Decision

Charity Inquiry: Care4Calais

Published 24 August 2023

Applies to England and Wales

The Charity

Care4Calais (‘the charity’) was registered on 5 September 2016. It is governed by a CIO Foundation Constitution dated 19 August 2016.

The charity’s charitable purpose, as set out in its governing document (‘GD’), is, “The relief and assistance of people in need, in particular but not exclusively victims of war, natural disaster, trouble or catastrophe by such means as the trustees think fit, in particular but not exclusively by the provision of food, water, shelter, healthcare and legal support.”

In furtherance of these charitable objects, the charity’s activities include the provision of direct aid and social support to displaced people in the UK, Belgium and in France, as well as advocating for a welcoming and inclusive attitude towards refugees in the UK.

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

Background and Issues under Investigation

Engagement with the Charity prior to the opening of the Statutory Inquiry

Since its registration on 5 September 2016, there has been a history of engagement with the charity.

Following a compliance case in 2017, the charity was issued with an action plan under section 15(2) of the Charities Act 2011 (’the Act’) on 22 May 2017 (‘the 2017 action plan’). The 2017 action plan provided regulatory advice and guidance to the trustees regarding their duty to ensure that the charity’s resources are protected so that the charity can fulfil its aims, safeguard the charity’s assets and ensure the charity is properly protected against financial abuse.

It specifically noted that the trustees must avoid exposing the charity’s assets, beneficiaries and reputation to undue risk, review ‘CC8 – internal financial controls for charities’, and consider adopting a suitable financial policy. The trustees were informed, that if the regulatory advice and guidance was not acted on, this would be taken into account when considering if further action should be taken.

Between 2017 and 2019 the Commission also engaged with the charity in relation to safeguarding issues arising from incidents and allegations in relation to potentially vulnerable beneficiaries. Some of these issues were the subject of national media reporting. Further advice was provided under section 15(2) of the Act on 27 August 2019 in relation to the charity’s reporting and handling of safeguarding issues.

Issues under Investigation

Analysis of the charity’s bank statements for the period 13 May 2019 to 13 May 2020 raised concerns about payments to connected parties. In addition, wider regulatory concerns about its governance, including a lack of clarity around whether those acting as trustees were validly appointed and the trustees’ decision-making were identified.

As a result, the Commission opened a statutory inquiry under section 46 of the Act into the charity on 12 August 2020 (‘the inquiry’) to examine:

1. The implementation, maintenance and effectiveness of the charity’s financial controls.
2. The implementation, maintenance and effectiveness of the charity’s safeguarding and complaints policies and procedures.
3. The trustees’ responses to the Commission’s previous requests for information and the regulatory advice and guidance provided.
4. Whether there has been mismanagement and/or misconduct in the administration of the charity by the trustees.
5. The extent of the impact of any of the factors at 1 to 4 above on the charity’s property, including its reputation.

The trustees of the charity changed during the inquiry. At the opening of the inquiry, Trustee A, Trustee B, and Trustee C were named as the trustees of the charity on the register. These individuals will collectively be referred to as ‘the previous trustee board’. Trustee A is the charity’s founder and has acted as the CEO (albeit in an unpaid capacity) since the charity was established until April 2023. Trustee A and Trustee B are sisters. Trustee A, B, and C are no longer trustees of the charity. Trustee B did not stand for re-election and ceased to be a trustee in December 2022. Trustee C was not re-elected and ceased to be a trustee in December 2022. Trustee A resigned on 6 May 2023.

Findings

A decision was made to appoint an Interim Manager (‘IM’) under section 76(3)(g) of the Act on 29 July 2021 to conduct an independent review of the charity’s governance, administration and decision-making. The IM’s findings have helped to inform the inquiry’s findings.

Governance, administration, and decision-making

Failure to maintain the minimum number of trustees in accordance with the governing document.

The IM reported on their review on 21 October 2021 and provided 20 key recommendations to strengthen the charity’s governance and decision-making. One of their main findings was that the minimum number of trustees as required by the GD were not in place.

Clause 9(3)(a) of the GD states that there must be at least three charity trustees and that if the number of trustees falls below three, the remaining trustees may only act to appoint additional trustees. The IM report concluded that the charity had not had three validly appointed trustees since at least sometime in early 2020 (and potentially since some time in mid/late 2019) in breach of the GD. The exact dates could not be established as detailed meeting minutes or records of decisions taken (including relating to the appointment and resignation of trustees) were not being produced or kept.

