Decision

Global Welfare Project

Published 14 September 2018

This decision was withdrawn on 18 January 2022

This Inquiry report has been archived as it is over 2 years old.

The Organisation

In 2014 the Charity Commission (‘the Commission’) was contacted by West Yorkshire Police (‘the Police’), under section 54 of the Charities Act 2011 (‘the Act’) which provides a statutory gateway to share information. The Police requested information regarding an organisation operating under the name Global Welfare Project (‘the Organisation’) which was appealing for donations from the public for charitable purposes. The Police enquired whether the Organisation was registered with the Commission and, if so, what information the Commission held about it.

In a witness statement provided by an officer of the Commission on 7 March 2014, the Commission confirmed to the Police that, after conducting a search of the Register of Charities (‘the Register’), that the Organisation was not a registered charity, nor had the Commission received an application to register an organisation with this name. The Police provided the Commission with additional information regarding the individuals believed to be involved in the Organisation and those who acted as signatories to the bank account in its name. Further to this, the Commission conducted a search of the Register for the names associated with the Organisation, and confirmed that none were recorded as current trustees, or had been a trustee, of a registered charity.

The Organisation had a website on which it was holding itself out to be a registered charity by stating it had a registered charity number. The charity number advertised on the Organisation’s website belonged to a separate charity that is registered with the Commission. The Organisation’s website has since been removed by the Organisation, at the request of the Commission. It is an offence, under section 63 of the Charities Act 1992 to solicit money or other property with the representation that it is for the benefit of an institution registered with the Commission when it is not registered.

The Organisation’s website stated ‘the aim of this charity is to work in various countries to help those who are the most affected with calamity and assist them with your donations. We want to bring some hope back to the people by helping to rebuild their infrastructure i.e their homes, schools and hospitals’. In addition to this, the Organisation’s website also made reference to a number of activities it claimed it was undertaking in a number of countries which included water and sanitation, aid containers, supporting hospitals with ambulances and supporting orphans and widows. Although the Organisation’s website stated that it worked in a number of countries, the majority of its focus appeared to be to assist those affected by the Syria Crisis.

Based on the information provided by the Police and found on the Organisation’s website the Commission considered that the money raised by the Organisation was raised for charitable purposes and therefore the Commission had jurisdiction to regulate the Organisation. In addition the Commission considered that the signatories to the Organisation’s bank account were the trustees of those charitable funds (‘the trustees’).

Background

On 19 May 2014 the Commission opened a statutory inquiry (‘the Inquiry’) into the Organisation under section 46 of the Act. On 21 May 2014 the Police arrested five individuals connected to the Organisation, including the trustees, for fraud by false representation, an offence under section 2 of the Fraud Act 2006. Shortly after opening the inquiry the Commission used its regulatory powers to protect charitable funds held by the Organisation. An Order was issued under section 76(3)(d) of the Act (“the Order”), which directed the bank with which the Organisation’s account was held not to part with the funds held within it, without the Commission’s prior consent. The Order was issued to the Organisation’s bank on 21 May 2014 and remained in effect until 26 April 2018 – see regulatory action taken for more detail.

Whilst the criminal investigation by the Police was ongoing the Commission placed the inquiry on hold so as not to prejudice their investigation. In 2016 the Commission received confirmation from the Police that its investigation had been completed, with no charges being brought against the individuals arrested on 21 May 2014.

Shortly after the Inquiry into the Organisation was opened the Commission received an application to register it as a charity. The Commission deferred making a decision on registration because of the ongoing criminal investigation by the Police.

Issues under Investigation

• the inquiry was opened because the Commission had regulatory concerns, which were: individuals were falsely purporting that the Organisation was a registered charity when it was not

• risk to public trust and confidence in charities in that members of the public, when donating to the Organisation, were likely to be doing so under the impression that it was a charity registered with the Commission

• whether funds raised for charitable purposes were being abused and/or misapplied

The scope of the inquiry was to examine a number of regulatory issues including:

• the administration, governance and management of the Organisation by the trustees and the nature of the relationship between it and the registered charity whose registration number it used as its own
• the conduct of the trustees
• the financial control measures and whether or not the trustees have and continue to comply with and fulfilled their duties and responsibilities as trustees under charity law – including the verification of end use of all charitable funds raised and expended by the Organisation
• ensuring that funds held in the bank account in the name of the Organisation are applied for their intended charitable purpose (see Regulatory action taken)

