Decision

Charity Inquiry: Revelation Foundation

Published 9 October 2020

This decision was withdrawn on 12 October 2022

This Inquiry has been archived as it is over 2 years old.

Applies to England and Wales

The charity

Revelation Foundation (‘the charity’) was registered with the Charity Commission (‘the Commission’) on 6 November 2003. It is governed by a memorandum and articles of association incorporated 13 October 2003.

Further details about the charity can be found on the register of charities.

Summary

The Commission’s report refers by name to a limited number of individuals who are identified because of their position within the structure of the charity and/or its related entities solely for the purposes of narrative clarity. The Commission makes it clear that where it makes findings in respect of the trustees those findings relate to the trustee body as a whole, and no additional weight should be attached to those persons identified by name. The persons named in the report are:

• Howard Conder: a founder of Revelation TV and a trustee of the charity from October 2003 until his resignation in February 2010. Howard Conder is a presenter on the Revelation TV channel and a member of the Revelation TV leadership team. He is the joint owner, with his wife Lesley Conder, of 21st Century Television Limited (“21st Century TV”)
• Lesley Conder: a founder of Revelation TV and a trustee of the charity since April 2013. Lesley Conder is a presenter on the Revelation TV channel and a member of the Revelation TV leadership team. She is the joint owner, with her husband Howard Conder, of 21st Century TV
• Gordon Pettie: a founder and trustee of the charity. Gordon Pettie is CEO of Revelation TV and a presenter on the Revelation TV channel
• Brian Johnson: a licenced insolvency practitioner, appointed as interim manager of the charity by the Charity Commission on 11 June 2015 and discharged on 13 September 2018

The charity fulfils its objects – the advancement of Christianity and the teaching of Christian doctrines, principles and values – through production and broadcasting of Christian content television programmes. It has developed its broadcast channel, Revelation TV, to hold a prominent position in the domain of Christian broadcasting.

The channel originally broadcast from the UK but for reasons including operating costs and issues with the UK regulatory regime transferred the bulk of its broadcasting operation to Spain over several years. Many Christian broadcast channels at that time operated with Spanish broadcasting licences.

The move to Spain, however, was undertaken without the benefit of appropriate advice sufficiently early in the planning stage. As a result, the charity evolved an overly complex operating structure leading to significant issues in terms of governance and finance. Existing entities, set up for other purposes and not owned by the charity, were used rather than the charity setting up a new entity under its direct ownership for the specific purpose of undertaking the Spanish broadcasting operation. The situation appears to have arisen as a result of the trustees’ desire to expand the charity’s operation and to focus upon the broadcasting output, with the consequence that they paid insufficient attention to ensuring that the necessary governance structure and controls were in place.

Whilst the charity also continued to operate a small studio in the UK, detailed preparations for the relocation of the bulk of the broadcasting operation to Spain were in progress by 2010 and the move was effectively completed by 2012. The structure of the organisation was such that the Spanish broadcasting licence was held by one Spanish company, Revelation TV Europe SL (“Revelation TV Europe”), funded by the charity but not directly owned by it.

A second Spanish company, Genesis 247 SL (“Genesis 247”) owned significant amounts of equipment used in the broadcasting operation; it too was funded by the charity but not directly owned by it. A separate Spanish legal entity, Revelation Association, not owned by the charity, employed the staff and managed the volunteers involved in the broadcast operation (including some staff previously employed by the charity in the UK, who had been made redundant when the bulk of the UK operation was transferred to Spain). Revelation Association received funds from the charity to cover the payroll and to allow it to fund the broadcasting operation. A further connected company, 21st Century Television Limited (“21st Century TV”), paid the charity for permission to broadcast on the TV channel. That same company, and separately its owners, Howard and Lesley Conder, supported the charity by way of donations of funds and in kind. The structure of the charity and its related entities and the flow of funds around the group are set out in appendices 1 and 2 to this report.

The Commission’s regulatory engagement with the charity stemmed from complaints regarding the transparency of the charity’s funding arrangements and led to the opening of a statutory inquiry into the charity in September 2014 and the appointment of an interim manager (“IM”) in June 2015. The IM conducted a review of the charity which, together with the Commission’s inquiry and engagement with the trustees, formed the basis of the Commission’s findings and conclusions. The trustees of the charity remained responsible for the day-to-day operation of the charity at all times, including throughout the period of the IM’s appointment.