In line with Clause (3)(a) of the GD the quorum for making valid decisions is two trustees or one third of the total number of charity trustees, whichever is greater. The inquiry has seen trustee meeting minutes that demonstrate that the quorum was not always met. Additionally, the trustees could not have been validly taking decisions as the overall minimum number of validly appointed trustees had dropped below three.

The situation was further complicated by the family relationship between Trustee A and Trustee B and the limited evidence available to demonstrate that conflicts of interest and/or loyalty were being appropriately managed. There was additionally an ongoing dispute between the trustees of the previous trustee board and despite the efforts of the inquiry and a mediator, the previous trustee board was unable and/or unwilling to resolve the dispute and appoint the minimum number of trustees to validly operate the charity.

In any case, as the charity did not have the minimum number of trustees to operate, there are significant doubts and questions about the validity of any decision taken in relation to the charity throughout 2020 and 2021.

To rectify the situation and protect the charity and its operations, the inquiry made an order under section 76(3)(b) of the Act on 9 March 2022 and appointed five trustees (including Trustee A and B) for a 9-month term. The order also required the trustees, to carry out an open and fair trustee recruitment exercise, before the end of their 9-month term.

The failure to keep adequate records of trustee appointments and resignations and to ensure that trustees were appointed properly, in line with the GD, is misconduct and/or mismanagement in the administration of the charity by the previous trustee board. The failure to ensure that the minimum number of trustees were appointed was a risk to the charity’s operations/business and is also misconduct and/or mismanagement in the administration of the charity.

Following the appointment of trustees, to strengthen the charity’s overall governance, the inquiry made an order under section 84 of the Act on 10 March 2022, which included an action plan (‘the 2022 action plan’). The 2022 action plan directed the charity to implement the recommendations of the IM over a 9-month period. The IM was discharged on 7 December 2021 and the inquiry oversaw the charity’s implementation of the 2022 action plan.

When reviewing the charity’s compliance with the 2022 action plan, the inquiry found that the charity had an expanded, quorate, committed, and united trustee board.

Lack of appropriate governance structures

In respect of the charity’s governance and decision-making, the IM report concluded that there had not been any robust challenge of Trustee A in her position as CEO, that the charity placed an unhealthy reliance on her, and that it focused on operational matters to the detriment of strategic governance.

Trustee meeting minutes prior to the appointment of the IM were poor and focused mostly on operational matters. Most minutes reviewed by the inquiry were short and consisted only of a couple of action and bullet points. They also fail to demonstrate that the trustees had any collective consideration or control of the charity’s financial position and contained few elements of strategic review or planning. Overall, they reflected the limited attention matters of good governance and compliance were given at the charity prior to the IM’s appointment.

There was also no regular schedule of meetings and they were called on an ad hoc basis, often with only a few days’ notice, which further demonstrates the absence of any planned approach to governance and decision-making.

The IM report also noted that further action to bring the charity’s governance and management in line with best practice and legal requirements was also necessary in relation to complaints handling, obligations as an employer, financial controls, safeguarding, and GDPR/ Data Protection matters.

In the charity’s early years, the delivery of its activities relied heavily on volunteers and this pattern continued even as the charity and its activities expanded. However, as the organisation grew, insufficient priority and attention was given to hiring permanent staff to manage and organise volunteers and to adapt the charity’s structure.

Trustee A founded the charity and acted as a trustee and CEO (unpaid) and continued to remain directly involved in the management of volunteers and the delivery of the charity’s activities even as the charity significantly expanded. Her dual role would have required careful balancing to ensure she could fulfil both her roles appropriately and in the best interests of the charity. However, as the size of the charity grew, the situation led to an inappropriate blurring of the lines between the two roles and created a lack of accountability of Trustee A to the trustee body. This was exacerbated by the fact that the minimum number of trustees were not appointed, the family relationship between Trustee A and Trustee B, and the absence of a job description for the CEO function or any form of clear delegated authority between the board of trustees and the CEO.

The inquiry found that, the lack of properly defined roles for the CEO coupled with insufficient oversight and scrutiny by the trustee board led to Trustee A dominating the charity and going unchallenged for some time. These governance issues and associated risks were also brought to the attention of the charity by previous trustees and complainants, before the IM appointment however, no action was taken by them to rectify the situation.

