Decision

Action Aid for Animals

Published 30 April 2019

This decision was withdrawn on 29 November 2022

This Inquiry has been removed as it is over 2 years old.

A statement of the results of an inquiry into Action Aid for Animals, registered charity number 1133543 (“the charity”).

The Charity

The charity was entered onto the Register of Charities (“the register”) on 18 January 2010. It was previously known as Romanian Animal Aid. It is governed by a constitution dated 5 July 2009, as amended on 5 November 2015 (“the governing document”).

The charity’s entry can be found on the register of charities.

The Charity’s objects are:

1. For the benefit of the public to relieve the suffering of animals in need of care and attention and in particular, to provide and maintain rescue homes or other facilities for the reception, care and treatment of such animals

2. To promote humane behaviour towards animals by providing appropriate care, protection, treatment and security for animals which are in need of care and attention by reason of sickness, maltreatment, poor circumstances or ill usage and to educate the public in matters pertaining to animal welfare in general and the prevention of cruelty and suffering among animals.

The Trustees

During the Charity Commission’s (“the Commission”) engagement with the charity (since 2012) there have been numerous trustees some of whom were only in office for short periods of time. The table below only lists the trustees who were either in office during the inquiry or just prior to the opening of the inquiry

Trustee	From	To
Kendra Pinder (“Trustee A”)	17 August 2011 25 October 2012	2 August 2012 27 March 2018
B	28 November 2015
C	27 April 2017
D	17 March 2011	10 March 2016
E	28 November 2015	June 2016
F	20 April 2017	1 August 2017
G	20 April 2017	28 July 2017
H	9 February 2018	28 May 2018

This inquiry dealt mainly with Trustee A, B and C and also had some correspondence with Trustees D and E who both resigned before the inquiry was opened.

Background

Between 26 July 2012 and 26 July 2016 the Commission conducted 9 compliance cases, into the Charity. The regulatory issues of concern to the Commission have consistently included governance issues, the failure to submit accounts, lack of, or poor financial controls/policies and procedures and poor record keeping.

On 2 August 2012 the Commission wrote to the then trustees to advise them that a number of concerns had been raised with the Commission about the management and administration of the charity. The then trustees, were asked to provide information and documentation relating to the charity’s activities, income and expenditure, policies and procedures.

The information and documentation provided by those trustees highlighted a number of deficiencies in the charity’s governance, management and administration.

At that time it was brought to the Commission’s attention that Trustee A was disqualified from acting as a trustee in accordance with section 178 of the Charities Act 2011 (“the Act”) but had continued to act as a trustee whilst being disqualified. Acting as a trustee when disqualified is a criminal offence and this was considered to be evidence of misconduct and/or mismanagement in the administration of the charity.

The trustees were also acting in breach of the charity’s governing document because they had allowed a trustee to act whilst disqualified. The Commission provided regulatory advice and guidance to the trustees in respect of their legal obligations and duties. Trustee A subsequently resigned as a trustee on 20 August 2012 but was reinstated in December 2012 when her disqualification came to an end.

Despite the extensive regulatory advice and guidance given by the Commission during this period, the charity failed to comply with its legal obligations to submit annual accounts and/or returns for the financial year ending (“FYE”) 2012 on time and were 354 days late. When the accounts were finally submitted in April 2014 they were qualified.

On 13 January 2015 the Commission wrote to the charity outlining its serious concerns in relation to the annual accounts and returns, which were now also overdue for the FYE 2013 and 2014.

Between September 2015 and June 2016 several meetings with the then trustees were scheduled for the Commission to inspect the charity’s books and records as the regulatory concerns had not been addressed. However, the trustees either failed to attend or cancelled at short notice. The trustees provided limited evidence regarding how the majority of the charity’s funds were spent. The records were therefore insufficient to meet the trustees’ legal duty to account for the funds of the charity.

The then trustees had also still failed to comply with their legal obligations to file accounts and they had not been filed for three consecutive years. On 29 June 2016, the Commission met with Trustee A, who was the only trustee available at the time. Trustees D and E had resigned on the 9 May 2016 and Trustee A informed the Commission that Trustee B, who had been appointed in November 2015, was no longer heavily involved with the Charity.

The Commission was informed that a third trustee had been appointed on 15 June 2016, however, this appointment was never confirmed and the Commission’s records were never updated to reflect this appointment. At the meeting Trustee A confirmed that there was no audit trail of how charitable funds had been spent overseas and that the charity relied upon photographs and social media messages to show the work undertaken abroad.

Qualified accounts for the FYE 2013 were submitted on the same day as the meeting 786 days late. Although the Commission had provided the trustees with a substantial amount of regulatory advice and guidance since 2012, the charity repeatedly failed to act to improve its governance.