The inquiry identified a number of serious failings in the structure and governance of the charity which are set out in detail in the body of this report, and which amount to mismanagement in the administration of the charity by the trustees. The inquiry has not seen any evidence to suggest that charitable funds have been misappropriated.

Principal amongst the inquiry’s findings was the complexity of the structure surrounding the charity. This was a matter of concern both in terms of the trustees’ decision making, which had allowed such an unwieldy structure to develop, and because the structure itself placed a very significant proportion of the charity’s assets beyond its direct control and therefore at risk.

The trustees viewed the charity and the associated companies within the structure as a single entity. This was reflected in the finances of the charity and the related entities, which were found to be inadequately separated when the charity’s books and records were inspected by the inquiry. This extended to related companies owned by Howard and Lesley Conder which played a significant role in funding equipment purchases and the broadcasting operation. The relationship with the most significant such company after a period of several years became the subject of a Memorandum of Understanding (“MoU”) that was inadequately defined and documented. The MoU itself was ultimately replaced by a commercial agreement negotiated by the IM independently of the trustees.

Inherent in the relationships between the entities within the structure was the potential for conflicts of interests to arise. The inquiry found that the trustees had failed to identify and manage such conflicts of interest, although equally there was no evidence of unauthorised benefit on the part of any current or former trustee as a consequence of the trustees’ failure in this regard.

The complexities in the structure and the flow of funds from the charity to the other entities created a situation whereby substantial inter-company balances became owed to the charity, placing the charity in a vulnerable financial position.

The trustees did not clearly understand their roles and responsibilities, nor did they all understand the structure and funding of the entities surrounding the charity. This lack of understanding contributed to a number of significant governance failures including but not limited to the failure to implement and maintain appropriate financial controls, such as were needed to protect the charity’s substantial investment in the Spanish broadcasting operation; the failure to conduct detailed risk assessments and obtain appropriate professional advice before taking major decisions; and the failure to properly account for the charity’s property by maintaining a detailed asset register.

Following the discharge of the IM in September 2018 the inquiry continued to examine the identified regulatory issues and the trustees recognised the organisational and governance deficiencies that were identified to them and started to take action to address them. In August 2019 the trustees were provided with an Order of the Commission, directing them to address the remaining areas of regulatory concern, and the substantive phase of the Commission’s investigation into the charity was closed.

At the time of this report, the trustees have taken significant steps to address the regulatory concerns identified by the inquiry. The charity sits within a simplified structure, with greater focus on risk management. The trustees have implemented improvements to the governance of the charity, including in terms of record keeping and control of assets. The Commission will continue to monitor the trustees’ compliance with their obligations under charity law and their progress in addressing the identified regulatory concerns.

Issues under investigation

On 8 September 2014 the Commission opened a statutory inquiry into the charity under Section 46 of the Charities Act 2011. The inquiry closed with the publication of this report.

The issues investigated by the inquiry were:

• the charity structure including its relationship with Genesis 247 Ltd, Revelation TV Europe SL, and Revelation Association and whether the relationships are in the best interests of the charity
• whether the transactions the charity entered into with Genesis 247 Ltd, Revelation TV Europe SL and Revelation Association were in the best interests of the charity
• examining transactions between the charity and its trustees, former trustees, individuals and companies connected to the trustees and former trustees since 31 March 2009
• the administration, governance and management of the charity by the trustees with specific regard to how conflicts of interest have been managed
• whether or not the trustees have complied with and fulfilled their duties and responsibilities under charity law
• the charity’s fundraising activities

Findings

The inquiry’s findings are based on the report of the IM appointed by the Commission to review the charity’s operation and structure; on the Commission’s own meetings with the trustees and on information provided by the trustees in the course of the inquiry.

The charity’s structure

The charity’s structure became much more complicated as a result of the decision to relocate the bulk of its television production operation to Spain. Much of this complexity was unnecessary and could have been avoided if the trustees had set up a new entity, owned by the charity, for the specific purpose of undertaking the Spanish broadcasting operation. Instead the charity used existing entities, set up for other purposes.

