Charities Management | Charity issues

Charity issues

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A charity offering an alternative to the traditional aid model

Musana was built out of a need to challenge and disrupt the traditional aid model, providing communities in Uganda with a future free of dependency, but instead full of dignity. By tackling the underlying causes of poverty, not just the symptoms, we help to restore Ugandans’ dignity by breaking the cycle of reliance created by programmes like child sponsorship.

Musana does things differently, and is changing the way charity is done.

Building community infrastructure that becomes owned and run by Ugandan locals, we give them a say in their future and provide them with education, healthcare and employment, resulting in a purpose-filled future. We also provide training and opportunities in each community through investment in individuals’ potential – which enables local leadership and the empowerment of the entire community, including women and children.

Through our disruptive model of developing sustainable social enterprises, we lift entire groups out of poverty by creating and delivering thriving communities that are based in Christian faith but also generate revenue to be reinvested in the community, for the benefit of those who live and work there.

Seeing the problem first-hand

Beginning as a children’s home in 2008, the concept for Musana was born out of a need to help 80 children in a state-run orphanage. Taking on their care, the name Musana – which in Luganda means “light” – was used to emphasise the children’s journey into a new way of living, where care, wellbeing and a true sense of community awaited them.

The Musana sustainable development community model came two years later in 2010, and emerged through many valuable challenges and lessons along the way. Under the leadership of Ugandan-born Haril Kazindra and his wife Andrea, there grew the perception of the pervasive effect of international overseas aid on Ugandan communities, seeing first-hand the detrimental effects of traditional charity models on the people who the money was intended to help.

Desperate to find a solution for Ugandan families trapped in poverty – and with no obvious future other than reliance on aid – Haril and Andrea set about creating a new way of providing help that didn’t stifle initiative or prevent ownership within the community.

How aid has failed Africa

Often aid simply does not reach those who need it.

According to economist William Easterly, between the 1960s and 2006, Western nations spent over $2.3 trillion USD on foreign aid, with around one trillion being spent on aid to Africa alone. Easterly also says that the failure of using aid appropriately has led to the countries receiving the highest average aid see a mere 0.4% growth in income over this almost five-decade period, while at the same time many Africans are dying for the want of drugs costing as little as 12 cents.

As witnessed by our founder, Haril, while living in Uganda as a young man, state-run orphanages often exploit children, attracting Western aid by claiming their residents are orphans, when in fact 80% of them are not. It was this simple deception to channel continuous international funding that drove Haril to want better outcomes for Ugandan children and their families.

This poignant observation of the traditional aid model’s shortcomings were catalysts for Haril and Andrea’s commitment to championing community independence over aid dependency.

Why the Musana model is different

At the heart of Musana’s unique and disruptive model are the sustainable Ugandan communities.

Having seen the fundamental problems of the traditional charity donation or international aid models, we pioneered something altogether different, centred on building the communities. All donations we receive are invested in building community infrastructure, which since 2008 has delivered three communities with state of the art hospitals, women’s empowerment centres, primary and vocational secondary schools, restaurants, guest houses, conference centres, and more.

These communities have served over 18 million meals, treated 266,000 patients, educated over 6,500 children, and empowered over 1,000 women with business and skills training.

The unique aspect at the core of our model is that, once built, these social enterprises are completely owned and run by the Ugandan community itself. Within seven years, the communities become financially self-sustaining, covering 100% of their own operating budget and even earning profit, which is reinvested in the community through outreach initiatives like scholarships and free health services.

In 2023, Musana’s communities generated almost $3 million USD (almost £2.3 million) in local revenue, covering 95% of their total operating budget. The community in Iganga (a town in the East of Uganda) generated $400,000 USD in profit that we reinvested in strengthening the community and supporting its most vulnerable members.

In communities like this, the key to our success in breaking cycles of poverty is working smarter, not harder. When it comes to foreign aid, the problem has not been a lack of quantity, but a lack of quality. Traditional models like child sponsorship, while well intentioned, are simply less effective at producing lasting change – which we are turning on its head.