On 27 July 2016, the Commission opened a statutory inquiry into the Charity, under section 46 of the Act, (“the inquiry”) to investigate the misconduct and/or mismanagement in the administration of the charity and if there was a need to protect the charity property.

Issues under Investigation

The scope of the inquiry was to investigate:

• the financial controls, management and application of charitable funds, property and assets belonging to the charity
• the administration, governance and management of the charity by the trustees, particularly whether the trustees have acted prudently and exercised reasonable care in respect of the day-to-day running of the charity
• whether there has been any misconduct and/or mismanagement by the trustees and consider whether remedial regulatory action is necessary
• whether the charity’s objects are being met and the charity is operating for the public benefit

The inquiry closed on 30 April with the publication of this report.

Findings

The financial controls, management and application of charitable funds, property and assets belonging to the charity

Trustees must comply with their statutory obligations to comply with the accounting and reporting requirements and failure to do so is a breach of duty and considered to be misconduct and/or mismanagement in the administration of the charity. Qualified accounts for FYE 2014 were submitted 505 days late on 21 September 2016.

The independent examiners report confirmed that the charity had failed to keep proper accounting and financial records, which is evidence of a failure by the trustees to comply with their statutory duties, in accordance with section 130 of the Act.

On 9 January 2017 the inquiry identified an entry on the charity’s social media page where Trustee A had directed a donor to pay a donation to the charity into a bank account unknown to the inquiry in the name of Ticket to Freedom.

Trustee A informed the inquiry that Ticket to Freedom was an “independent subsidiary” of the charity. In a meeting held with Trustee A on 18 October 2017 she explained that the trustees had set up Ticket to Freedom in 2014 to receive donations that had been given specifically to be used to rescue dogs and were not intended to form part of the general funds for the charity.

However, the inquiry found through open source research that the charity’s name (Action Aid for Animals), logo and registered number was used by Trustee A to raise funds under the name of Ticket to Freedom at least until November 2017.

The inquiry found that the Ticket to Freedom PayPal account was held solely in the name of Trustee A and linked to her personal bank account. Trustee A had total control of this PayPal account and the funds in it.

Furthermore, an analysis of the charity’s bank accounts showed that during the period July 2016 to November 2017, Trustee A transferred approximately £63,000 from the charity’s PayPal account into the Ticket to Freedom account.

The inquiry found, through open source media, in July 2017, Trustee A used the charity’s social media page to ask donors to make direct debit payments to the Ticket to Freedom PayPal account alleging that it would be safer to use because there had been an (unfounded) theft of funds from the Charity’s account.

The inquiry found that Ticket to Freedom dealt with the overseas dog rescue operations which were previously carried out by the charity.

Trustee A used the charity’s name, logo and registered number to raise funds for Ticket to Freedom which gave the impression to the public and the inquiry that the charity and Ticket to Freedom were associated organisations. However, the inquiry found that Trustee A was effectively running a separate organisation outside of the charity which meant that Trustee B and Trustee C had no control over those funds or the activities carried out by Trustee A.

Trustee A failed to co-operate with the inquiry or the other trustees on matters relating to Ticket to Freedom insisting it was a separate organisation.

Trustee A maintained that she had loaned the charity approximately £42,000 of her own money. The inquiry identified payments made by Trustee A to the charity amounting to £5,643 during the period October 2012 to June 2013. No evidence or information was provided by the trustees to confirm that those payments were loans to the charity and there was no loan agreement in place to confirm the terms of any loan.

Despite having the opportunity to evidence loans given to the charity, Trustee A was unable or unwilling to produce any other paperwork to confirm that she had loaned the charity £42,000. In the absence of any loan agreement and any other evidence the inquiry was unable to accept that Trustee A had loaned the charity £42,000, although it did accept that there was evidence she had transferred £5,643 to the charity which may have been a loan.

The administration, governance and management of the charity by the trustees, particularly whether the trustees have acted prudently and exercised reasonable care in respect of the day-to-day running of the charity

In October 2017 the inquiry held separate meetings with Trustee A, Trustee B and Trustee C to determine the governance of the charity, in particular what their involvement was and what role they played in the administration of the charity. The inquiry found that although the trustees talked regularly, they did not keep formal minutes.

It was also established that Trustee A dealt with the Charity’s operations abroad whilst Trustee B and Trustee C were only involved with the adoption and fostering of dogs in the UK. The inquiry found that Trustee B and Trustee C knew very little about the activities abroad and how funds were spent. Trustee B and Trustee C did not carry out due diligence and there appeared to be no monitoring or evaluation of the end use of charitable funds.

Trustee B and Trustee C confirmed that they had not seen a copy of the charity’s governing document and were not aware of their trustee duties.