The operating model appears to have arisen as a result of the charity’s concentration on developing its services, however the failure to focus upon structural planning created issues in terms of governance and finance.

At the time the inquiry opened the charity only directly owned a dormant subsidiary, Genesis TV. Shares in two Spanish subsidiaries, Revelation TV Europe and Genesis 247, were held “on trust” for the charity by Gordon Pettie and Howard Conder, because at the time the charity did not have the necessary tax identification number required under Spanish law to enable it to hold assets and undertake commercial activity. Revelation TV Europe and Genesis 247 between them owned the assets necessary to produce and broadcast programmes for the charity.

Revelation TV Europe, which held the Spanish broadcast licence, had acquired the leasehold premises from which the charity initially broadcast in Spain, and had purchased equipment. It received funding from the charity (the vast majority of which was raised in the UK) in order to operate.

Genesis 247 purchased and held a significant quantity of equipment which was used for the production and broadcast of programmes. Funded by the charity, it subsequently purchased the freehold land upon which a purpose-built studio, also financed by the charity, was constructed.

A non-profit association, Revelation Association, was set up in Spain in 2012 to retain the paid staff and volunteers involved in the production and broadcast of the charity’s programmes. This arose because under Spanish regulations Revelation TV Europe, as a private limited company, could not engage unpaid volunteers. Revelation Association is a separate legal entity, not owned by the charity. It funded payroll for the Spanish staff, and the activities of Revelation TV Europe and Genesis 247, and whilst it received donations in its own right, it was largely funded directly by the charity.

In addition, entities associated with the charity, often by virtue of links with Howard Conder and his wife Lesley, provided funding and equipment to the charity and the other entities involved in the broadcasting operation. These included 21st Century TV, which received funds from the charity for the hire of its equipment for use by Revelation Association and Revelation TV Europe and paid the charity for permission to broadcast on the TV channel. In 2010 Revelation TV Europe was gifted to the charity by Howard and Lesley Conder, with its shares thereafter being held by Howard Conder and Gordon Pettie “on trust”. Its relationship with 21st Century TV thereafter was the subject of an agreement, but the MoU formalising the relationship was not put in place until September 2013, and the costs to be apportioned to 21st Century TV under the MoU did not start until January 2014. The income generated by 21st Century TV from the arrangement was unclear.

The position was further complicated when shares in Revelation TV Europe were transferred to Revelation Association in April 2016 by Howard Conder and Gordon Pettie. This was a significant decision of material importance to the charity, relating as it did to control of its most valuable asset. The decision-making process surrounding the transfer fell significantly short of best practice, consisting as it did of an email communication from the charity’s secretary sent to individual trustees seeking their views upon a single course of action – the transfer of the shares to Revelation Association. A meeting of the trustees to discuss the transfer was not held prior to it taking place, and this removed the opportunity for a comprehensive discussion of the potential risks of the proposed course and of any alternative options available to the trustees. At the next trustee meeting in May 2016, the Chairman advised the trustees of the steps taken before the transfer took place. This transfer of shares away from the charity effectively took the charity’s asset and main method for delivering its charitable purposes out of its control. The shares in Genesis 247 were transferred to the charity at the time the Spanish studio land was purchased in November 2015.

A substantial proportion of the cost of setting up the Spanish operations was funded by Revelation Communities SL (“Revelation Communities”), a Spanish company of which Howard Conder was the sole director. This was later repaid by Revelation Association, and Revelation Communities was wound up in 2016.

The structure also included Revelation TV Inc, a non-profit organisation which is a separate legal entity, is not owned by the charity and is located in the USA.

Inadequate separation between the charity and other entities

The inquiry found that historically the charity and its subsidiaries and associated companies were viewed and operated as one entity by the trustees.

The trustees’ failure to ensure sufficient separation of the finances of the charity and those of Revelation Association and Revelation TV Europe SL was apparent when the inquiry conducted an inspection of the charity’s books and records. Inadequate separation of the governance of the charity and associated entities was evident from the fact that Revelation Foundation trustee meetings were also meetings of the board of the Revelation Association, the two being identical in composition. ^{[footnote 1]}

The charity was heavily reliant upon donations and equipment provided by the Conders and by companies owned by them. The IM noted that fixed assets were bought from 21st Century TV by the charity and were used in studios alongside those of 21st Century TV and the Spanish entities.