When funding is channelled into building communities with effective local ownership and leadership, it represents not only generosity and good intentions, but a gift that enables transformative impact in the long run. Underpinned by Christian faith, this is a model that genuinely improves the everyday lives of those in poverty.

Collaboration – global and local

While local ownership is central to our approach, it takes global collaboration to build these social enterprises in the first place. Funding to continue infrastructure development in Uganda comes through Musana in the United States and now also in the UK, which I now lead, and launched in February of this year.

Like the US arm, Musana UK plays a vital role in infrastructure development without interfering with the operations and management of the communities. I collaborate closely with the teams in the US and Uganda to identify needs, provide funding and support implementation.

All of this ensures that the Ugandan communities can run and sustain their enterprises autonomously, under local leadership. A hands-off approach from me in the UK and the team in the US ensures that the enterprises remain firmly rooted in local ownership and accountability.

Across both offices in the US and UK, we are committed to complete transparency in the stewardship of our donated funds, applying strict checks and balances to ensure every pound donated is spent with integrity to support the development of the Ugandan social enterprises. Similarly, the Ugandan project managers implement strict checks and balances, along with robust financial management practices and transparency measures - all intended to mitigate the risk of mismanagement, corruption or inefficiency.

In fact, local ownership of the social enterprises actively ensures resources are used effectively. Along with formal measures to mitigate risk, the community’s stake in the success of these enterprises is a powerful motivator to address any challenges proactively. Unlike the traditional model, the Ugandan locals who benefit when their communities thrive are the ones making the management decisions.

To support and cultivate these local leaders, we prioritise local engagement and capacity-building initiatives to empower the Ugandan communities to drive their enterprises’ success. These include training programmes, leadership development and skills enhancement for local staff and community members.

One example is the quarterly Musana Leadership Development Programme, where more than fifty local leaders in the organisation gather to grow in their leadership skills. This training often reveal otherwise overlooked potential, empowering locals to use their gifts for the sake of their communities.

By valuing trust, collaboration, empowerment and sustainability, it is Ugandans who own and manage Musana’s social enterprises. By addressing the causes of poverty, not the symptoms, we have empowered Ugandan people to carve their own path to prosperity – and that is how we deliver transformative change within communities.

The Musana-funded communities in Uganda are built on a culture of ownership and entrepreneurship, and this ethos ensures that these communities are not just sustained from the outside, but continue to grow and thrive independently.

So what’s next? As Musana grows, funding can be diverted to building more of these communities, and transform more lives in Uganda, and eventually other countries across Africa. We aim to create seven new communities over the next eight years, with a total of 10 by 2032.

There is literally no limit to our ambition.

Musana UK’s Paul Smith - when funding is channelled into building communities in Africa with effective local ownership and leadership, it represents not only generosity and good intentions but a gift that enables transformative impact in the long term.
"A hands-off approach from me in the UK and the team in the US ensures that the enterprises remain firmly rooted in local ownership and accountability."

Developing partnerships when overseas projects

Habitat for Humanity Great Britain envisions a world where everyone has a safe home. Operating in over 70 countries, we tailor our approach to local needs, covering construction, water, sanitation, disaster response and policy advocacy.

In the UK, the work of Habitat for Humanity GB includes a focus on addressing local housing needs. With fewer affordable homes and rising costs exacerbated by Covid, our priority programme, Empty Spaces to Homes, repurposes vacant commercial spaces into affordable housing.

History of Global Village

Volunteering has been at the heart of Habitat’s work since its foundation in 1974. Originating in the US, Habitat’s model mobilised communities in helping to construct homes for their neighbours.

In 1989, this inspired an overseas volunteering and community mobilisation programme, and “Global Village” became the flagship opportunity for people, including in the UK, to participate in initiatives around the world, building and improving homes in partnership with local communities in alignment with Habitat’s vision.

Up until the pause necessitated by the Covid pandemic in 2019, Global Village was active in 40 countries, typically involving around 13,000 participants a year. In 2019 alone, 801 teams, numbering 12,176 individuals, committed their time in 37 countries.

Fifteen of these teams, or 250 UK participants, were supported by Habitat GB in fundraising for, and bringing their commitment, time and hard work to build homes in nine countries.