To ensure a more balanced distribution of decision-making power within the charity, the IM recommend, that Trustee A ceased acting in her dual role as trustee and CEO and that the charity recruits a full-time paid independent CEO to head up and direct the operational side of the charity. This, their report notes, would “allow proper separation between the trustees and the operational side of C4C enabling the trustees to focus on their strategic governance role whilst holding the CEO to account in relation to operational matters” and reduce the charity’s overreliance on Trustee A.

The absence of appropriate governance structures and proper collective decision-making as well as the poor record keeping in relation to trustee decisions is mismanagement and/or misconduct in the administration of the charity. The fact that the previous trustee board was made aware of the lack of collective decision-making and unequal distribution of power and did not take any steps to address them is also misconduct and/or mismanagement in the administration of the charity.

The 2022 action plan directed the charity to carry out an open and fair recruitment process to hire a full-time paid CEO to head up and direct the charity’s operational activities. The campaign was successful, and a new CEO joined the charity on 10 April 2023.

When reviewing the charity’s compliance with the 2022 action plan, the inquiry found that the new trustee board met regularly after the IM was discharged in 2021 and had implemented the 2022 action plan. This resulted in significant improvements in the charity’s overall governance and more balanced decision-making processes. Meeting minutes since the IM appointment, which were reviewed by the inquiry, are comprehensive and reflect the improvement in relation to governance and compliance matters. With the new and independent CEO, further improvements are expected to ensure proper and meaningful separation between the charity’s operations and the governance function.

Inappropriate internal financial controls

The inquiry’s analysis of the charity’s bank statements found that between October 2017 and August 2020, payments amounting to £340,092.47 were made to what the charity later confirmed was Trustee A’s personal bank account. The payments ranged in value from £2,805.21 to £20,000.00 and most are referenced ‘[Trustee A] spreadsheet’ or ‘[Trustee A] per spreadsheet’. From the charity’s annual accounts, the reasons for the payments were unclear and on 21 August 2020 the inquiry issued an order under section 76(3)(f) of the Act to prohibit the making of payments between the charity and the current trustees, former trustees, or parties connected to the current or former trustees without the prior approval of the Commission.

In respect of the charity’s financial controls more broadly, the inquiry also found that the charity’s financial controls policy was an undated two-page document. The document noted that Trustee A and B (who are sisters) were the authorised signatories to the charity’s bank account. In line with the policy the charity should have also had a bookkeeper to support the management of the charity’s finances, but the bookkeeper had been unable to carry out their duties due to personal reasons between 2020 and 2021. As the policy was undated it was also unclear how long it had been in effect.

When asked about the payments made to her personal bank account, Trustee A explained that she made the payments on behalf of the charity through her personal account and was later reimbursed. She also explained that this payment mechanism was only used for payments incurring a non-sterling fee and that it saved the charity approximately £3,000 per annum in foreign exchange fees. She also provided a spreadsheet which detailed each of the payments made and included a short description of the expenditure.

The inquiry undertook a scrutiny of the information provided and found no evidence that in relation to the payments made to Trustee A’s personal account funds had been misapplied or misappropriated and it was clear that the payments made represented charitable expenditure in line with the charity’s objects. Therefore, the payment restriction order was discharged on 7 December 2021.

However, the inquiry found that the use of Trustee A’s personal bank account was inappropriate especially as the 2017 action plan provided advice and guidance in relation to strengthening the charity’s internal financial controls. In line with this advice, there should have been independent oversight or checks of the reimbursements made to Trustee A but Trustee A stated during her interview with the inquiry that she was in sole control of the charity’s finances. She also stated that the expenditure tracked by the spreadsheet was not pre-approved by another trustee before it was incurred and that she authorised her own reimbursements without additional checks from any of the other trustees.

Trustee A does not accept that this practice was inappropriate and maintains that the independent examination of the charity’s accounts after the financial year end was a sufficient control mechanism. It’s the inquiry’s view that because checks would only be carried out after the expenditure had already been incurred it would be harder to rectify or refuse reimbursement and therefore insufficiently safeguard charitable funds.

The inquiry acknowledges that by using Trustee A’s personal bank account the charity saved money and that no misapplication or misappropriation of charity funds was identified. However, the inquiry found due to the charity’s poor financial controls overall the risk associated with the charity’s practice outweighed the savings achieved.

