Decision

The Great Generation

Published 7 December 2018

This decision was withdrawn on 18 January 2022

This Inquiry report has been archived as it is over 2 years old.

Applies to England and Wales

On 3 January 2018, the Charity Commission (‘the Commission’) opened a statutory inquiry (‘the inquiry’) into the charity.

The Charity

The charity was registered on 30 July 2007. It is a company limited by guarantee, governed by a memorandum and articles of association and was incorporated on 10 June 2005. The charity’s objects are the relief of financial and physical need and suffering, the advancement of education, the promotion and protection of physical and mental health and the promotion of volunteering to achieve any of the aforementioned objects in each case for the benefit of the public.

The charity operates in Brazil, India, Jordan, Sri Lanka and Uganda and works with individuals, schools and businesses to help achieve the United Nations Sustainable Development Goals, specifically poverty alleviation.

Further details about the charity can be found on our website.

Background

The charity failed to submit its accounts for the financial year ending 31 December 2015 and, having also filed its accounts for the previous financial year significantly late, became part of a class inquiry on 15 February 2017 being conducted by the Commission examining charities that repeatedly defaulted on their accounting obligations.

During the course of that class inquiry, the charity submitted the outstanding accounts and the inquiry was subsequently closed. However, despite receiving regulatory advice and being reminded to meet their legal duties to file accounts on time, the trustees again failed to file the charity’s statutory accounting information on time for the financial year ending 31 December 2016. In addition, the accounts previously filed by the charity did not comply with legal requirements as they did not include an independent examiner’s report.

The Commission’s enquiries confirmed that there was only one active trustee governing the charity, which contravened the charity’s memorandum and articles of association which requires the charity to have at least three trustees. This left the sole trustee unable to legitimately administrate the charity and raised regulatory concerns about the governance and administration of the charity.

Issues under investigation

The inquiry examined the following regulatory issues:

• the administration, governance and management of the charity by the sole trustee, with specific regard to the extent to which the trustee:

  • acted in the charity’s best interests and acted in accordance with duties and responsibilities under charity law
  • responsibly managed the charity’s resources and financial affairs
  • ensured that conflicts of interests had been adequately avoided or managed
  • ensured that links and relationships with third parties had been prudently managed

• the extent to which the charity operated in furtherance of its charitable purposes for the public benefit

• whether and to what extent any issues or weaknesses in the administration of the charity during the period under review:

  • were as a result of misconduct and/or mismanagement by the trustees
  • required regularising by the trustees or the Commission

The inquiry was closed on 7 December 2018 on the publication of this report.

Findings

The administration, governance and management of the charity by the sole trustee

The inquiry found that the sole trustee had failed to regularise a prolonged issue with the charity’s banking provider in a timely manner which impacted on the charity’s ability to fulfill its legal reporting obligations. The inquiry met with the trustee and found that the charity had experienced significant issues with its banking provider, the impact of which was that the charity’s independent examiner was not provided with the necessary financial information to complete their examination. This ongoing issue led to the trustee again failing to comply with the statutory duty to submit accurate accounts on time to the Commission. The inquiry was provided with evidence that demonstrated that, although the trustee had failed in their duty to report, there were contributory external factors which had led to the default.

Due to the issues with the charity’s bankers, the inquiry found that the charity had been operating for a time using the trustee’s private resources. The inquiry acknowledges that this allowed the charity to continue to operate, however, with only a single trustee, it meant that the charity was unable to provide necessary assurance that potential conflicts of interest could be adequately managed.

Following engagement with the trustee, steps are now being taken to appoint additional trustees who, collectively, will be able to undertake the steps set out in an Order issued under s84 of the Charities Act 2011, including reviewing the charity’s banking arrangements. The trustee’s progress in implementing the Order will be monitored by the Commission.

The extent to which the charity operated in furtherance of its charitable purposes for the public benefit

At the time the inquiry was opened, it was not clear to the Commission whether the charity was operating in furtherance of its charitable purposes. The inquiry found that despite the issues with its bankers, the charity had continued to operate in furtherance of its charitable purposes for the public benefit. However, the extent to which the charity could further its purposes appeared to be limited as a consequence of the inadequate governance arrangements and the long-term issues that the charity experienced with its banking provider.

Whether and to what extent any issues or weaknesses in the administration of the charity during the period under review were as a result of misconduct and/or mismanagement by the trustees and/or required regularising by the trustees or the Commission

The inquiry found that links and relationships with third parties had been prudently managed and found no evidence of the misapplication or misappropriation of charitable funds.

However, the trustee should have taken steps to appoint additional trustees who collectively would have formed an adequate governance body to legitimately manage and administer the charity and who may have assisted in regularising the issue with the charity’s banking provider and by extension assist in the charity complying with its legal reporting obligations.

Conclusions

The Commission concluded that there was mismanagement in the administration of the charity prior to the Commission’s intervention because:

• the trustee repeatedly failed to comply with their legal obligations to file accurate accounting information with the Commission within the statutory timeframe
• the charity’s governance and management was inadequate, as the sole trustee was unable to legitimately administer the charity and adequately manage any potential conflicts of interest

The Commission acknowledges that the charity’s trustee cooperated fully with the inquiry.

Regulatory action taken

In January 2018 the Commission made an Order under s76 (3) (d) of the Charities Act 2011 (”the Act”) whose effect was to freeze the charity’s bank account. Subsequent engagement with the charity and the provision of information enabled the Commission to satisfy itself that charity assets were not at risk. Accordingly, on 6 February 2018 the Commission made an Order under s337 (6) of the Act whose effect was to lift the freeze on the charity’s bank account

During the inquiry, the Commission issued the charity with a Direction under s84 of the Act. The effect of this Direction was to direct the sole trustee to take specified actions to address weaknesses in the charity’s governance and administration within specified time limits. The Commission will monitor the charity’s compliance with this Direction.

Issues for the wider sector

Trustees must ensure that the charity complies with charity law, and with the requirements of the Commission as regulator; in particular ensuring that the charity prepares reports on what it has achieved and Annual Reports and accounts as required by law. There are legal requirements for charities, relating to the maintenance and retention of accounting records; the preparation of charity accounts and Annual Reports; the audit or independent examination of accounts; and the submission of these to the Commission. The Commission will not hesitate to exercise its statutory powers to ensure that a charity’s annual reports, annual accounts and annual returns are submitted to the Commission within the statutory deadlines where trustees persistently fail to comply with their legal duties.

An effective charity is run by a clearly identifiable board or trustee body that has the minimum number of trustees as required by its governing document and whom have the right balance of skills and experience, acts in the best interests of the charity and its beneficiaries, understands its responsibilities and has systems in place to exercise them properly. The board or trustee body should ensure that the charity’s committees have clear and appropriate delegated authority to carry out their designated roles in delivering the charity’s purposes. In the absence of any delegated authority all decisions concerning a charity are taken by the board or all of the trustees acting collectively and as a team.