The IM and the inquiry, in interviews with the trustees, found that some of the trustees were unclear as to the flow of funds between the entities and the implications of these arrangements for the charity. There was confusion amongst the trustees about the need to disclose and properly account for donations in kind such as equipment provided by the Conders or their companies.

Complexity of structure/ flow of funds

The development of a complex structure surrounding the charity had a notable effect upon the flow of charitable funds. Donations largely originating in the UK flowed out of the UK jurisdiction to finance, through Revelation TV Europe, Genesis 247 and Revelation Association, the production and broadcast of television programmes in Spain.

The complex structure and flow of funds – the transfers were for a period of time treated not as donations but as loans - created a situation whereby inter-company balances owed to the charity grew substantially, resulting in Revelation TV Europe and Genesis 247 having negative balance sheets.

The IM found the negative inter-company balance sheets of Revelation TV Europe and Genesis 247 posed a risk to the charity as creditors of those companies could, under Spanish law, go to court and ask for the companies to be placed into bankruptcy and their operations to cease, leading to a substantial loss to the charity not only in terms of monies owed to it by the companies, but also of the companies themselves which the charity had heavily invested in and relied upon to deliver its charitable purposes. The charity subsequently took steps to resolve the Genesis 247 and Revelation TV Europe balance sheets.

The flow of funds between the charity, Revelation TV Europe, Genesis 247 and Revelation Association did not comply with Spanish transfer pricing regulations. Transfer pricing is the setting of the price for goods or services sold between related legal entities, for example a parent and subsidiary company. The transfer price should match that which would be charged in an independent, arm’s length transaction. This was directly applicable to a structure within which Revelation TV Europe provided broadcasting services to Revelation Association and the charity, and it gave rise to a potential vulnerability under the Spanish tax regime.

Conflicts of interest

Trustees did not always appropriately identify and manage conflicts of interest and/or of loyalty and for a long time the charity did not have a conflicts of interest policy. The charity and its subsidiaries and associated companies were viewed and operated as one entity and there were insufficient trustees on the board of the charity who did not also sit on the Revelation Association Board to manage conflicts, for example, in determining the proportion of the charity’s income to be applied to Revelation Association.

Even after the introduction of a conflicts of interest policy it was not always clear that potential conflicts were identified or acted upon. ^{[footnote 2]} In cases where family members had been employed there was no clear evidence of open and fair recruitment procedures having been followed. However, the inquiry found that the arrangements had not caused the charity to have suffered a loss.

Studio land purchase

The charity funded the purchase by Genesis 247, in November 2015, of freehold land in Spain upon which a purpose-built studio, also financed by the charity, was subsequently constructed. At the time the decision was taken the cost of the land purchase alone was €950,000, with a further €1,000,000 estimated for construction and €500,000 for fitting out. The audit trail in respect of the purchase of the studio land did not evidence an adequate decision-making process for a venture of this magnitude.

The Commission’s published guidance on decision making ^{[footnote 3]} makes it clear that trustees must consider all relevant factors when making decisions, and this includes assessing the risks/benefits of the proposed decision. The charity had been looking for an appropriate site for the studio since early 2014, and the decision to go ahead with the land purchase was made in May 2015. However, a risk assessment was produced only after the last meeting of the trustees prior to the purchase, although the trustees stated that the risks had been considered previously. Given the size of the proposed transaction the Commission would have expected the trustees to have conducted a full risk assessment at a much earlier stage.

Following his appointment in June 2015 the IM obtained professional advice regarding the recovery of the IVA (a Spanish tax equivalent to VAT) on the land purchase which, based on the charity’s budget figures for the purchase of land and construction of the studio, could be as much as €386,926. The potential for recovery of IVA was highlighted to the trustees by the IM and subsequently acted upon by the trustees.

