Decision

Presidents Club Charitable Trust: case report

Published 12 July 2018

This decision was withdrawn on 18 January 2022

This report has been archived as it is over 2 years old.

1. About the charity

Presidents Club Charitable Trust (registered charity number 1017310) (the “charity”) was established over 33 years ago. It has been registered as a charity since 1993. Its charitable objects are:

“to apply the income and so much of the of the capital of the Trust Fund as the trustees may in their absolute discretion determine from time to time in furtherance and pursuance of such charitable purposes which are exclusively charitable according to the law of England and Wales as the Trustees may from time to time determine”.

The charity does this by hosting a ticketed dinner (henceforth referred to as the “event”) once a year at which auctions are held for various lots with the proceeds of auctions and ticket sales (after costs) then being distributed via grants to various charities.

2. Why the Commission got involved

On 23 January 2018, a newspaper reported allegations of harassment of female staff during a fundraising event held by the charity a few days earlier to which only men were invited as guests (“the 2018 event”). A journalist for the relevant newspaper had attended the event under cover of being a staff member.

The newspaper reports resulted in immediate reputational damage for the charity itself, and led a number of charities that had received donations from the charity in the past, or that were due to receive funds from the 2018 event, to announce that they were considering returning or declining those monies.

A number of further reports allegedly from attendees at the event were also reported in the media, and the Commission subsequently received two complaints from members of the public and complaints from Parliamentarians. There was significant negative commentary on social media. The reports and subsequent complaints were assessed against the Regulatory and Risk Framework and a regulatory compliance case was swiftly opened in light of the regulatory concerns identified.

On 25 January 2018 the charity made an interim Report of a serious incident to the Commission and on 9 February made a full Report of the incident on the basis that the press reports had caused serious damage to the charity’s reputation.

3. The Commission’s regulatory role

The Commission is a statutory regulator whose role is to ensure that trustees comply with their legal duties and responsibilities in managing their charity. The Commission is not responsible for determining whether sexual harassment, or any other type of abuse has taken place. Such matters are for police and the courts.

In this case our regulatory role was focused on assessing:

• the trustees’ compliance with their legal duty to act with reasonable care and skill

• the trustees’ compliance with their legal duty to manage charity resources responsibly, specifically avoiding exposing the charity’s assets, beneficiaries or reputation to undue risk

• the trustees’ compliance with their legal duty to act in the best interest of the charity, specifically whether trustee decision making was adequately informed and taken solely in the best interest of the charity not the personal interests of supporters, funders or donors.

4. The action we took

As part of our investigation, we:

1. Reviewed publically available video footage of the event alongside material used at and to promote the event such as the event brochure

2. Reviewed a significant number of wider reports in the media that documented other attendees’ experiences

3. Interviewed

   a. the trustees and required them to supply information and documents in relation to the event

   b. the journalist

   c. representatives of the agency that supplied the event staff

   d. representatives of the hotel which staged the event

   e. a former member of the event staff who had worked at the charity’s fundraising dinner in 2015

4. Issued a public regulatory call for information from those who attended the event or from those who wished to raise complaints about their treatment at the event. The call for information sought to encourage complainants wishing to, to come forward. The alert can be found on GOV.UK

5. Issued regulatory advice and guidance under Section 15 (2) of the Charities Act 2011 in response to enquiries from a number of charities seeking to return donations to the Presidents Club and for charities in respect of declining to accept and or return donations to the charity.

Read more about returning money to charities

A number of the issues raised within the allegations and complaints that the Commission received were subject to the primacy of other regulatory bodies. The Commission has therefore also engaged closely with the:

• Fundraising Regulator - a non-statutory body which holds the Code of Fundraising Practice and is responsible for regulating and maintaining the standards of charitable fundraising in England, Wales and Northern Ireland

• Equality and Human Rights Commission - a non-departmental public body with responsibility for the promotion and enforcement of equality and human rights laws in England, Scotland and Wales.

