Decision

Charity Inquiry: The Macbeth Memorial Trust

Published 5 April 2023

Applies to England and Wales

The Charity

The Macbeth Memorial Trust (‘the charity’) was registered on 25 October 2016. It was governed by a trust deed dated 19 June 2014 (amended by Deed of Variation on 02 September 2016).

The charity’s objects were ‘to further such charitable purposes (charitable under English law) as the trustees see fit from time to time.’

The charity was removed from the Register of Charities on 06 March 2023 and is recorded on the Commission’s Register as a removed charity

Background and Issues under Investigation

The Commission had been engaged with the charity since October 2020, in relation to its overdue accounts for the financial year end (‘FYE’) 31 December 2018 and the accounts which were due for the FYE 31 December 2019. Between October and December 2020, the trustees were given a number of deadlines to file the charity’s accounting information, none of which were met.

During this period, the trustees indicated that they wished to close the charity. Despite receiving guidance from the Commission on how to do this, the Commission saw no evidence that any steps had been taken to wind the charity up.

In December 2021, the trustees were sent a ‘warning of further action’ letter as the charity’s accounting information for the FYE 31 December 2018, 31 December 2019 and 31 December 2020 was overdue.

On 31 May 2022, the charity was issued with an Official Warning (‘OW’) because the charity’s accounting information remained overdue. The OW required the trustees to bring the charity’s accounting information up to date and increase the number of trustees (which was below the number required by the charity’s governing document) by 22 August 2022. The Commission did not see any evidence that the trustees had complied with the requirements of the OW by the deadline.

In September 2022, the Commission was again informed by the trustees that they wanted to close the charity and they were provided with regulatory advice and guidance under s15(2) of the Charities Act 2011 (‘the Act’). The Commission did not see any evidence that this guidance was followed.

On 24 November 2022, the Commission opened a statutory inquiry into the charity under s46 of the Act.

The scope of the inquiry was to examine:

• the extent to which the trustees are complying with their legal duties in respect of their administration, governance and management of the charity with particular regard to their accounting and reporting responsibilities and compliance with the charity’s governing document
• the trustee’s plans for the charity’s future and the charity’s viability
• the extent to which any failings or weaknesses identified in the administration of the charity during the inquiry were a result of misconduct and/or mismanagement by the trustees

The inquiry closed with the publication of this report.

Findings

Compliance with legal duties in respect of administration, governance and management

Accounting and Reporting

Charities with an income of over £25,000 must provide the Commission with an annual return, trustees annual report and accounts which have been independently scrutinised. Charities with an income between £10,000 and £25,000 must submit an annual return to the Commission and charities with an income of under £10,000 must report the charity’s income and expenditure to the Commission. Regardless of their level of income, all charities must prepare accounts and ensure these are made available on request.

A review of the charity’s accounts for the period ending 31 December 2017 found that they did not meet the required standard as there was no trustees annual report or independent examiners report.

In the FYE 31 December 2018, the charity’s income was £100,000. However, the inquiry found that the trustees had failed to prepare and provide the Commission with the necessary accounting information.

As the charity’s income fell below £10,000 in the FYE 31 December 2019, 2020, and 2021, the trustees were not required to submit any accounts or annual returns with the Commission. However, the inquiry found that the trustee’s failed to report the charity’s income and expenditure to the Commission. The inquiry also found that the trustee’s failed to prepare any accounts.

Trustees have a legal responsibility to ensure that the proper financial information is prepared and supplied to the Commission. The trustee’s failure to do so over a number of years is misconduct and/or mismanagement in the administration of the charity.

Compliance with Governing Document

The inquiry found that the charity had been operating without the required number of trustees since March 2020. The charity’s governing document (clause 9(i)) states that there must be at least three trustees. The inquiry was not informed of any steps taken to increase the number of trustees from two to three.

The charity’s governing document (clause 13) states that the trustees must hold at least two ordinary meetings a year. When asked to provide minutes of all trustee meetings, the inquiry was provided with three sets: June 2014 (prior to the charity’s registration with the Commission), September 2016 and December 2022. The trustees told the inquiry that formal meetings were “only held when required”.

Trustees are collectively responsible for a charity’s management, and they should act in accordance with the requirements of their governing document and the general law. The trustee’s failure to comply with the requirements of the governing document is misconduct and/or mismanagement in the administration of the charity.

Compliance with an Official Warning and s15(2) advice

The inquiry found that the trustees did not take any steps to provide the Commission with accounting information, appoint new trustees or wind the charity up by the deadlines provided in the OW and s15(2) advice.

Trustees must act upon regulatory advice and guidance issued by the Commission under s15(2) of the Act and must comply with Orders (including an OW) of the Commission. In some circumstances it may be a criminal offence (or contempt of court) for a charity or a trustee to not comply with an order or direction of the Commission and in this case is misconduct and/or mismanagement in the administration of the charity.

The trustee’s plans for the charity’s future and the charity’s viability

In December 2022, the trustees resolved to close the charity and bank statements show that the charity’s remaining funds were equally redistributed to three charities in accordance with the charity’s governing document.

In January 2023, the trustees applied to remove the charity from the Register of Charities and the charity was removed on 06 March 2023.

Conclusions

The Commission found that the trustees were responsible for misconduct and/or mismanagement in the administration of the charity. The trustees repeatedly failed to prepare and submit the necessary financial information and did not comply with the requirements of an OW or follow regulatory advice and guidance. The trustees also failed to operate the charity in line with the governing document.

The trustees cooperated fully with the inquiry and the Commission is satisfied that the charity has been closed in accordance with the charity’s governing document and in line with the Commission’s guidance.

Regulatory Action Taken

On 30 November 2022, 08 December 2022, and 10 January 2023 the Commission used its information gathering powers under s52 of the Act.

On 14 December 2022 the Commission issued the trustees with a direction under s47 of the Act to provide information and copies of documents.

On 06 March 2023 the charity was removed from the Register under s34 of the Act as it does not operate.

Issues for the wider sector

The purpose of this section is to highlight the broader issues arising from the inquiry 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.

Trustees of charities with an income of over £25,000 are under a legal duty as charity trustees to submit annual returns, annual reports and accounting documents to the Commission as the regulator of charities. Even if the charity’s annual income is not greater than £25,000 trustees are under a legal duty to prepare annual accounts and reports and should be able to provide these on request.

Further guidance on charity accounting can be found on GOV.UK