Participants also committed their fundraising efforts; Global Village raised over £7.8 million annually around the world. Taking part in Global Village not only mobilised participants to raise much needed funds, but it also raised awareness of Habitat’s work, and the issue of decent housing worldwide.

Global Village experience

It takes months for someone to set foot on a build site when they first join Habitat GB as a Global Village participant. Participants are typically driven individuals joining a community group or workers of Habitat GB's strategic corporate partners. Beginning this journey as part of a larger organisation is helpful when navigating the worries and anxieties that may arise when committing to an overseas experience.

After they commit to a build, the Habitat GB Engagement Coordinator helps them along the way by giving them early information about fundraising, the work and impact of Habitat, as well as other crucial details about the country where the building work will be conducted, including local needs and considerations alongside the strategy each country has in place for addressing these.

As the journey progresses, the British participants work as teams to fundraise and prepare for their build – attending orientation sessions focused on preparing and packing for a build, what to expect upon arrival, and some of the practical essentials around health and safety, safeguarding, and insurance.

This is also an excellent time to introduce the participants to both the Habitat staff in the country they will be travelling to, as well as the Team Leaders. These are volunteers who have taken part in Habitat builds in the past and work to lead others through the process both in the preparation for the build trip and through the build itself.

Throughout the process, participants have access to the Engagement Coordinator, as well as the Team Leaders, for their queries and ease any concerns that may arise.

Travelling from the UK

Upon departure from the UK for the build itself, teams will usually travel together where possible to their build project, and are met upon arrival by local Habitat staff, who would have already coordinated hotels, transportation, food, and social learning exchange activities, in addition to the build itself.

Being familiar with the local area, the Habitat staff in the programme countries have the knowledge, skills, and passion to help volunteers feel supported and excited for the week of their build.

This support – both from local staff and Team Leaders – is critical in ensuring that local communities benefit from their involvement so participants have a safe experience, . The Global Village programmes takes a responsible, person-centred approach to overseas engagement trips.

From an operational perspective, all Habitat entities – including Habitat GB – which recruit and send teams are subject to oversight and policy standards provided by Habitat for Humanity International. This requires completing a robust accreditation process which ensures Global Village meets a consistently high standard across all countries – whether sending or hosting teams.

This process includes a comprehensive review of safeguarding policies and procedures, health and safety and risk management strategies, insurance and contingency plans, financial due diligence, and oversight of the support and guidance provided to participants through pre-departure training and resources.

This accreditation process also emphasises the role of advocacy in the Global Village programme, working to ensure that each participant emerges from their experience a lifelong advocate for the charity and its global and local work.

Challenges of overseas volunteering

The Covid-19 pandemic had an immediate and significant impact on Global Village. The urgent need to pause all builds while we all responded to the impact of significant travel restrictions turned into a longer hiatus. This was driven firstly by a responsibility to protect vulnerable communities where vaccination availability and healthcare provision are both limited.

Secondly, there was the recognition that this was an opportunity to reassess the Global Village programme in recognition of the changing volunteer landscape, and to think about what overseas volunteering could look like into the future.

Having done this work, in collaboration with Habitat teams worldwide, Habitat GB is now preparing to resume Global Village, sending over 50 participants to three countries participating in the staged resumption - Romania, Kenya and Malawi.

This need for an in-depth review came from an awareness of the challenges that are inherent to overseas engagement opportunities which in the past we would have described as volunteering, and our commitment to ethical and sustainable practices. These challenges take different forms, and demand reflection and action on the part of the operating organisation.

Most critical to us in this pause phase was the question of what part Global Village played in a sustainable, impactful, approach to development. Short term overseas engagement activities are perennially popular and offer huge income generating and profile raising opportunities – but they are also subject to growing criticism, and the label of “voluntourism”.

The time limited support of unskilled participants can be seen to create dependency, harm communities through inefficient use of resources, prioritise the experience of volunteers over communities, and perpetuate stereotypes.

These are serious considerations, and ones which we wanted to give time and space to addressing through the Global Village hiatus – how could the desires of participants to meaningfully give back be balanced with an organisational commitment to ethical and responsible community engagement?