5. Findings

5.1 Trustee compliance with their legal duty to act with reasonable care and skill

What the Trustees told us:

• following each event they carried out a review to assist in planning the next event and to identify potential risks

• the charity had engaged the same event management company for seven years and the same agency for hiring staff for the past five years

• the trustees had not been made aware of any complaints in respect of the event in any of the previous years and considered it to be a hugely successful format

• they did not “micro-manage” the events – they contract with both a main event organiser and an Agency to supply event staff

What the supplier representatives told us:

trustees had logistical supervision and oversight discussions about the event but did not give the Agency detailed instructions or specification. The trustees had little or no involvement in the recruitment or selection process for the event staff.

The Legal & Regulatory Requirements

Charity Fundraising: a guide to trustee duties (CC20) sets out clearly trustee duties in relation to fundraising. It makes clear that:

• trustees are legally responsible for their charity’s fundraising

• trustees can delegate day-to-day activity but cannot delegate ultimate responsibility – they should have systems and processes to allow effective oversight and control

• the Commission expects all trustees to adhere to the Code of Fundraising Practice

Conclusion

The Commission produces clear guidance for trustees that is easily accessed on gov.uk.

The Commission also produces regular reports on its findings in cases, such as this one, and communicates with trustees directly through CC News and other channels to update and signposts trustees to its own and other regulators latest guidance and advice.

It is therefore reasonable and proportionate to expect trustees who run a significant fundraising event with high profile attendees likely to attract social or media interest to have ensured they were up to date with their legal duties and have applied them accordingly.

Answers at interview provided by the trustees and by one of their key suppliers explain the trustees’ understanding of their role in respect of oversight of the event. This confirms that although a standard service provision contract was entered into with the main event organiser, no bespoke written contract was in place for the Agency supplying event staff. Nor was there any detailed written instructions or specifications from trustees to either of their suppliers. These should have been in place.

It is clear from our discussions with the charity and the responses we have received to our requests for evidence, that the trustees were not aware of their responsibilities under CC20. They did not meet the minimum standards in relation to trustee, control, delegation and oversight of fundraising.

The Fundraising Regulator also concluded that no evidence was provided that consideration was given to ensure that fundraising was undertaken in accordance with Code of Fundraising Practice, that it has seen no evidence that any formal monitoring or supervision of the third-party agency by the charity and that there had been breaches of the Code of Fundraising Practice.

The Charity Governance Code, a voluntary Code, states (under integrity) that the board should make sure that “the charity operates responsibly and ethically, in line with its own aims and values”.

The trustees did not take account of this in organising the event.

As a result of the lack of written contracts with suppliers, absence of oversight and a lack of awareness of the relevant regulatory guidance, the Commission finds that the trustees did not act with reasonable care and skill.

5.2 Trustee compliance with their legal duty

To manage charity resources responsibly, specifically avoiding exposing the charity’s assets, beneficiaries or reputation to undue risk.

The charity’s annual fundraising event was an annual dinner and auction for male guests only. The event had a mix of male and female staff approximately 30 male and 140 female staff. Guest tables were assigned to female staff hired and provided specifically for the event by an Agency at the request of trustees. These staff were also invited by the trustees via the Agency to a drinks party after the formal dinner had finished for which they were to be paid extra.

The event also consisted of a number of auctions to raise funds for the charity.

What the Trustees told us:

• following each event, the trustees carry out a review to assist in planning the next event and to identify potential risks

• the charity had engaged the same event management company for seven years and the same agency for hiring staff for the past five years

• the trustees had not been made aware of any complaints in respect of the event in any of the previous years and considered it to be a hugely successful format

• the trustees also told us that, in light of recent substantial media coverage of inappropriate behaviour by men towards women they identified the potential risk of inappropriate behaviour and therefore decided to issue a code of conduct to guests, via the event programme, which was also drawn to the attention of guests at the start of the dinner. This code of conduct was in place at the start of the 2018 event

