By Lucy Caulkett-
The Charity Commission, the independent regulator of charities in England and Wales, has opened a statutory inquiry into Combined Funds Limited, and frozen the charity’s bank accounts. The inquiry was opened on 27 March 2018.
The purposes of Combined Funds Limited are to advance religion in accordance with the Jewish Orthodox faith, and to relieve poverty. They do this by making donations to other charitable organisations. In the financial year ending 2016, the charity had an income of over £700,000 with net assets over £6.5m. The charity also has nine trading subsidiaries.
The Commission initially opened a compliance case in 2017 , after concerns from trustees of the issue. 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 have expressed concerns in particular about potential conflicts of interest and connected party transactions, given that the 3 trustees of the charity are all related, and in 8 of the trading subsidiaries. The sole director is also a trustee of the charity. groups ‘confident about the future’,
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ASSETS
The charity had an income of more than £700,000 in the financial year to the end of 2016, with more than £6.5m in net assets.
The regulator said its investigation would focus on the administration, governance and management of the charity, including its relationship with its trading subsidiaries and whether conflicts of interest had been adequately managed.
The commission will also examine the extent to which the charity operates for the public benefit and whether any administrative failings were due to misconduct and/or mismanagement by the trustees.
In a statement, the commission said it had opened the investigation because it deemed Combined Funds Ltd to have been operating as a charity, despite not being registered with the regulator.
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“The Charity Commission deemed that the company’s objects are entirely charitable and the trustees duly applied for registration in November 2017,” the statement said.
“That application is pending the outcome of the inquiry. As its objects were deemed to be charitable, it therefore falls within the Charity Commission’s regulation.”
Despite the charity’s main activity being making grants to other charitable organisations, there is no formally agreed grant-making policy in place. 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.
The inquiry will look at the administration, governance and management of the charity by the trustees with specific regard to 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.#
RELATIONSHIP
It will also look into how the charity has managed its relationship with its trading subsidiaries, whilst ascertaining the relationship is in the charity’s best interest, and that its interests in the trading subsidiaries are properly protected the extent to which the charity operates for the public benefit. It also looks at
the extent to which any failings or weaknesses identified in the administration of the charity during the conduct of the inquiry were a result of misconduct and/or mismanagement by the trustees
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.
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