Governance / Trustee duties and responsibilities

The IM reported that not all trustees clearly understood their roles and responsibilities as trustees, or the distinction between the charity and the other entities, including the operating model, how operations were funded and how the funds flowed around the various entities associated with the charity. ^{[footnote 4]}

The IM undertook meeting with the trustees and with Howard Conder and made a number of findings, including:

• there was a lack of awareness of the distinction between the role of trustees and management
• decision making processes were often informal, and decisions were consequently not always clearly recorded
• the distinction between matters to be dealt with by trustees and management was blurred, and matters related to governance and procedures were given less prominence than operational matters
• the majority of the trustees were not fully aware of the difference in governance between a charity and a commercial company
• it was clear that a number of trustees were not fully aware of the need to account for and then properly disclose donations in kind
• there was some confusion on the part of the trustees about the need to disclose related party transactions in the accounts
• a number of trustees also commented that the charity would not be able to survive financially without contribution from the Conder family both by means of financial donations and donations in kind

The IM noted there was no formal strategy document addressing the needs of the charity in terms of its future development.

Minutes / record keeping

Trustees failed to keep sufficiently detailed minutes of meetings to be able to demonstrate that matters of importance were discussed fully.

The Commission noted a number of examples of inadequate minute keeping, including in respect of matters of such material significance as the move to Spain, and substantial investment in costly studio equipment. Whilst minutes may have referred to action to be taken (or indeed action that had already been taken), matters including the trustees’ decision-making process, competitive tendering processes, risk assessment or scope of appointments had notably not been included. ^{[footnote 5]}

The IM noted there was very little evidence of risk assessments having been carried out by the charity for major purchases or when important decisions were taken by the trustees as a board. On occasions significant equipment purchases and decisions appeared to have been taken, by Howard Conder, but without professional advice or consultation with the board of trustees.

Financial management

The trustees failed to have in place sufficient financial controls to adequately protect the charity’s assets or its substantial financial investment in Spain.

Revelation TV Europe and its associated broadcasting licence were ‘gifted’ to the charity by Howard and Lesley Conder in 2010, subject to a condition that 21st Century TV Ltd had access to up to 42 hours per week airtime on Revelation TV and retained any advertising revenue that was generated during that time. 21st Century was to bear the costs of its broadcasting hours and these were to be calculated upon an agreed basis. The details of the arrangement were discussed at a trustee meeting in April 2010. In April 2012 the charity obtained advice from a firm of accountants regarding its financial relationship with Revelation TV Europe. This identified issues with the transfer of funds from the charity to Revelation TV Europe (the accountants stating that the charity was restricted from making loans and would potentially risk its charitable status by doing so). However, it was not until some three years after the gift of Revelation TV Europe was made, in September 2013, that a MoU was put in place between 21st Century TV and the charity.

The trustees had not recognised or understood the financial risk posed by the organisation’s vulnerability to penalties under Spanish transfer pricing regulations, specifically where Revelation TV Europe was providing broadcasting services to Revelation Association and the charity. There was a lack of controls surrounding the pricing of goods and services that were transferred around the organisation, and necessary paperwork had not been maintained resulting in a vulnerability to potential penalties. This was identified by an advisory firm appointed by the IM after his appointment in 2015 and remedial action undoubtedly saved the charity significant future costs.

The IM reported confusion in the trustee body over funding, particularly (a) monetary and donations in kind from the Conder family and (b) the implications of movement of funds between entities. The IM noted that sometimes the decision to make payments from a certain bank account was based on there being funds available rather than whether those funds related to charitable activities.

Notwithstanding the issues set out above, the Commission and the IM noted that the charity’s accountant provided regular management accounts, which detail actual figures as against budgeted figures with explanations as to why there were variances. In addition, there is evidence that the charity:

• retained financial records for a period of 6 years
• prepared annual reports and statutory accounts meeting legal regulations
• had a reserves policy in the trustees’ annual report
• accounts were audited and filed on time

The IM found the charity’s reserves stood at £123,206 in the financial year ending (“FYE”) 31 December 2014. The IM considered that for the charity to become more self-sufficient and fund its equipment needs the level of reserves should increase to £300,000 but noted that the trustees had indicated a desire to address the issue, and had increased the reserves to approximately £200,000 by the following year.

The Commission is aware that since the opening of the inquiry steps have been taken to obtain a NIF number for the charity (the tax identification number required under Spanish law for the charity to undertake commercial activity and hold assets in that country), in November 2014; and a Spanish bank account in the charity’s name was opened in December 2014.

