By James Simons–
The Uk Charity Commission has concluded that the trustees of a Birmingham based charity are responsible for misconduct and/or mismanagement of a scale that prevented them from accounting for £100,000. over financial and governance oversights.
The One Community Organization was registered as a charity in 2009 and organizes events and education programmes for the deaf/blind and special educational needs community deplorably failed to account for a huge amount of money to the tune of £100,000 paid into a trustee’s bank account.
The inquiry found that the trustees had agreed that the chair of trustees would make payments on behalf of the charity using his own bank account because the charity didn’t have its own bank card.
Its inquiry report also found that the charity paid more than £1,000 into a trustee’s account without contacting the regulator, even after the commission had ordered that no payments could be made from the charity to board members without the commission’s authorization.
At the time the inquiry was opened by the charity commission, its spokesperson told The Eye Of Media.Com that it did not have access to a business bank card , adding that it had a full digital footprint to prove “no wrongdoing or anything illegal” has taken place.
It added that its transparence with investigators would ”demonstrate its innocence in due course”
The chair was found to have dishonourably reimbursed himself without the supervision or authorization of another trustee. The trustees’ poor record keeping also meant they could not provide the inquiry with supporting documentation for the reimbursement of around £100,000 spent in this way, meaning the inquiry could not conclude that the money was spent solely in furtherance of the charity’s objects.
Transactions made by the chair on behalf of the charity using his own bank account were also not included in the charity’s accounts for the financial years ending in December 2017 and 2018. This means they understated the charity’s income and expenditure by between £70,000 and £80,000 for both years.
The statutory inquiry also found that the trustees lacked a basic understanding of the charity’s governing document and their duties as trustees.
This resulted in a number of governance failures, including the charity operating outside of the geographical area stated on its governing document, not identifying or managing conflicts of interest, and making decisions without the required number of trustees.
The commission’s investigation of the charity began after it reported a burglary at its offices and at the home of a trustee in 2019. The financial details subsequently provided by the charity “were not consistent with the commission’s records”, the regulator said in a statement, and it opened an inquiry in 2020.
Review
Following the commission’s review of One Community Organization’s accounts, it identified a total of £280,000 paid from the charity to the chair of trustees between 2017 and 2021.
The trustee told investigators that, as the charity account had no bank card, he purchased items for the organization from his own account and was reimbursed by the charity.
Shockingly, the bent One Community Organization was unable to provide supporting documents for more than £100,000 of this spending, which trustees said had gone on “sundry expenses”.
The Charity Commission’s investigation also found that transactions made by the chair on behalf of the charity using his own bank account were also not included in the charity’s accounts for the financial years ending in December 2017 and 2018.
This means they understated the charity’s income and expenditure by between £70,000 and £80,000 for both years
The commission concluded that trustees had failed to show that charity finances “were used for exclusively charitable purposes. This was misconduct and/or mismanagement in the administration of the charity and a breach of trustee duties.”
Initial inquiries also found that One Community Organization sometimes worked outside of Birmingham and governance decisions were made without full involvement from trustees.
The commission said “the vast majority of decisions were made by the chair and then relayed to the other trustees individually, often over the phone”.
Defiance Of Charity Commission’s Order
In December 2020, the commission issued an order that the charity would need permission from the regulator before any money could be transferred to a trustee or related party. Despite this, the inquiry identified six payments made to the chair of trustees in December 2020 and January 2021, worth a total of £1,100.
The charity told the commission that this was “during an overlap” between accounts closing and opening.
The inquiry report said: “Charity trustees must comply with orders and direction of the commission. Failure to do so can be a criminal offence and in this case was misconduct and/or mismanagement in the administration of the charity.”
Lack Of Written Arrangements
The commission also criticized the lack of any written arrangement between the charity and a private company run by the chair of trustees, which received purchases worth about £3,000 paid for from the charity’s funds.
The regulator said it had seen evidence that the firm helped advertise and promote donations to One Community Organization, but argued that trustees should have “formalized a written agreement” regarding the relationship.
Delroy Wilson confirmed he had spoken to the commission since the report was published and said: “The main thing we want to highlight is that there were no fraudulent activities there, which is very important.”
He argued that some issues had arisen because the charity started responding to demand from local people rather than waiting to organise formal programmes.
The failure to get a separate bank card for the charity was “the main thing which we got wrong, the main thing that, in hindsight, we would have done better”, Wilson said.
He added that the money that was unaccounted for related to paper receipts for petrol and other charity expenses “that got lost in the mix”, and said that, although the regulator accepted online documents, “we have a basket full of paper receipts but they just didn’t accept that, so it mounted up to £100,000 over three years.
“Every penny counts because it is people’s donations, we get that. But it is the paper receipts that they wouldn’t accept that accumulated so much.”
Wilson stressed there had not been any deliberate wrongdoing, but acknowledged that money going through a personal account “doesn’t look very professional, let’s just say that”.
He said the charity will continue its work and argued that the report “doesn’t show that there is any fraudulence or anything of that nature. It showed poor accounts and poor auditing, which we put our hands up to because it was something which we got involved in [but] didn’t plan it out as a project, we just got on with it.”
Amy Spiller, head of investigations at the Charity Commission, said: “The trustees’ failures in this case resulted in significant amounts of charity money being unaccounted for. This is unacceptable and amounts to misconduct and/or mismanagement.
“I hope that the commission’s intervention in this case means the charity is now able to deliver on its charitable purposes and improve the lives of the people it was set up to support.”
The revelations led to the regulator issuing the trustees with an Action Plan to improve the charity’s overall governance and decision-making procedures, including to update the charity’s financial controls policy, familiarize themselves with Commission guidance on conflicts of interest, and appoint a professional accountant to assist with record keeping and accounting duties.
The trustees have since implemented the Action Plan.
Amy Spiller, Head of Investigations at the Commission, said:
”The trustees’ failures in this case resulted in significant amounts of charity money being unaccounted for. This is unacceptable and amounts to misconduct and/or mismanagement.
I hope that the Commission’s intervention in this case means the charity is now able to deliver on its charitable purposes and improve the lives of the people it was set up to support”.
A spokesperson for the Commission told The Eye Of Media.Com;The Charity Commission takes proportionate action and are really robust depending on our findings has a range of powers and our general aim is to ensure that a charity can continue because it is a question of law whether an organization is a charity.
Occasionally, a charity does close down as a result of our inquiry, but generally speaking, we seek to protect what is charitable, and sometimes that requires providing advise to put a charity on a more secure footing than to close it down.