Charity Commission investigating 12 “double-defaulting” charities

The Commission opened a class inquiry into 12 charities with a last known income of over £500,000 which have each failed to file annual reports, accounts and returns for two or more years. Failure to submit annual documents to the Commission is a criminal offence and the Commission is concerned because such defaulting is often associated with wider mismanagement and poor governance, including the misapplication or abuse of charitable funds. The Commission has issued a formal legal direction to the trustees of each of the 12 charities, ordering them to meet their reporting requirements within a specified period and, should they fail to comply, the Commission will make a referral to the police for criminal prosecution unless it is evident that the trustees have taken all reasonable steps to comply. The Commission also indicated that it may appoint an Interim Manager to secure compliance, seeking to recover the costs of doing so from the trustees personally. It is understood that some of the charities have now filed the outstanding accounts with the Commission. It is interesting to note that the defaulting charities tend to have small boards (on average three trustees).

IBB Solicitors’ specialist Charities team has a wealth of experience in delivering practical commercial advice to charities and not for profit organisations and those who work with them. For advice, on Charity Law and Trustee responsibilities contact an IBB charity lawyer. Call us on 01895 207809 or email charities@ibblaw.co.uk.