• the trustees explained that the responsibility of the security staff hired for the event and provided by the Hotel included ensuring the security and privacy of guests and event staff, preventing unauthorised people gaining entry into the event and protecting the belongings of the event staff following a previous incident involving the attempted theft of belongings from the event staff

• the job of the event staff during the event was to supply drinks to the tables at which they were allocated to work, assist the guests with their pledges and to be on hand to assist with any catering needs

• the trustees told us they believed they had carried out an appropriate risk assessment albeit not to the level prepared by suppliers, like the florist. They considered they had carried out a proper risk assessment and as a result had published the code of conduct in the programme

• the trustees told us they had not moved with the times and thought this was their own failing

What the supplier representatives told us:

• the agency sent an email to those staff attending the event on 15 January prior to the event with details and instructions, including the hours to be worked, a ban on taking photographs and social media comment, a requirement to sign a non-disclosure agreement and specific information about uniform and appearance such as “wearing their make-up and hair as if going to a smart sexy place” and bringing their own “smart sexy shoes with heels” .

• the trustees have never asked to see photographs of those applying to work at the event

• dresses are supplied by the charity – staff have to fit the dress which is cost effective which is why size and height required

• in addition to agency staff 10 managers were on site and available during the event

• they did not witness any harassment of staff at the event after party

• following the event and the allegations made, the agency, on the instructions of the trustees, contacted the staff engaged at the event twice and were invited to express any concerns which they had about the event. Three members of staff said that they felt uncomfortable but no formal complaints were made to the agency as result of this contact

The Legal & Regulatory Requirements

Act in your charity’s best interests

The essential trustee: what you need to know, what you need to do (CC3) makes clear that:

• trustees are ultimately responsible for deciding what activities the charity will undertake

• trustees should record how they make significant decisions in case they need to review or explain them

• trustees must act reasonably, responsibly and honestly

• trustees have a duty to avoid exposing their charity to undue risk

Conclusion

It was clear from evidence provided and statements taken during interviews that the trustees’ intent was to raise as much funds as possible for the causes supported by the Presidents Club Charitable Trust. There is no evidence to suggest that trustees acted in bad faith nor that they acted in anything other than what they believed to be the best interests of the charity.

The trustees’ responses in interview also set out that trustees did undertake reviews to assess previous events. However, these reviews were neither recorded nor documented as required and set out in CC3 and as such show a clear breach of that guidance.

The trustees’ responses in interview evidenced that they were clearly aware of the risks generated by holding an event of this nature. Whilst there is evidence that trustees did undertake some mitigation in relation to the risks through the issuing of a code of conduct with the presenter of the event drawing the attendees attention to the code, and the recruitment of security staff this did not sufficiently mitigate the risks of holding an event of this nature.

The trustees relied upon the success of the previous event and fundamentally failed to adequately review the nature of the event or the controls in place. The trustees failed to fundamentally address the risk to the reputation of the charity in relation to it being an all-male event with predominantly female event staff who had been issued with dresses purchased by the charity and with instructions on appearance.

By their own admission the trustees now accept the charity’s “model of fundraising may be considered less appropriate to a larger number of people in today’s world” in contravention of their duty to not expose the charity to undue risk.

The email from the agency to staff who worked at the event did not set out any procedure for how concerns would be dealt with or any process for their independent consideration. The trustees should have taken responsibility for independently investigating any allegations.

The absence of any clear procedures and policies to deal with harassment or improper behaviour was in stark contrast to the measures taken to protect the privacy of the guests.

Event staff were required to sign deeds of confidentiality, had their mobile phones taken away during the course of the event, and specifically instructed not to talk to anyone about the event. The trustees and the Agency set out that this was standard practice to protect any commercially sensitive discussions that may take place or philanthropic donations which guests wish to keep private.

It’s important to set out that the trustees and suppliers all rebut the allegations of harassment and assault set out in the media. The Commission put out a call for evidence for individuals to come forward, but has not received any information to date.

