Decision

Imamia Mission London (UK): case report

Published 5 September 2018

This decision was withdrawn on 18 January 2022

This report has been archived as it is over 2 years old.

About the charity

The charity was established to advance the Islamic Religion according to the precepts and the tenets of the Shia Isna Ashri Faith. In 1985, the charity purchased a property in the London Borough of Newham to be used as a community centre and as a place of worship for Shia Muslims.

Why the Commission got involved

We were alerted to a proposed sale of the charity’s property by those opposed to its disposal. A number of concerned people protested outside the Commission’s London office and handed in a petition. We learnt that the property was to be replaced by new premises in Ilford in the London Borough of Redbridge.

Allegations were made of possible financial irregularity in the sale of the property and that the trustees would be making a personal gain. Concerns were also raised with us about how the charity runs its elections and restrictions on membership.

The action we took

As part of our case we held two meetings with representatives of the protestors and met with the charity trustees to assess whether they acted in the charity’s best interests. We also visited the new property in Ilford.

We obtained information from the trustees about the relocation. We scrutinised documents relating to the sale, including professional opinions obtained by the trustees, in order to assess compliance with trustees’ duties and responsibilities, and ensure there had been no private benefit.

We also provided advice and guidance to the trustees in respect of elections and membership.

What we found

The trustees told us that they considered the Newham premises to be unfit for purpose due to health and safety concerns and because it was too small for current use.

A review of the charity’s constitution confirmed that the trustees did have the power to sell all or any part of the charity’s property. There was also no geographical restriction on where the charity operates from or its area of benefit.

We established that a loan has been taken out by a trustee in a private capacity to purchase the Ilford property. The committee agreed to a charge being placed on the Newham property in favour of that trustee until the Newham property is sold and the loan repaid.

We looked into this transaction closely and satisfied ourselves that the trustee in question would not benefit personally from this arrangement. Steps were also taken to register the property at the Land Registry in the names of holding trustees in trust for the charity.

Although there was an allegation of possible financial irregularity in the sale of the property, no financial irregularity was found.

We established that in respect of the purchase and proposed sale of property the trustees had been acting in accordance with the charity’s constitution and the Charities Act 2011 and there was no conflict of interest.

However, we were concerned with the way the trustees had made the decision to sell the Newham property and to buy the Ilford property. The principles of trustee decision making require trustees to consider all relevant factors.

The Commission’s publication, It’s your decision: charity trustees and decision making, sets out the principles for good trustee decision making and is useful here. If the trustees’ decision making does not comply with those principles the trustees can be said to have breached a trustee duty. In this instance the relevant principles are that trustees should have:

• made sure they were sufficiently informed. This includes being able to demonstrate that their decisions are based on sufficient and appropriate evidence such as the impact of the decision; any controversy affecting the issue at hand; and cost and value

• taken account of all relevant factors. This includes whether the decision is in the best interest of the charity, the risks and benefits of the decision, how this could affect the charity’s reputation and any steps to take to mitigate such risks, whether the charity has consulted and what they have learnt from such consultation

The Commission considers that the views of the charity’s members and beneficiaries is a relevant factor which was not adequately considered by the trustees.

The trustees had clearly failed to properly communicate and consult with members of the charity or beneficiaries about the relocation. Given the central role of the property to its members and beneficiaries and the significant 4 mile distance to the new property in Ilford, we would have expected the trustees to consider the impact on members and beneficiaries and properly prepare them. Attempts to inform the community, such as notices after Friday Prayers, were insufficient, thereby exposing the charity to the possibility of reputational damage. There was also a concerning lack of evidence of proper planning. The trustees failed to produce any business plan setting out matters we would expect to have been taken into consideration – such as cost, financing, available options, and impact on beneficiaries.

The evidence we considered did not substantiate allegations made about unfair elections and restrictions on membership. We established that the charity has employed the services of independent election supervisors to arrange and conduct elections to the committee. However, the trustees should work to ensure greater clarity of compliance with the governing document as regards application for membership and elections.

Impact of our engagement

We have issued the trustees with formal regulatory advice under section 15(2) of the Charities Act 2011 in the form of an Action Plan to remind them of their duties and responsibilities as charity trustees and ensure they take steps to minimise any future disruption.

We did not find anything that would invalidate the trustees’ decision to sell the Newham property, and understand that they intend to proceed. We have told the trustees that they should take action to ensure that any beneficiaries who will have difficulty travelling to and from the new property are catered for. The trustees may want to consider providing transport in the short to medium term for those affected.

We established that if the Newham property sells for more than £1.3m, any surplus proceeds will be used to re-develop the charity’s new property.

We have also set out in clear terms that the committee must ensure all AGMs and elections are held strictly in accordance with the charity’s constitution and are open, fair and transparent.

We will be closely monitoring compliance with the advice and guidance given. Any further disputes that arise due to a failure to comply with trustee duties may result in more serious regulatory action.

Our conclusions

Whilst the decisions made here do not suit everybody, we did consider that they were consistent with the charity’s governing document and the Charities Act 2011 and did not fall beyond the range of decisions a trustee body could reasonably make.

However, the property is central to the charity as all charitable activities are carried out there, so decisions should have been given much greater consideration.

The charity is unincorporated which means it only exists because of and for the purpose of its members. Given the failure to properly consult with members we did not therefore consider that decisions were made fully in line with the trustees’ responsibility to make balanced and informed decisions.

The trustees should have been aware of the risk of opposition to the decision to dispose of the property if not properly managed, including the risk of litigation, exposing the charity’s assets to risk, including its reputation. The attempts to mitigate this (such as a notice after Friday Prayers) were insufficient.

By failing to mitigate the risks of opposition to the relocation, the trustees exposed the charity to undue risk, acting contrary to the Commission’s guidance on risk management.

The allegations made about the charity’s governance are serious and while, as explained above, we were unable to substantiate allegations made about unfair elections and restrictions on membership, the committee must ensure that it follows our regulatory advice closely in this area and takes steps to minimise any perception that it is not committed to compliance with the trustee duty of accountability.

Overall, we considered that the way the trustees’ decisions were made were not in accordance with the principles of good decision-making.

Lessons for other trustees

When making significant or strategic decisions, such as those affecting a charity’s beneficiaries, assets or future direction, it is vital that trustees follow the principles set out in It’s your decision: charity trustees and decision-making (CC27).

Trustees should regularly review and assess the risks faced by their charity in all areas of its work and plan for the management of those risks. The dangers of not reviewing risks can have serious consequences for the reputation of your charity, as set out in Charities and risk management (CC26).

Trustees should act in a proper manner appropriate to the trustees of a charity. The Charity Governance Code is a voluntary code endorsed by the Commission. It promotes the principles of openness and accountability and states that trustees should communicate and consult effectively with the charity’s stakeholders.