Updating the accreditation process

Part of the answer to this is updating the accreditation process, mentioned above. This includes an increased emphasis on safeguarding standards, and more guidance for those participating in Global Village in setting out expectations of appropriate behaviour, as well as the importance of recognising and reporting any concerns when they are on the build.

Team Leaders undertake annual training which includes extensive safeguarding training, as well as background checks. Alongside this is a greater focus too on that person centred engagement response.

Builds have always involved working alongside both volunteers from the local community, under the supervision of local construction experts. But now each build includes planned cultural learning activities, where participants use their downtime to learn more about local challenges, culture and practices, and enrich their understanding of how their contribution fits into a wider strategy for the country they are visiting.

Any tourist activities are strictly for after the experience is over, organised independently by participants. The fundraising component of Global Village has also been foregrounded, emphasising the importance of making a meaningful financial contribution to local projects, and ensuring that communities are being served by Global Village through increased resources.

Also, the language we use has changed too – i.e. talking about “participants” rather than “volunteers” to reflect in a more nuanced way how Global Village supports projects and how the focus is on programmes, rather than individuals.

Potential of overseas engagement

Habitat for Humanity GB is committed to demonstrating the potential of overseas engagement in fostering partnerships and mutual understanding, using it as a tool to challenge rather than perpetuate stereotypes through providing opportunities for participants to gain real insights into not just the challenges experienced in the country they are travelling to, but also the local way of life, customs, traditions and language.

This is to foster greater understanding and appreciation of diverse cultures, and empower participants with a broader perspective on global issues. Our ambition is to transform participants into passionate and motivated advocates for their mission, and strengthen their voice in advocating for everyone to have a safe and decent home. Global Village can be a powerful tool in that goal, if employed in an ethical and responsible way.

Habitat for Humanity GB’s Henrietta Blackmore – the charity’s ambition is to transform participants in the Global Village project into passionate and motivated advocates for their mission, and strengthen their voice in advocating for everyone to have a safe and decent home.
"The time limited support of unskilled participants can be seen to create dependency, harm communities through inefficient use of resources, prioritise the experience of volunteers over communities, and perpetuate stereotypes."

Collaboration between charities can achieve greater outcomes

Charities play a crucial role in modern society by offering essential services and support to the most vulnerable people. However, many charities face the persistent challenge of securing adequate resources to meet the growing demand for their services. The UK Giving Report 2023 revealed that the proportion of people donating to charities has not fully returned to pre-pandemic levels.

As of March 2023, there were 168,850 charities operating in England and Wales, and over the last ten years around 5,000 new charities have been registered every year, but a similar number also closed or merged. This highlights the enormous scale of charities needing support. So now, more than ever, it is imperative for charities to explore ways they can fulfil their missions and amplify their impact within the sector.

One way charities can enhance their activities is through partnerships with other charities. While this may sound counter-intuitive to many, charities supporting other similar charities can help minimise duplication, leading to more efficient resource allocation as well as establishing coherent pathways for individuals using multiple services.

Let me explain how my charity, The Royal Alfred Seafarers’ Society, a registered charity established in 1865 and incorporated under Royal Charter, draws support from other charities and also contributes to the work of fellow charities. The society’s objectives were originally to maintain facilities for the care of elderly and infirm merchant seamen, and to provide financial assistance to individuals who were in need.

Specialist maritime care

Since 1996, the grant-making function has been dormant, and the remaining beneficiaries were transferred to the Shipwrecked Mariners’ Society. We have continued to offer specialist maritime care at our care home, Belvedere House, which provides on-site nursing, dementia, residential and respite care to former seafarers and their dependents, together with sheltered housing on our 14- acre Weston Acres estate. Part of the reason we have been able to maintain our services for so long is due to the continuous support we receive from other organisations.

Collaboration within the charity sector offers numerous advantages, including increased impact, improved efficiency, more diverse funding sources and stronger partnerships. By generating funds for other charities and raising awareness about crucial issues, charities like ours can collectively contribute to meaningful change.

