Charity Commission inquiry highlights significance of Trustee responsibilities

In late August, the Charity Commission concluded their three-year-long inquiry into Care4Calais, finding that the former trustees were responsible for several instances of misconduct and mismanagement; the Commission found that for a number of years the charity lacked appropriate governance structures, had poor internal financial controls, and inadequately handled complaints.

The detailed findings below – both positive and negative – highlight the significance of Trustees’ responsibilities, and steps current Trustees can take to ensure that they are meeting theirs.

Poor internal financial controls

The inquiry was critical of the charity’s financial management, notably a lack of suitable internal financial controls. Between October 2017 and August 2020, a now former trustee was reimbursed over £340,000 for charitable expenditure they had incurred to save the charity around £3,000 per year in foreign exchange fees. The inquiry concluded that while no funds were misused or misappropriated for private benefit, this arrangement was inappropriate, and put the charity’s funds at undue risk.

Governance failings, poor complaint handling and dispute

The regulator found that between 2020 and 2021, Care4Calais operated with two trustees, failing to maintain the minimum number of trustees stipulated in its governing document.

A dispute between board members left them unwilling or unable to resolve their conflict. The inquiry also concluded that the charity’s handling of complaints was inadequate; it was found to have failed to demonstrate that complaints were handled in an impartial, fair, open and transparent way, and that it had failed to maintain records of investigations. On at least one occasion, and in breach of the charity’s own policy, one trustee handled a complaint about another trustee to whom they were related, failing to identify or manage the conflict of interest and/or loyalty which arose.

Charity structure and conflicts of interest

Two of the former trustees were siblings, and the inquiry found little evidence to demonstrate that any past conflicts of interest or loyalty which may have existed had been appropriately managed. This was worsened by poor minute-taking. This amounted to misconduct and/or mismanagement. Furthermore, the founder of the charity was a trustee and also the Chief Executive Officer, bringing into question how balanced the distribution of decision-making power was.

Campaigning and political activity

As part of its inquiry, the Charity Commission reviewed the trustees’ decision to issue judicial review proceedings to challenge the UK government’s Migration and Economic Development Partnership with Rwanda. It found the decision was properly made, adequately documented, and was within the range of reasonable decisions open to the trustees of this charity. The activity itself served to further the charity’s objects, and the inquiry determined it was in line with the Commission’s guidance on political campaigning. In concluding their inquiry, the Commission signpost their CC8 guidance regarding Internal Controls for Charities, and their self-check-list for trustees to use to enable them to evaluate their charity’s performance against legal requirements and best practice.