictured) in Vauxhall, London, began in January 2011 following a tip-off by a member of the public. Initial enquiries unearthed problems including non-submission of accounts, unauthorised trustee benefits, poor financial controls and inadequate trustee decision-making.
The trustees were issued with an action plan but failed to properly respond and in July 2011 the regulator opened a statutory inquiry focusing on two issues – the trustee benefits and poor financial controls. Once the two trustees were advised that their payments were unauthorised, they quit both their paid and trustee posts.
Subsequently, two new trustees were appointed and the new board took steps to return the charity to a secure legal footing. When considering whether to seek repayment of the unauthorised benefits from the former trustees, the new board concluded that the remuneration paid to them was below market rate and that the trustees had acted “honestly and reasonably” in receiving the remuneration. It decided not to pursue restitution and the Charity Commission supported this view.
The wider lessons for the sector, according to the Commission, include that expenditure records must be accurately maintained; decision-making processes about recruitment and employment must be open and transparent, and potential conflicts of interest must be properly and openly managed. Any trustee benefits must be duly authorised and reported in the charity’s accounts.
AA Hamilton College declined to comment.
Read the Commission's full inquiry report into the college here.