The inquiry also found that Trustee A dominated the charity’s finances with little to no oversight by the previous trustee board and that there were no discussions at trustee level about budgets or expenditure. When interviewed by the inquiry, Trustee B who according to the charity’s financial policy was involved in the charity’s finances stated that Trustee A managed the charity’s finances. Trustee C noted that she never received any information about the charity’s finances and expenditure, despite asking for this information, and that decisions about these matters were taken solely by Trustee A. The absence of any collective consideration of the charity’s finances, is also evident from the trustee meeting minutes reviewed by the inquiry.

The inquiry also found that the charity’s financial controls were still inappropriate at the time of the opening of the inquiry despite advice being previously given to the charity by the Commission on the issue. In particular, CC8 was not sufficiently considered following the 2017 action plan and a robust financial controls policy was not implemented in a timely manner. The inquiry found that this is mismanagement and/or misconduct in the administration of the charity.

The 2022 action plan included a number of actions in relation to the charity’s financial controls which were fully implemented, and the use of Trustee A’s personal bank account was discontinued and replaced with a more appropriate payment mechanism. Budgets are now set at trustee meetings and reviewed at appropriate intervals as is the charity’s income and expenditure. The charity’s financial controls policy was also reviewed and updated, and a bookkeeper is now again supporting the charity’s financial management.

Complaint handling

In 2019 the charity was formally advised to consider the Commission’s guidance on safeguarding.

Over the course of the inquiry, a number of complaints about the charity were received by the inquiry directly, these came from a number of sources including volunteers, employees, and trustees. The inquiry also requested a copy of all complaints the charity received via its own complaints handling process and associated policies. The complaints policy that was provided by the charity was undated and it was not clear how long it had been in effect and the charity did not keep a central log of complaints.

Overall, the inquiry found that the charity’s complaints handing was inadequate and the way in which some complaints were handled was damaging to the charity’s reputation. In at least one instance, in a breach of the complaints policy, Trustee B handled a complaint about Trustee A and the charity failed to identify or manage the conflict of interest and/or loyalty which arose.

The inquiry also found that the charity did not keep sufficient records of investigations undertaken in response to complaints and was not able to demonstrate that complaints were always handled in an impartial, fair, open, and transparent way or that appropriate action was taken in response to complaints.

The charity’s poor management of complaints and incidents is mismanagement and/or misconduct in the administration of the charity by the previous trustee board.

The 2022 action plan required the charity to implement a central log of complaints and to review and strengthen its complaints policy. Upon review, the inquiry found that complaints that had been made since the 2022 action plan was issued, had been handled in line with the updated complaints policy.

In May 2023 there were a number of media reports about historic complaints made to the charity relating to Trustee A. The inquiry was already aware of these complaints when they were reported in the media and had engaged with the charity on the complaints. As noted above the 2022 Action Plan included specific actions for the trustees to implement in relation to the charity’s complaints handling. These steps had been taken when compliance with the 2022 Action Plan was reviewed by the inquiry. It was also found that all newly received complaints had been handled appropriately in line with the charity’s updated complaints policy.

It was also reported that Trustee A stepped down from her position as trustee and chair of trustees due to the historic complaints and the media reports about them. The new trustee board informed the inquiry that this was not the case. Trustee A stepped down on 6 May 2023 due to a disagreement with the charity’s new CEO over the distribution of decision-making power in the charity.

The charity’s activities

Non-party political campaigning can be a legitimate way for charities to spend their resources, so long as they act within charity law.

Charities can engage in political activity that is actively intended to change or influence decisions taken by the Government where it furthers its charitable purpose.

During the inquiry, the charity decided to pursue Judicial Review against the Government’s decision to deport people seeking asylum in the UK to Rwanda.

The inquiry found the legal action was acceptable political activity which was furthering the charity’s charitable objects and was in line with the Commission’s guidance CC9 - Campaigning and political activity guidance for charities. The inquiry reviewed the trustees’ decision-making and found the decision was adequately documented, was properly made and a decision a reasonable trustee body can make.

There were also a number of media reports alleging that that charity is involved in or facilitates illegal immigration which the charity’s trustees have strongly denied. The Commission is a civil regulator and does not investigate crime or criminal offences (including immigration offences) which is a matter for the police or other relevant enforcement bodies. The Commission’s duties, functions and objectives are set out in the Act and must ensure charities are accountable, well-run and meet their legal obligations.

