By Charlotte Webster-
The Charity Commission has concluded its second inquiry into the charity Hospice Aid UK leading to a conclusion of serious misconduct and/or mismanagement. This follows an Official Warning in 2021 and a previous statutory inquiry.
A number of charities in the Uk are increasingly coming under suspicion for the misappropriation of funds often purported to be for the charitable purposes of helping the targeted group of the individual charity. Unregulated arrangements by fundraisers are capable of damaging public trust and confidence in that charity, and others like it in the Uk,
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During the first and second inquiries, orders dated 4 July 2016 and 21 January 2021 were produced under s84 of the Charities Act 2011. These orders required the trustees to address the weaknesses and issues at the charity, particularly the proportion of income being applied directly for charitable purposes.
The Commission found that the proportion of charity income applied for charitable purposes despite some improvement in the most recent financial year, remains low and this continues to be an area of concern and is something the trustees must focus on improving
The inquiry identified that after two conflicting sets of accounts were sent from the charity, the first set of accounts submitted failed to include a high proportion of the income derived from the fundraising arrangement with the fundraising agency and excluded the entirety of the direct expenditure incurred in the activity which comprised a material part of the charity’s operations.
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The second (resubmitted) accounts erroneously materially overstated income for the year ended 31 March 2019 and the comparative year ended 31 March 2018.
The inquiry found that neither set of accounts for the financial year ended 31 March 2019 fairly conveyed the extent to which donations were likely to be applied for charitable purposes. Further information should have been included to enable readers to have a better appreciation of the performance of the fundraising agency.
The Charity Commission is the independent, non-ministerial government department that registers and regulates charities in England and Wales. Its purpose is to ensure charity can thrive and inspire trust so that people can improve lives and strengthen society.
Facilitating Relief Of The Sick
Hospice Aid UK was founded in 2002 with aims that included facilitating and promoting the relief, care and treatment of the sick, especially of the dying, and the support and care of their families and carers and of the bereaved. It also aimed to facilitate and promote the charitable activities of independent hospices; (C) to undertake any other charitable purpose.
As part of the inquiry, concluded today, the regulator issued the charity with an Official Warning after finding misconduct and/or mismanagement by its trustees. This included trustees’ failure to fully comply with a previous action plan, which had required them to significantly increase the proportion of the charity’s income spent on supporting hospices.
Misconduct And Mismanagement
In 2016, following the conclusion of a first inquiry, the Commission issued an action plan to address serious misconduct and mismanagement, directing the trustees to improve the charity’s governance, management and fundraising arrangements.
The regulator opened a second inquiry after a review of the charity’s 2018 accounts raised a number of concerns. It became clear that the trustees had not fully complied with the first inquiry’s action plans and had renewed a costly direct mailing agreement with a specialist direct marketing and fundraising agency, despite the Commission’s earlier findings that this was not an effective use of charitable funds.
This second inquiry was opened to investigate the proportion of the charity’s income being applied for exclusively charitable purposes, as well as the trustees’ management of fundraising arrangements and the extent to which they had complied with their legal duties and previous Commission directions.
The second inquiry, concluded today, finds that the substantial funds generated were consumed almost entirely by the direct costs and fees of running the fundraising activity. Between March 2013 and July 2020, the charity raised over £3.2m but the direct costs and fees of this fundraising came to just over £3m leaving less than 6% for charitable activities.
The regulator also found that the trustees did not undertake due diligence and review the fundraising agency’s past performance before renewing the agreement.
An ongoing lack of transparency in the charity’s accounts about the fundraising agreement, the terms of which were not in the charity’s best interests, amounts to misconduct and/or mismanagement by the trustees.
Poor financial management, including trustees’ failure to submit accurate sets of accounts or a staff appraisal policy. The regulator used its formal powers and issued an Official Warning in 2021, requiring the charity to ensure future financial statements and trustees’ reports complied with the Charities’ Statement of Recommended Practice.
The Official Warning also requires the trustees to exercise sufficient oversight of the charity’s activities and finances, and prevents the charity from entering into commercial agreements that are not in the charity’s best interests.
None Compliance With Commission
The charity also failed to fully comply with an order of the Commission issued during the first inquiry dated 4 July 2016 which required, amongst other actions, that the trustees disclose in their annual reports the outline terms and performance of the agreement entered into with a fundraising agency.
The charity’s accounts were difficult to interpret, particularly in respect of the salary and fees paid to the charity’s Chief Executive Officer (‘CEO’) and whether the amounts were reasonable given the low level of charitable activity. In addition, it was not clear to what extent the trustees had monitored and appraised the CEO’s performance.
Also alarming was the fact that one of the trustees appeared to be a member of the CEO’s family and it was not clear to the Commission how this trustee was recruited, selected and, if applicable, remunerated by the trustees nor was it clear to what extent any potential conflict of interest had been managed by the trustees.
Amy Spiller, Head of Investigations at the Charity Commission, said:
”The public expects trustees to ensure that the money they donate goes towards delivering the charity’s objects and is carefully managed in the best interests of the charity. In this case, a woefully small proportion of funds generously donated by the public in support of hospices reached the intended cause. This was a direct result of the trustees’ misconduct and mismanagement.
Cases like this risk seriously undermining public trust and confidence as well as people’s willingness to donate to the thousands of well-run charities doing great work across the country.
This is not the first time the trustees of Hospice Aid UK have let their charity down. We will monitor their activities closely and will not hesitate to take firm action should there be any further failing.
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