Findings

The administration, governance and management of the Organisation by the trustees and the nature of the relationship between it and the registered charity whose registration number it used as its own

The Commission found that the trustees allowed a website in the name of the Organisation to refer to the registration number of another charity as its own. This was misleading to members of the public who are likely to have donated to the Organisation based on the representation that they were supporting a registered charity. In response, the trustees said that the display of this registration number on the Organisation’s website was done in error.

A charity’s registration number is unique to it and is not something to be shared or otherwise used by another organisation. The Inquiry found that the Organisation was working with the registered charity whose registration number it was using. The Commission confirmed this when it conducted a separate compliance visit to the registered charity.

Limited information and records were maintained and/or provided in respect of the administration, governance and management of the Organisation. The inquiry found that there was little, if any, information to show how the trustees decided to spend funds donated to the Organisation, how it identified and chose partners that it worked with and how they accounted for the funds received and expended.

The conduct of the trustees

Charity trustees have a number of legal duties and responsibilities. The trustees must ensure that they apply their charity’s funds and assets only in furtherance of the charity’s purposes. They must avoid undertaking activities that might place the charity’s funds, assets or reputation at undue risk and they must maintain and preserve accounting records to account for their charity’s income and expenditure. The Inquiry found that the trustees did not fully comply with their duties – particularly as it relates to maintaining accounting records.

Although the trustees complied with the Inquiry’s requests for information, the information provided was incomplete and did not fully account for the income received and spent by the Organisation.

The Inquiry found that the trustees did not fulfil their duties under charity law, as set out in the Commission’s guidance, The Essential Trustee: what you need to know, what you need to do (CC3).

The financial control measures and whether or not the trustees have and continue to comply with and fulfilled their duties and responsibilities as trustees under charity law – including the verification of end use of all charitable funds raised and expended by the Organisation

The Inquiry found that the trustees failed to maintain full and accurate records relating to the income and expenditure of the Organisation. The bank account was opened in December 2013 and between then and February 2017 (the date of the last deposit into the account), £33,417.37 was deposited into the account of which £17,909.70 was spent.

The inquiry found that the trustees failed to monitor or verify the end use of charitable funds. Funds (£10,409.70) being given to other charities or otherwise expended do not evidence the ultimate charitable expenditure. The trustees failed to provide evidence in support of this expenditure and how they ensured that the funds were used for their intended charitable purposes. The trustees advised the Commission of photos and videos displayed on the Organisation’s social media account; however, the inquiry did not consider these sufficient to evidence and fully account for the funds expended.

Where charities give money to partners and beneficiaries, especially large amounts of money or in high risk areas, such as Syria, they must ensure there is adequate monitoring. Trustees are required to verify that charity funds reach the intended destinations and are applied for the intended purpose(s). The verification process depends on various factors and must be proportionate to the level of risk. Factors include consideration of the various aspects of the charity’s work, the associated risks, the amount of money involved, if it works with partners and whether those partners or the charitable funds are overseas, and if so, where.

The inquiry found that the actions of the trustees fell short of what is required of people raising and holding funds on trust for charitable purposes, including failing to evidence any monitoring of the end use of funds. Trustees have a duty to monitor the application of funds, in accordance with their legal duty to ensure that funds have been applied for the purposes that they were intended. Drawing up robust monitoring processes, and recording and implementing them will help charity trustees ensure that funds are adequately protected from abuse, misuse or other loss, and are being put to their most effective use. The Inquiry found that the trustees did not develop or have in place a monitoring process.

Conclusions

The Commission concluded that there was misconduct and/or mismanagement in the administration of the charitable funds by the trustees because:

• it used the registration number of another charity as its own. It was misleading to donors and potential donors who may have donated to the Organisation based on the representation that they were supporting a registered charity

• the trustees failed to maintain accurate records relating to the income and expenditure of the Organisation and significant amounts of charitable funds have not been accounted for

The Commission acknowledges that the trustees co-operated with the Inquiry throughout, as they are expected to.