Account for property / asset register

The IM noted that the asset register he examined in the course of his appointment was not fit for purpose. Without a proper asset register the charity was unable to easily evidence which assets belonged to it, particularly as the equipment located in the UK and Spanish studios, whilst purportedly owned by a number of different entities, was viewed as one single pot of assets by the entities that utilised it and broadcast from the studios.

The list seen by the inquiry during the February 2015 books and records inspection was a list drawn up for insurance rather than accounting purposes and compiled on the basis of the country in which the assets were located rather than by which entity owned them. It contained insufficient detail to be an effective accounting tool.

A more detailed register was subsequently provided to the inquiry. ^{[footnote 6]}

Policies

At the time of the IM’s appointment the charity had inadequate written policies and had operated for a long time without any at all. The trustees had not devoted sufficient time and resources to ensure that the necessary processes, controls and policies had kept pace with the growth and success of the charity.

At the time the inquiry opened a conflict of interest policy had only relatively recently been created, the charity having for a long time operated without a written policy, although there were references in minutes to indicate the trustees did sometimes recognise conflicts.

The charity had inadequate internal financial controls and no expenses policy, a matter of concern particularly given the charity’s significant income and its operation as part of a group structure which involves the transfer of significant funds outside of the jurisdiction of the Commission and the High Court.

Obtaining appropriate professional advice

Trustees failed to obtain appropriate professional advice before taking important strategic decisions which would have a significant impact on the charity and its property.

The decision to move to Spain was of major importance in the development of the charity, and preparations for the move, which largely took place in 2010, appear to have begun as early as 2006. There is, however, no evidence that the trustees took appropriate advice prior to the move taking place, and it would appear the charity obtained advice from a firm of accountants in relation to transferring operations to Spain in January 2012, some 2 years after the event.

The result was that for convenience, and in order to adapt to the prevailing regulatory regime, existing corporate entities that had already been incorporated for other purposes were utilised by the charity rather than the most appropriate vehicle to undertake the Spanish operations being adopted. Appropriate advice taken in the course of planning the move may have resulted in a simpler organisational structure being adopted.

The trustees on occasion obtained professional advice from advisors appearing in person at joint meetings of the charity and Revelation Association. This meant that it was not always clear which entity the advisor was advising, ^{[footnote 7]} and indeed it remains unclear if any advice was ever given that was solely for the interests of the charity.

Fundraising

In March 2014, the charity launched the Building Appeal, initially with the goal of raising funds to acquire a new studio in Spain. The Building Appeal Fund was initially the subject of a 5% deduction to cover the expense of administering the appeal, the funds being transferred from the restricted Building Fund to the unrestricted General Fund. During the year ending 31 December 2014, the charity charged £45,000 to the Building Appeal for this purpose. There is no evidence either that a calculation took place to arrive at the figure of 5%, or that a deduction of any amount was communicated to donors at the time donations were pledged to the charity. The effect of this was that donors might have given to the appeal on the basis that 100% of their donation was going to the Building Appeal, whereas in practice this was not the case. The inquiry raised this issue with the trustees and funds were returned to the Building Fund in 2016.

Initial fundraising appeals in respect of the new studios were potentially misleading in that they did not make it clear that funds were being raised in respect of two separate studios, one in England and one in Spain. This created an increased risk that the trustees would not comply with donors’ intentions.

Information and updates to the public upon the building appeal were infrequently posted upon the Revelation TV website in the early years of the appeal but this has improved recently. There were 18 such updates in 2019 and 5 the previous year.

Influence of Howard Conder

At the time of the IM’s appointment Howard Conder, whilst not a trustee, held significant power and influence over the charity’s decision-making process.

Howard Conder was a founding trustee of the charity who resigned in February 2010. He is a presenter on Revelation TV and was at the time of the IM’s appointment also on the Management Committee, a group with no formal terms of reference. It appeared to be the case that the Management Committee was responsible for the day to day activities of not just the charity but also Revelation TV Europe SL and Revelation Association.

The charity was financially reliant upon the support of Howard and Lesley Conder, who contributed significantly either personally or through companies under their control to the establishment of the Spanish broadcasting operation, and the equipment and facilities required. For a number of years, the Conder family home in London was used as the studio for programmes produced in the UK.