However we consider that trustees did not take sufficient steps to protect those coming into contact with the charity nor sufficiently investigate what happened following the allegations made about the event. Thereby not just failing to protect those who came into contact with the charity sufficiently but also to ensure the reputation of the charity was sufficiently protected.

We also find that while the trustees assessed risks iteratively based on their experience of previous years’ events, they failed to assess adequately the risks posed in holding such an event and in failing to do so this caused irreparable reputational damage to the charity.

Trustees failed to comply with their legal duty to manage charity resources responsibly, specifically avoiding exposing the charity’s assets, beneficiaries or reputation to undue risk.

5.3 Trustee compliance with their legal duty

To act in the best interest of the charity, specifically whether trustee decision making was adequately informed and acted solely in the best interest of the charity not the personal interests of supporters, funders, donors.

What the trustees told us

Asked why, having identified the risks and publishing a Code of Conduct, female staff were still requested to wear uniform they had worn at previous events the trustees said that they saw nothing wrong with the uniform.

Asked how the agency telling staff about the underwear required to be worn accorded with their risk assessment, the trustees told us that had they seen it in advance, they would have stopped it being sent. However, they considered it appropriate for the agency to specify requirements.

What the supplier representatives told us:

No bespoke written contract was in place for the agency supplying male and female staff who undertook a significant role at the event.

The hosts of each table were also expected to have some oversight of the event. Table hosts invited their own guests and they were not all known to the trustees. It was therefore expected that the hosts would have some responsibility for the behaviour of their guests.

The legal & regulatory requirements

The essential trustee: what you need to know, what you need to do (CC3) sets out the duties of trustees, which include the duty to act in your charity’s best interests. It’s not about serving:

• the interests of trustees or staff
• the personal interests of members or beneficiaries
• the personal interests of supporters, funders or donors
• the charity as an institution in itself, or preserving it for its own sake

It’s your decision: charity trustees and decision making (CC27) also provides detailed information about how charities must take decisions as well as what factors they should take into account.

Conclusion

The evidence provided and statements taken during interviews suggest that the trustees made decisions on the basis of what they considered to be the best interests of the charity and, particularly, what would best enable them to raise the greatest amount possible for the good causes supported by the charity. Having raised significant money for charity during past events, they saw no reason to change the format.

There is no evidence that the trustees gained financially from their positions as trustees of the charity or acted otherwise than in good faith and what they honestly considered to be, the charity’s best interests.

However, we consider that the trustees’ decision making was not sufficiently informed. In particular, the trustees did not take account of all relevant factors, including the risks that the event posed to the charity’s reputation especially in relation to the purchase of clothing for female staff to wear and instructions on how female staff should appear, neither of which we consider acceptable in a charitable environment. Their decision making was not informed by the Code of Fundraising Practice, which they did not know about, or the Commission’s guidance, particularly on the essential trustee duties and on decision making.

The trustees made decisions on the basis of what they considered to be in the best interests of the charity. However, they did not ensure that their decision making was adequately informed and, as a consequence, decisions were made that damaged the charity’s reputation.

6. The Commission’s call for information

The Commission’s own call for information has not resulted in anyone coming forward with allegations of harassment or improper behaviour and no further complaints have been made.

7. Liaison with other regulators

The Equality and Human Rights Commission has not reached any conclusions that it can share with the Commission, or commenced an investigation, but has confirmed that it is considering what the most appropriate course of action may be in relation to parties involved in the event other than the charity itself.

They have however confirmed that a male only event is not a breach of the Equalities Act 2010 (“the EA”). Section 193(7) of the EA says that “It is not a contravention of section 29 for a person, in relation to an activity which is carried on for the purpose of promoting or supporting a charity, to restrict participation in the activity to persons of one sex.”

Read more about the Equalities Act

Single-sex fundraising events are not a breach of the requirement to be non-discriminatory in the course of providing a service.

The Fundraising Regulator has confirmed in their Decision that there had been breaches of the Code of Practice.