As a charity, we raise funds through revenue generated at our Weston Acres site but also through the support of our very loyal donors and other organisations, such as Trinity House, the Merchant Navy Welfare Board and RN & RM Charity. To sustain the vital services for the people under our care, we understand how important it is to support fellow entities and so frequently fundraise for other causes throughout the year, especially causes within our sector. This year, our focus has been on raising money for The Seafarers’ Charity.

Real difference to people’s lives

The Seafarers' Charity is a major grant-making charity which has been helping people in the maritime community for more than 100 years by providing vital funding to support seafarers in need and their families. The charity supports organisations and projects that make a real difference to people's lives across the Merchant Navy, fishing fleets, Royal Navy and Royal Marines.

This year, the Royal Alfred Seafarers’ Society’s contributions have helped raise a remarkable £8,700 for The Seafarers Charity to support maritime workers and their families through various initiatives like cake sales, plant markets, BBQs and quiz nights.

Members of the society also completed the 24 Peaks Challenge in the Lake District, walking and climbing 33 miles with a 13,000 ft ascent within 24 hours. This feat was dedicated to the memory of former estates manager Richard Condie, a three-time challenger who previously raised more than £12,000.

Indispensable role of volunteers

Most charities have volunteers. Without volunteers 85% of the sector could not keep going. Sector leadership would also collapse without the voluntarily given time of trustees.

We are lucky at the society as we engage volunteers who contribute to the smooth running of our nursing care home and sheltered housing – individually and collectively. They undertake tasks such as befriending - where a volunteer spends time with an individual resident or tenant to increase their quality of life, running the bar for special occasions when the regular bar staff are absent, or assisting with activities.

For us, none of the help provided by volunteers has a financial implication – they are over and above the provision of care and running of the home but add that significant little extra.

Increasing the impact of the mission

From our experiences of supporting other charities, working with organisations which have shared goals with your own or operate within the same sector can be very beneficial as it helps to increase the impact of the mission.

This is an extension of the work we do here at the society, as it increases the support available for the people who need it. For us, we usually look for organisations within the maritime sector, to help support a broad cross-section of seafarers, including those with backgrounds in the Royal and Merchant Navies, Women’s Royal Naval Service, Royal Fleet, and auxiliary and fishing fleets.

More recently, to help us recover from an expensive period of modernisation, we have cast our net wider to other charities and commercial organisations with an interest in our provision of care and accommodation.

When beginning a partnership, it is essential to make sure all communications are clear by properly articulating the purpose of the collaboration - for example, how to allocate funds and how it benefits the shared mission, as well as remembering to be transparent with donors about the partnership.

Charities should also ensure that each partner involved maintains a high level of accountability and demonstrates the impact of the funds raised. Charities should regularly assess the impact of collaborative fundraising efforts and adjust their strategy as needed to maximise effectiveness.

Tackling systemic issues better

The significance of charities supporting one another cannot be overstated and should be more widely considered within the sector, and this is particularly so in the maritime charity field. Collaborative efforts enable charities, particularly smaller ones, to tackle systemic issues more efficiently, allowing for greater success in their fundraising efforts.

Charities must secure funds to support their work, making resource pooling a sensible objective. Collaborating with like-minded charities widens their reach through their shared networks. By pooling resources, such as fundraising prowess through certain activities, charities can amplify their impact significantly.

Collaborative efforts empower charities to also amplify their messages by sharing content such as articles, social media posts and videos. By reaching a wider audience collectively, especially vital for smaller charities, these partnerships help counter alarming statistics: over a third of people cannot name a local charity in their area; one in 10 have never donated to any charity, local or otherwise. Pooling marketing resources for focused campaigns can significantly boost your chances of reaching your target audience.

Charities can share success stories, showcasing their positive impact on individuals or communities. They can exchange information to avoid duplicating services. If a charity has met a specific community need, they can share this information with others to prevent duplicating efforts.

For the greater good

Assisting fellow charities is crucial as it fosters cooperation, efficiency and effectiveness within the sector. This collaborative spirit results in a greater collective impact in addressing social issues and improving community wellbeing. After all, for us and our partners our individual aims are the same, and thus in relation to former seafarers our collective duty is the care and accommodation for those who have served their country at sea and need our help.