The IM found that Howard Conder, as the founder of the charity and the driving force behind it, was still very involved in the day-to-day running of the charity and to all intents and purposes was effectively a “shadow trustee”. In discussion with the IM, Howard Conder accepted that this was the position. The IM observed that it would make sense to clarify and set out limitations to Howard Conder’s role within the charity.

The IM considered the option of Howard Conder being invited to once again become a trustee of the charity, and cautioned that if he was not to do so the other trustees must ensure that he does not act as a shadow trustee and exert any control over their actions. The Commission was subsequently informed that Howard Conder had declined the trustees’ invitation to become a trustee and that he had withdrawn from active leadership involvement in the TV station. Whilst his involvement may have reduced, Howard Conder remains a central figure in the broadcasting schedule at Revelation TV and is identified on the Revelation TV website, along with Lesley Conder, as a member of the Revelation TV Leadership Team.

Lesley Conder remains a trustee of the charity and a presenter on Revelation TV. The Conder home in the UK has ceased to operate as a studio.

Conclusions

The Commission has not seen any evidence to suggest that charitable funds have been misappropriated.

The inquiry found evidence of governance failures at the charity, by those trustees who were in post at the relevant time, which it considers to be mismanagement. In particular:

• a failure to clearly understand their roles and responsibilities as trustees
• not always obtaining appropriate professional advice upon strategic decisions having a significant impact upon the charity and its property, before those decisions were taken
• a failure to ensure sufficient separation in the governance and finance of the charity, its subsidiaries and associated companies
• not always appropriately identifying and managing conflicts of interest
• not having in place the policies and controls required of a charity and a business
• a failure to keep sufficiently detailed minutes of meetings to be able to demonstrate that matters of importance were discussed fully.
• not properly accounting for the charity’s property in the charity’s accounts and in a detailed register of the charity’s assets.

However, the trustees had recognised the regulatory concerns of the Commission and had taken remedial action over the course of the time the inquiry was open.

Whilst the highest risk areas resulting from poor governance have been addressed, the Commission is concerned to ensure that the current momentum in progress and improvements is maintained in the longer term. As a result, the trustees have been issued with an Order pursuant to Section 84 of the Charities Act 2011 directing the trustees to take further action necessary to address outstanding concerns.

Regulatory action taken

The Commission opened a statutory inquiry into the charity on 8 September 2014.

The inquiry used information gathering powers under section 47 of the Act to direct the charity’s accountants to provide copies of documents and under section 52 of the Act to obtain financial information about the charity from its bank.

In January 2015 the Commission secured an undertaking from the trustees (1) not to transfer funds or assets other than those required for day to day operational activities out of the UK, and (2) not to enter into any new Contract with any organisation or individual connected to the Trustees or their family members, without first obtaining the approval of the Commission.

The inquiry undertook meetings with the trustees and in February and March 2015 an inspection of the charity’s books and records.

On 11 June 2015 the inquiry used its temporary protective powers to appoint Brian Johnson, a licenced insolvency practitioner, as IM, to conduct a review and report to the Commission with recommendations on the charity’s relationships with the other entities associated with the broadcasting operation; its governance and model of operation. On 9 September 2016 the scope of the IM appointment was varied to include renegotiating the terms of the MoU with 21st Century TV. There followed a significant delay, during which the inquiry sought updates from the IM and relayed the trustees’ concern that the IM had been in very limited contact with them. However, on 9 September 2018 the IM confirmed the commercial agreement between the charity and 21st Century TV (to replace the MoU) was signed. The IM was discharged 13 September 2018.

The costs of the IM’s appointment were met out of the charity’s funds. The total cost of the IM appointment was £86,048.44 (inclusive of VAT). Of this amount, the IM’s fee for the work was £71,130.12, and disbursements were £14,918.42.

The trustees remained responsible for the day to day management of the charity throughout the IM’s appointment.

The inquiry used its remedial powers under section 84 of the Act to direct the trustees to complete specific actions that were in the interests of the charity.

The substantive phase of the inquiry was closed on 2 August 2019.

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.

Decision making and high-risk decisions

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.