As the inquiry progressed they demonstrated a willingness to act on regulatory advice and guidance given by the inquiry in order to regularise the charity. However, Trustee A informed the inquiry that she was unable to administer the Charity properly.

The report of the chair of trustees, by Trustee A, in the qualified accounts for FYE 5 July 2014, submitted on 21 September 2016, stated that:

“….though we know the importance of maintaining records and submitting our accounts for independent examination, because of lack of manpower and commitments much of the time it has been a choice between saving animals lives or sitting down to do paperwork.”

The report then goes on to state:

“We will be learning from our experience and in 2016 we are ensuring adequate records are maintained.”

During the meeting on 18 October 2017, Trustee A informed the inquiry:

“I am no good with accounts. I don’t want to do the accounts” and “I don’t want anything to do with admin”.

Whether there has been any misconduct and/or mismanagement by the trustees and consider whether remedial regulatory action is necessary

As set out above, the evidence shows that there has been misconduct and/or mismanagement in the administration of the charity. Prior to the opening of the inquiry the Commission had engaged with the charity in relation to a number of regulatory concerns, which had been ongoing since 2012.

It is also to be noted that there had been a high turnover of trustees some who were only in office for a short period of time, but during almost the entire period of time Trustee A was a trustee.

Trustees have a duty to ensure they identify, declare, record and manage an actual or perceived conflict of interest. A conflict of interest arises when a trustee has a personal or other interest which conflicts with the trustee’s fiduciary duties.

The decision to make donations to Ticket to Freedom from the charity’s funds created a conflict of interest, because Trustee A was a trustee of the charity and was solely responsible for Ticket to Freedom.

Trustee A should not have been involved in decisions relating to Ticket to Freedom and the charity.

Trustee B and Trustee C failed to manage the conflict of interest prudently which placed the charity’s funds at risk.

The inquiry found that Trustee A set up Ticket to Freedom and a PayPal account solely in her name as a separate organisation to the charity, for the purposes of rescuing dogs abroad. However, the inquiry found through open source research that Trustee A used the charity’s name, logo and registered number and invited donations from the public through the charity’s social media.

The other trustees failed to demonstrate appropriate oversight of the activities of Trustee A which resulted in the charity funds and reputation being placed at risk.

Trustee A also failed to responsibly manage the resources and property of the charity by using the name, logo and registered number of the charity on social media between 2014 and November 2017, to raise funds for Ticket to Freedom. Trustee A also used the charity’s social media to ask the donors to change their direct debits to make payments to the PayPal account for Ticket to Freedom, without making it clear that this was a separate organisation.

In effect Trustee A was diverting funds/donations which were due to the charity. Trustee A was unable to and has been unwilling to show the inquiry how these funds were spent and if they were applied for the purposes of the charity.

The trustees placed charitable property at risk by failing to have adequate oversight of the charitable funds and over the activities of Trustee A.

Trustee A failed to manage the resources and property of the charity and her actions resulted in funds which were due to the charity being diverted to Ticket to Freedom. The misconduct and/or mismanagement by Trustee A has resulted in a loss of approximately £63,000 to the charity.

Trustee B and Trustee C have informed the inquiry that it is likely that the diverted funds/donations were applied to further the purposes of the charity, but Trustee A has been unable or unwilling to provide evidence to substantiate this.

Whether the charity’s objects are being met and the charity is operating for the public benefit

The inquiry found that the charity was meeting the Charity’s objects by carrying out dog rescues and arranging for adoptions and fostering for the animals that were rescued from abroad. Throughout the inquiry the trustees continued to provide and maintain rescue homes for the reception, care and treatment of suffering animals.

Conclusions

The inquiry concluded that there was evidence of poor financial management and governance in the charity for the following reasons:

There was a significant amount of charitable funds which were not accounted for.

There was a high turnover of trustees and there did not appear to be a dedicated role for managing the finances or administration staff.

Despite the trustees being provided with extensive regulatory advice and guidance since 2012, and being formally directed under S47 of the Act for the accounts on two separate occasions, the charity has repeatedly been unable to produce satisfactory accounts on time. The trustees persistently failed to comply with their statutory obligations to file the charity’s accounts.

Whilst each of the trustees are jointly responsible for ensuring that a charity complies with its accounting duties, the Commission concluded that Trustee A was primarily responsible for the misconduct and/or mismanagement identified within the administration of the charity.

Trustee A was acting as decision maker throughout the Commission’s engagement with the charity and in a position to influence the activities and management of the charity. Trustee A established Ticket to Freedom as a separate organisation and as a result of her actions diverted funds/donations due to the charity.

Based on the information provided the inquiry concluded that Ticket to Freedom is not a charity and does not fall within the regulatory remit of the Commission.