8. Outcomes

The Commission considered its regulatory options after finding the trustees had breached a number of their duties. Given that the trustees intend to wind up the charity after collecting in as much of the funds raised at the event and distributing them to the children’s charities and worthy causes they have supported for many years, in particular those that need urgent funds for disadvantaged and underprivileged children, the proportionate action was to issue the trustees with a Regulatory Action Plan which requires them to take urgent steps to secure:

• liaising with the donors and suppliers of auction prizes

• the collection of sums due to the charity, including collection of funds arising from successful auction bids

• the collection of outstanding costs for the dinner from those people who attended

• the collection of outstanding pledges including those from potential patrons of the charity

The Commission will be closely monitoring the trustees’ progress.

Once the trustees have collected in the money due to the charity they will distribute the charity’s assets (which remain after the payment of all liabilities and expenses) in accordance with the charity’s charitable objects.

The Commission has also issued the trustees with formal regulatory advice under section 15(2) of the Charities Act 2011 in relation to the breaches of their duties identified in our case to ensure trustees comply with their duties in future.

Following the guidance issued by the Commission, a number of charities reviewed their decisions to return donations, which resulted in the protection of substantial funds which will continue to be applied for charitable purposes.

Detailed guidance Acceptance, refusal & return – a practical guide to dealing with donations was issued by the Institute of Fundraising supported by the Commission.

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 may have serious consequences for the reputation of their charity.

Find out more about risk management and charities

9. Lessons for trustees

Trustees must consider and take reasonable steps to ensure that agents who act on their behalf comply with the wider law and best practice in relation to their charity’s fundraising. Further information can be found in Charity fundraising: a guide to trustee duties

As stated above, 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 may have serious consequences for the reputation of their charity.

Trustees should act in a proper manner appropriate to the trustees of a charity. The Charity Governance Code is a voluntary code which sets out an approach to governance that the Commission endorses which charities can adopt. It states (under integrity) that the board should make sure that “the charity operates responsibly and ethically, in line with its own aims and values”.

Trustees should proactively safeguard and promote not only the welfare of their charity’s beneficiaries, but also they must take reasonable steps to ensure that beneficiaries or others who come into contact with their charity do not, as a result, come to harm. This should be a key governance priority. Read more about safeguarding.

Any event organised by a charity should aim to provide a safe environment for everyone involved, free from abuse. Public trust and confidence in the charity (and the wider sector) can be harmed if trustees do not act appropriately.

The Fundraising Regulator have explained in their decision following their investigation into the charity that under the Code of Fundraising Practice, charities have a responsibility to ensure fundraising is undertaken according to best practice and to monitor fundraising when it is being undertaken either by their staff or by third-parties on their behalf. To do so adequately, trustees should ensure that the policies and contractual arrangements in place reference and reflect the requirements and best practice set out in the Code of Fundraising Practice and monitor those third-parties who are fundraising on their behalf.

The Fundraising Regulator has also explained that they do not expect all charities who fundraise to have in place detailed policies and procedures that reference all aspects of the Code of Fundraising Practice. However, they do expect charities and fundraising organisations to recognise and reference their responsibilities under the Code of Fundraising Practice in their fundraising strategies and policies and in any contractual arrangements with third-parties engaging in fundraising on a charity’s behalf. This includes recognising and referencing a charity’s responsibility to monitor fundraising at events such as this one, to help ensure that it is properly conducted.

The Equality and Human Rights Commission have said that whilst it has not investigated or made any findings in relation to the charity’s trustees, it is worth reminding trustees of their general obligations to ensure that their charity acts in accordance with the Equality Act 2010 in relation to its own staff. They should also ensure that in accordance with s111 Equality Act 2010, the charity does not instruct, cause or induce another party to contravene the Equality Act 2010. Finally, they should take reasonable steps to ensure that other parties involved in their events comply with the Equality Act 2010 (insofar as a failure to do so may amount to a breach of their duty to safeguard others who come into contact with their charity).