Further information can be found in the Commission’s guidance:

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

It’s your decision: charity trustees and decision making (CC27)

When considering high risk decisions particularly those involving significant sums of money, it is difficult to see how trustees could discharge their legal duties without taking and properly considering independent professional advice as they would be exposing the charity and its property to significant risk by failing to do so. Donors and beneficiaries have a right to expect trustees to take appropriate steps to protect property of the charity.

Conflicts of interest

Trustees have a legal duty to act only in the best interests of their charity. If there is a decision to be made where a trustee has a personal or other interest, this is a conflict of interest and you won’t be able to comply with your duty unless you follow certain steps. Trustees must prevent any conflict of interest from affecting the decision making.

Trustees must actively manage any conflicts of interest. They should step back from or avoid any situation where a conflict exists or is likely to arise. If it is clear the conflict cannot be adequately managed, even if this means, for example, that additional disinterested trustees are appointed or that the affected trustees resign. It is vital that trustees avoid becoming involved in situations in which their personal interests may be seen to conflict with their duties as trustees.

The Commission recognises that it is inevitable that conflicts of interest will occur. The issue is not the integrity of the trustee concerned, but the management of any potential to profit from a person’s position as a trustee, or for a trustee to be influenced by conflicting loyalties. Even the appearance of a conflict of interest can damage the public’s trust and confidence in the charity, so conflicts need to be managed carefully.

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 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.

Appendices – Structure Charts

Appendix 1 – Organisational structure, June 2015 (extracted from Interim Manager’s report)

The chart displays the organisational structure of the charity and its related entities as at 11 June 2015.

Revelation TV Inc, a non-profit organisation which is a separate legal entity and is not owned by the charity, is located in the USA.

The UK charity, Revelation Foundation, has a wholly-owned subsidiary, Genesis TV, which is dormant.

Shares in two Spanish private companies, Genesis 247 SL and Revelation TV Europe SL, are held on trust for the charity by Gordon Pettie and Howard Conder. Revelation Association is a non-profit association, also located in Spain.

There are three connected parties: 21st Century TV Limited, Revelation Communities SL and Revelation TV.

Appendix 2 - Flow of funds, June 2015 (extracted from Interim Manager’s report)

The chart displays the flow of funds around the charity and its related entities as at June 2015.

Funds flow from the UK charity Revelation Foundation to Revelation TV Inc in the USA.

Funds flow from the UK charity Revelation Foundation to the Spanish private companies, Genesis 247 SL and Revelation TV Europe SL, to the Spanish non-profit association Revelation Association, and to the connected party 21st Century TV Limited.

Funds are also received into the Spanish non-profit association Revelation Association from Spanish donors and flow from Revelation Association to the Spanish private companies, Genesis 247 SL and Revelation TV Europe SL.

Funds flow back to the UK charity Revelation Foundation from the connected party 21st Century TV Limited.

Appendix 3 – Organisational structure, August 2019

The chart displays the organisational structure of the charity at the closure of the statutory inquiry.

Revelation TV Inc, a non-profit organisation which is a separate legal entity and is not owned by the charity, is located in the USA.

The UK charity, Revelation Foundation, has two wholly-owned subsidiaries, Genesis TV, which is dormant and located in the UK, plus Genesis 247 SL, a private company which is located in Spain.

Revelation Association, a Spanish non-profit organisation owns Revelation TV Europe SL, a private company, both are located in Spain.

There are two connected parties: 21st Century TV Limited and Revelation TV.

1. In an Order provided to the trustees in August 2019 the Commission directed the trustees to take further action in respect of this issue. ↩

2. In an Order provided to the trustees in August 2019 the Commission directed the trustees to take further action in respect of this issue. ↩

3. It’s your decision: charity trustees and decision making (CC27) ↩

4. In an Order provided to the trustees in August 2019 the Commission directed the trustees to take further action in respect of this issue. ↩

5. In an Order provided to the trustees in August 2019 the Commission directed the trustees to take further action in respect of this issue. ↩

6. In an Order provided to the trustees in August 2019 the Commission directed the trustees to take further action in respect of this issue. ↩

7. In an Order provided to the trustees in August 2019 the Commission directed the trustees to take further action in respect of this issue. ↩