Regulatory action taken

Throughout the inquiry, the Commission exercised its information gathering powers under section 47 and 52 of the Act to obtain copy documents and answers to questions. These Orders and Directions were issued to the Organisation’s trustees and the bank with which the Organisation held an account.

On 21 May 2014 the Commission issued a section 76(3)(d) Order, to the Organisation’s bank, to prevent any funds being withdrawn or transferred from it unless authorised by the Commission. During the Inquiry no requests to authorise payments from the account were made by the trustees.

On 26 April 2018 the Commission discharged its Order under section 76(3)(d) of the Act and at the same time exercised its power under section 85 of the Act to direct the bank to transfer the funds totalling £15,508.67 in the bank account to a charity with similar purposes to those for which the Organisation raised the funds. This transfer comprised all of the funds held in the Organisation’s bank account at the time the Commission served its Order under section 76(3)(d) of the Act and an additional £6,830.12 deposited into the account by the Police. These funds were seized by the Police as part of its investigation but later returned to the Organisation as the Police were satisfied that the funds were donations intended for the Organisation.

The Commission did not take any further action in respect of the application received to register the Organisation. The Organisation’s website which contained misleading information has been taken down.

How the Organisation’s funds will be used

The receiving charity has provided assurances to the Commission that the funds will be used on a project to provide emergency assistance to evacuees form Eastern Ghouta in Syria. The receiving charity’s Syria Mission aims to secure food (baked bread for four months), hygiene kits and solar kits to support 69,500 Individuals in Idleb and Aleppo Governorates. The project will prioritise those families who are in greater need for example families with greater number of children, large family size etc.

The Project activities are as follows:

• identification of the families evacuated from Eastern Ghouta
• procurement of flour, solar kit and hygiene kit items from the supplier
• coordination with other humanitarian actors to avoid duplication
• distribution of the baked bread along 4 months
• distribution of the solar kit once to targeted families
• distribution of hygiene kit items twice to targeted household
• monitoring the humanitarian situation and documenting the distribution process

Of the total value of the £542,088 of the Syria Mission project funds, £15,507.67 will be from the funds transferred from the Organisation. The Project start date was 1 May 2018.

Issues for the wider sector

The purpose of this section is to highlight the broader issues arising from the Commission’s assessment 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.

Raising funds for charitable purposes

Funds raised for charitable purposes in England and Wales, even if they are not raised by a charity, fall within the Commission’s regulatory jurisdiction. People who manage and are responsible for fundraising appeals for or receive donations intended for the application for charitable purposes (including those created by non-charitable organisations) hold the position of trustee.

Trustee duties

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.

Protecting the charity’s assets

Trustees have a legal duty to protect charity property and funds with the necessary care and properly assess risk. Trustees must carry out appropriate due diligence on those individuals and partner organisations that the charity receives donations from, gives money to or works with closely. Due diligence and financial controls or checks depend on various factors and must be proportionate to the level of risk. Factors for consideration include: the amount of charitable funds and if the funds are being transferred to a high risk area.

Further information about the trustees’ legal responsibility to carry out due diligence checks on donors, beneficiaries and local partners and how to monitor end use of funds can be found in Chapter 2 of the Protecting charities from harm: compliance toolkit

Furthering the objects of the Charity/application of funds for the intended purpose

Trustees have a legal duty to ensure that their charity’s funds are applied solely and reasonably in furtherance of its objects. Therefore, in order to show that they are complying with their legal duties, trustees must keep records and an adequate audit trail to show that the charity’s money has been properly spent on furthering the charity’s purposes for the public benefit.

Practical advice for trustees on risk management factors and the need for appropriate financial controls and audit trails can be found in Chapter 4 of the Toolkit.

Safer giving

Members of the public should exercise care and caution when asked to donate to an individual soliciting funds and/or property with a representation that it is for charitable purposes whether they are being asked to donate in person, on Twitter, Facebook or other social media.

The Commission produces safer giving advice for the public on how to donate safely to support the work of registered charities.

Further information and regulatory advice and guidance on these subjects is available on the Commission’s website in Internal financial controls for charities (CC8) and chapter 2 of Protecting charities from harm: compliance toolkit and HMRC’s website