The inquiry engaged with the charity regarding the media reports and the effect they had on the charity’s reputation. The inquiry also reviewed the charity’s policies and procedures relating to overseas operations and activities. It identified some deficiencies in relation to risk assessments and the reporting of incidents for its Calais based operations. Areas for improvement were addressed by providing regulatory advice and guidance under section 15(2) of the Act.

During the inquiry, the charity repeatedly confirmed that it does not support, encourage, or facilitate illegal border crossings. The inquiry advised the charity to make this explicitly clear in all its policies and procedures and training materials for staff and volunteers.

The charity confirmed that it was working on implementing the regulatory advice and guidance provided.

Conclusions

The inquiry found that there has been serious misconduct and/or mismanagement in the administration of the charity by the previous trustee board.

New trustees were appointed, and an action plan was issued, the implementation of which has resulted in significant improvements in the charity’s overall operation, management and governance.

The charity has been issued with additional advice and guidance under section 15 of the Act, which will be followed up should the Commission need to engage with the charity again in future.

Regulatory Action Taken

On 21 August 2020 an order under section 76(3)(f) was made prohibiting payments between the charity and current or former trustees and parties connected to the former trustees. Following a review on 7 December 2021 the inquiry discharged the order.

On 29 July 2021 an order under section 76(3)(g) was made appointing an IM. The order was discharged on 7 December 2021.

On 9 March 2022 an order under section 76(3)(b) was made appointing additional trustees for 9 months.

On 10 March 2022 an order under section 84 was made directing the charity to take specified action over a 9-month period.

Various orders under section 47 and section 52 were made to gather information from a variety of sources.

Interim Manager

On 29 July 2021 an order under section 76(3)(g) was made appointing Sarah Tomlinson and Philip Watts of Anthony Collins Solicitors LLP as IM.

The IM were appointed to the exclusion of the trustees to undertake a review of the charity’s governance, administration and decision making. They outlined their findings and made recommendations on 21 October 2021.

The IM were discharged on 7 December 2021.

The appointment cost of £10,200.00 was met in full by the charity.

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.

An effective charity is run by a clearly identifiable board or trustee body that has the minimum number of trustees.

All charities must apply basic principles of good governance which includes considering regulatory advice and guidance from its regulator and making appropriate changes. That a charity is in its infancy or relies heavily on volunteers is no excuse for non-compliance.

Trustees must take decisions in a way that meets the requirements of charity law and their governing documents. This includes:

• taking decisions jointly (collectively), making sure all trustees have the opportunity to participate
• recording decisions properly, so there is no doubt about what was decided and why. Written records should be sufficient to allow someone to understand the issues involved, decisions made and the reasons for them, particularly for important or controversial decisions

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 the commission’s website. 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.

Many charities rely on significant volunteer effort to raise funds for their work or carry out charitable activities. Trustees should put systems in place to actively oversee the work its volunteers. This will include ensuring that they:

• are clear about what they are supposed to do, through appropriate role descriptions
• are aware of the rules and boundaries within which they must work, for example, when representing or speaking on behalf of the charity
• work safely
• know what to do if there’s a problem
• know what they need to report and who they report to

Trustees should ensure that their charity has appropriate procedures and policies in place, so that volunteers get appropriate training, and know they must comply with the charity’s policies and procedures.

Trustees must be satisfied that any political or campaigning activity by a charity is undertaken only in the context of supporting the delivery of its charitable purposes. Trustees must make sure they have adequate oversight over their charity’s campaigning and political activity and be mindful of maintaining their charity’s party-political independence.

The key legal principles from our guidance on political activity (CC9) that charities should remember are:

• charities cannot have political purposes, and campaigning and political activity must only be undertaken by a charity in the context of supporting the delivery of their charitable purposes
• in the political arena, a charity must stress its independence and ensure that any involvement it has with political parties is balanced; a charity must not give support or funding to a political party, candidate or politician
• a charity may give its support to or raise concerns about specific policies advocated by political parties if it would help achieve its charitable purposes as long as it makes clear its independence from any political party
• trustees must protect their charity and not allow it to be used as a vehicle for the expression of the party-political views of any individual trustee or staff member or by a party or candidate