We look forward to continuing our support for allied worthy causes in the future, expressing our gratitude to the organisations which assist us in return.

The Royal Alfred Seafarers’ Society’s Brian Boxall-Hunt – by generating funds for other charities and raising awareness about crucial issues, charities like his can collectively contribute to meaningful change.
"When beginning a partnership, it is essential to make sure all communications are clear by properly articulating the purpose of the collaboration…"

When the Charity Commission uses its regulatory powers

Charity trustees are often worried about what the Charity Commission might do if they get something wrong in the running of their charity. Media coverage in recent years of a wide range of wrongdoings in the sector, ranging from safeguarding through to avoidance of business rates, has added to the already high levels of anxiety among those who freely give their time, energy and expertise to charities.

Of course, in a sector with over 169,000 registered charities and many thousands of others which are not required to be registered, it is perhaps not surprising that there will be enough questionable activity to provide the media with a steady stream of exciting headlines to catch readers’ eyes.

Even with the knowledge that these cases represent a tiny proportion of the charity sector, trustees can be forgiven for thinking that they could be the next people to be hauled before the Commission and subjected to public criticism for their mistakes.

In many cases, the trustees can be reassured that the problems are minor and are not likely to reach the level of seriousness that would justify the Commission using its formal powers under the Charities Act 2011. However, from time to time trustees do need to be reminded about some of the possible outcomes if they get on the wrong side of their regulator, and particularly if they do not cooperate with the Commission.

Wide range of steps

In a recent inquiry report published by the Commission into the conduct of trustees of the Moss Side and Hulme Community Development Trust, we can see a wide range of the formal steps the Commission is willing to take.

This charity was included in the Commission’s “double defaulters” class inquiry, opened in 2017 under section 46 of the Charities Act 2011, regarding failure to file accounts for the years ending 31 August 2015 and 31 August 2016. The charity did eventually file those accounts and it was removed from that inquiry.

However, within five months the Commission had opened a second inquiry following the charity’s failure to file its 2017 accounts. That inquiry found that:

  • The trustees had failed to ensure that the quorum requirements of the charity’s governing documents were satisfied, in that it was being run by just two trustees.
  • Two trustees had been paid by the charity, in breach of its governing document.
  • The trustees had failed to provide any evidence of activities in furtherance of the charity’s objects.

Again in default

The trustees were again in default of their duty to file their 2018 accounts, despite the Commission having made an order under section 84 directing them to do so.

During the course of the inquiry, the Commission used its powers under section 47 to obtain information from the trustees and from the charity’s auditors and bank.

Once again, the overdue accounts were filed and the inquiry was closed in November 2020, with the issue of an order under section 84 of the Charities Act 2011 requiring the trustees to: pursue the recruitment of new trustees; hold an AGM; review the charity’s decision making procedures; review arrangements for ensuring that accounts are filed on time; adopt policies for the management of conflicts of interest; review the charity’s activities; ensure that there is no further unauthorised payment of trustees.

The section 84 order gave the trustees 6 months to show compliance with its requirements, but it will come as no surprise that the Commission heard nothing from the trustees. Complaints were also received that no AGM had been held.

Failure to comply

So a third inquiry was opened on 29 September 2021 to examine the trustees’ failure to comply with the earlier section 84 Order. In this third inquiry, the Commission used its powers under sections 76(3)to appoint a third trustee and under section 337 to direct that an AGM be called.

The AGM was held in March 2022, but in the meantime additional trustees were co-opted, and, of the two trustees who had been found to have mismanaged the charity in the previous inquiries, one resigned and the other was removed by the other trustees.

In April 2022, the Commission used its powers under section 181A, introduced by the Charities (Protection and Social Investment) Act 2016, to disqualify two of the trustees from being a charity trustee or holding any senior management position in a charity for a period of seven years.