Whilst it is likely that the charity’s money which was transferred to Ticket to Freedom has been spent on rescuing dogs from abroad, the inquiry was unable to verify that those funds had been spent in furtherance of the charity’s objects.

As a result Trustee A was removed as a trustee of Action Aid for Animals on 27 March 2018 and is permanently disqualified from acting as a trustee of this and any other charity.

Trustee B and Trustee C considered winding up the charity, but on 1 October 2018 they notified the Commission of their intention to continue operating the charity, to ensure that dogs that had not been rehomed were taken care of and to settle unpaid debts that they had not been aware of when Trustee A had control of the bank accounts. Trustee B and Trustee C are now in control of the charity’s bank accounts.

Accounting information is now up to date and the most recent accounts are compliant with the Charities Statement of Recommended Practice (SORP) and have been independently examined.

Regulatory action taken

On 9 August 2016 the inquiry made an order, under section 76(3)(d) of the Act, to the charity’s bank, not to part with the charity’s property, without the Commission’s prior written consent.

On 11 August 2016 the inquiry made an order, under section 76(3)(f) of the Act, ordering the trustees, not to enter into any transactions or payments in the administration of the charity, without the written approval of the Commission.

On 28 November 2016 and on 11 May 2017 the inquiry issued a direction, under section 47 of the Act, requesting information and documents. On both occasions the trustees failed to comply with the directions. Failure to comply is considered misconduct and/or mismanagement.

On 30 January 2018 the inquiry made an order, under section 76(3)(a) of the Act, to suspend Trustee A, and issued a notice of its intention to exercise its formal powers and remove her as a trustee of the charity. Consequently Trustee A resigned on 9 February 2018. However, the inquiry was still able to remove Trustee A because notice of removal had been served before they resigned.

On 27 March 2018 Trustee A was removed as a trustee, in accordance with section 79(4) of the Act, and entered onto the register of removed trustees in accordance with section 182 of the Act. Trustee A is now permanently disqualified from acting as a charity trustee, in accordance with section 178 of the Act.

On 21 September 2018 the inquiry discharged the orders made under section 76(3)(d) and section 76(3)(f) of the Act.

Issues for the wider sector

The purpose of this section is to highlight the broader issues arising from the inquiry of the issues raised publicly that may have relevance for other charities.

It is not intended as further comment on the charity in addition to the findings and conclusions set out in the earlier sections of this report, but is included because of their wider applicability and interest to the charity sector.

Administration and management

Every charity needs an effective trustee body which has control over the administration of the charity and acts as a whole, especially because all trustees are equal in responsibility. Trustees must ensure that their charity has adequate financial and administrative controls in place, and that the funds of their charity are applied for the benefit of the public for which it has been set up.

Trustee eligibility

Charity trustees must ensure that they are aware of the legal rules on eligibility to serve as a trustee. Additional restrictions on who can be a charity trustee may be included in the charity’s governing document. Before appointing a new trustee, the trustee board must make sure that the appointment meets the requirements of the charity’s governing document and any legal requirements.

Governance

Trustees are representatives of the charity they govern or the charitable funds they are responsible for, in the charity sector. Trustees must be aware of and act in accordance with their legal duties. The conduct of trustees can be a key driver of public trust and confidence in the charity sector. When the conduct of trustees falls below the standards expected there can be damage to the reputation of individual trustees, the charity and possibly the wider charity sector.

Principles of trustee decision making

Charity trustees are responsible for governing their charity and making decisions about how it should be run. Making decisions is one of the most important parts of the trustees’ role.

Trustees can be confident about decision making if they understand their role and responsibilities, know how to make decisions effectively, are ready to be accountable to people with an interest in their charity, and follow the 7 principles that the courts have developed for reviewing decisions made by trustees.

Trustees must:

• act within their powers
• act in good faith and only in the interests of the charity
• make sure they are sufficiently informed
• take account of all relevant factors
• ignore any irrelevant factors
• manage conflicts of interest
• make decisions that are within the range of decisions that a reasonable trustee body could make

It is important that charity trustees apply these 7 principles when making significant or strategic decisions, such as those affecting the charity’s beneficiaries, assets or future direction.

Financial controls

Trustees must ensure that their charity has adequate financial controls in place, It is important that the financial activities of charities are properly recorded, and their financial governance is transparent. Charities are accountable to their donors, beneficiaries and the public.

Donors to charity are entitled to have confidence that their money is going to legitimate causes and reaches the places that it is intended to, this is key to ensuring public trust and confidence in charities.

The Commission has produced guidance to assist trustees in implementing robust internal financial controls that are appropriate to their charity. Internal Financial Controls for Charities (CC8) is available on GOV.UK.

There is also a self-check-list for trustees which has been produced to enable trustees to evaluate their charity’s performance against the legal requirements and good practice recommendations set out in the guidance.