Submissions for the 2022 Charity Shop Survey close Friday!

Find out more and download the questionnaire here

Regulator shuts down charity after it received just £1.8m from £10m raised by agency 

03 Sep 2021 News

The Charity Commission’s has wound up a charity after a statutory inquiry found serious failures in the charity’s management, including in its arrangement with a fundraising agency.

The Commission has disqualified two trustees, including the chair, and the Alternative Animal Sanctuary has now closed, according to the report.

The charity was removed from the register of charities on 28 June 2021 and its remaining funds, totalling £407,000 were distributed to 10 different charities with similar purposes.

The regulator disqualified the chair from acting as a trustee for the maximum period available of 15 years, whilst one other trustee was disqualified for 10 years.  

The Alternative Animal Sanctuary was wound up on the basis that it was not feasible to address the underlying issues at the charity.

Findings: ‘A complete lack of basic financial controls’

The inquiry found the chair ran the charity on a day-to-day basis and “had full autonomy over the charity’s bank account, with no oversight by the other trustees”.

The regulator adds that there was “a complete lack of basic financial controls” and no separation between the personal finances of the chair and those of the charity.

According to the Commission the chair used personal credit cards to pay for some of the charity’s expenditure, which was then later reclaimed when the charity had funds available.

The inquiry was told that this arrangement was in place due to long-standing cash flow issues at the charity, meaning that the chair had resorted to using personal funds to pay for some of the charity’s expenditure. From 1 April 2010 to 31 March 2017, the charity paid over £360,000 to the chair.

The trustees also repeatedly failed to comply with their legal accounting responsibilities.

Fundraising partner

Through a partnership with fundraising agency between 2008 and 2020 £10.6m was donated. 

However, just £1.8m was directly received by the charity, “due to significantly high costs and fees of the agreement”. 

The inquiry found that trustees at the charity were not clear with potential donors about how much of their donated funds would go towards the charity’s purposes.

This represented less than 18% of the funds raised from the public being directed to the charity for it to use in furtherance of its objects, with over £8.8m being consumed by the costs and fees associated with the agreement.

‘A clear abuse of their position’

Amy Spiller, head of investigations at the Commission, said that the trustees’ conduct and the chair’s “clear abuse of their position” at the Alternative Animal Sanctuary “goes against everything we associate with charity”. 

She added: “The public donate generously to charities because they want to make a difference to the causes they care about. This means that when they donate their hard-earned cash, they want to see a high proportion of it spent on the end cause. I’m glad that the charity’s remaining funds have been transferred to active charities supporting the cause they were intended for.”

Governance & Leadership is a bi-monthly publication which helps charity leaders and trustees on their journey from good practice to best practice. Written by leading sector experts each issue is packed with news, in-depth analysis and real-life case studies of best practice in charitable endeavour and charity governance plus advice and guidance straight from the regulator. Find more information here and subscribe today!

 

More on