Many other powers

There are many other powers at the Commission’s disposal, including:

  • With a magistrate’s warrant, to enter premises and to seize paper and electronic records, take copies and require anyone on site to explain any document or information or to state where it can be found.
  • To require any person to provide any document or any information in their custody or under their control relating to any charity that is relevant to the discharge of the Commission's functions.
  • To disclose to any relevant public authority (such as a local authority, the police or HMRC) any information the Commission has received in connection with performing any of its functions.
  • To suspend a trustee, officer, agent or employee of a charity from their office and also to suspend such a person from membership.
  • To transfer charity property into the name of the Official Custodian, and to require any person to transfer property to the Official Custodian.
  • To prohibit someone who holds any property on behalf of the charity from parting with it without the Commission's approval.
  • To restrict the transactions that may be entered into in the administration of the charity without the Commission's approval, including freezing bank accounts.
  • To appoint an interim manager of the property and affairs of the charity, either alongside or instead of the charity's trustees.
  • To direct trustees not to take, or to stop taking, any action specified in that order that the Commission considers would constitute misconduct or mismanagement.
  • To order those in possession or control of charity property to apply the property in a specified manner.
  • Permanently to remove any trustee, charity trustee, officer, agent, or employee of the charity.
  • To make a scheme for the administration of the charity.
  • To issue a formal official warning to either: a trustee who has, in the Commission’s view, committed a breach of trust or duty or other misconduct or mismanagement in that capacity; or a charity in connection with which it considers a breach of trust or duty or other misconduct or mismanagement has been committed.

Identifying and assessing risks

The Commission does not take these steps lightly. As a responsible regulator, it will assess any case carefully before deciding that the statutory powers need to be invoked. It operates within its Regulatory and Risk Framework, which sets out how it identifies and assesses risks, how it responds and how it will review and adapt its approach, and which states:

“To achieve maximum impact, we are risk-led in calibrating our response to issues that come into us. This approach ensures that no issue or complaint is overlooked, whilst at the same time making sure we are proportionate, prioritise the most serious issues and identify what action is right against identified risks of harm. In cases of severe harm, we will act robustly and quickly, intervene assertively and, if appropriate, communicate our engagement to the wider public to demonstrate how things can and do go wrong.”

Trustees should be aware that the Commission’s powers to disclose information to other agencies may be used in the context of passing primary responsibility for looking into cases to another agency that may be better placed to respond. So a complaint to the Commission about the acts or omissions of charity trustees can, in some cases, lead to a police investigation and possible prosecution.

Having said that, the Commission’s regulatory functions will also take the conduct of charity trustees into account. If it is clear that trustees have acted honestly and reasonably and are willing and able to take whatever actions are required to manage the risks that have been identified, the Commission will generally support the trustees in putting things right.

In contrast, if the trustees appear to have acted carelessly or recklessly, or have committed deliberate breaches of their duties, the Commission is more likely to resort to using its statutory powers to intervene in the management of the charity. Likewise, if trustees do not show any willingness to put things right, the likelihood of formal intervention by the Commission is going to be greater.

Trustees can challenge

This is not to say that trustees should always accept the Commission’s actions without protest. Case officers do not always get things right, and it is worth bearing in mind that trustees can (and sometimes should) challenge the Commission’s handling of a case, either informally or through the more formal process of appeal to the First-Tier Tribunal (Charity) or the High Court or even, in relation to certain decisions, by judicial review.

But the case of Moss Side and Hulme Community Development Trust illustrates how matters can escalate if trustees do not cooperate, in that the Commission re-engaged its regulatory powers by opening new inquiries each time it appeared that the trustees were not taking the steps they had been told they needed to take to put things right.

In that respect, the case shows not only the range of powers the Commission has at its disposal, but also how trustees can, when head to head with the Commission on regulatory matters, influence the course that is taken. The main lesson, therefore, is that trustees can make things better – or worse – by they way they respond to the regulator, and that when things get worse, the consequences can be quite severe.

Hunters Law’s Paul Ridout – a complaint to the Charity Commission about the acts or omissions of charity trustees can, in some cases, lead to a police investigation and possible prosecution.
"…if trustees do not show any willingness to put things right, the likelihood of formal intervention by the Commission is going to be greater."