Decision

Charity Inquiry: double defaulter charities between April 2021 and March 2022

Published 1 September 2022

Applies to England and Wales

Background

All registered charities must provide information annually to the Charity Commission (‘the Commission’). The rules vary according to the charity’s size and structure. Registered charities with:

• income up to £10,000 should complete the relevant sections (income and expenditure) of the annual return
• income above £10,000, and all Charitable Incorporated Organisations (‘CIOs’), must prepare and file an annual return
• income above £25,000, and all CIOs, must also file copies of their trustees’ annual report and accounts

For further information see the Commission’s online guidance on preparing a charity annual return.

There is public interest in the issue of charities’ non-submission of annual returns, reports and accounts (‘annual documents’), particularly where the non-compliance is over a long period of time. As a result, on 20 September 2013, the Commission opened a statutory class inquiry (‘the inquiry’) into charities that were in default of their statutory obligations to meet reporting requirements by failing to file their annual documents for two or more years in the last five years and met certain criteria, including that:

• the charities were recently (or in the case of charities that would become part of it in due course, would be) given final warnings to comply by a specified date
• on the first working day after the specified date the charities were still in default (partially or otherwise)

The inquiry periodically identifies and brings charities into it that meet the criteria and have a last known annual income over a certain threshold. In order to ensure the inquiry’s strategy continued to be risk-based and proportionate, it was updated on 1 November 2019 to consider additional factors, when deciding which charities to bring into the inquiry.

Pre-inquiry stage

Work carried out at the pre-inquiry stage by the Commission includes issuing a final warning to charities that they will be placed into the inquiry if they fail to submit outstanding annual documents by a specified date. A number of charities proceed to submit their outstanding documents within the Commission’s deadline. The impact of the Commission’s work at the pre-inquiry stage during the reporting period was that over £4 million of charitable income in respect of 14 charities is now accounted for.

Issues under inquiry

The inquiry is confined to dealing with the charity trustees’ misconduct and/or mismanagement and remedying the non-compliance in connection with their failure to submit the required annual documents to the Commission within the statutory deadlines.

Findings

During the inquiry period (April 2021 – March 2022):

• 21 charities, listed in Annex A, submitted their outstanding annual documents and continue to operate as charities. This resulted in over £35 million of charitable income being accounted for
• 5 charities, listed in Annex B, were found to have ceased to exist or do not operate and were therefore removed from the register of charities
• 2 charities under the class inquiry were referred to separate inquiry during the reporting period

More details about the charities listed in Annex A and B are available on the register of charities (‘the register’).

Any regulatory issues arising from the inquiry’s scrutiny of the annual documents received have been followed up with the respective charities separately.

Official Warnings

In accordance with the inquiry’s revised strategy, updated in November 2019, during the period three charities that persistently failed to submit their accounting information were issued with notice of the Commission’s intention to give them an Official Warning under section 75A of the Charities Act 2011 (‘the Act’). Two out of the three charities filed their outstanding documents following receipt of the notice, but the remaining one did not and so was issued with an Official Warning – which can be viewed on its respective entry on the register:

Welling Community Centres Trust: 1157317: the Official Warnings require the trustees to comply with their legal obligations to submit the outstanding accounting information. Since the publication of this report the Welling Community Centres Trust is now up to date with its statutory filing requirements.

Where the class inquiry identifies additional serious regulatory concerns, these are referred for consideration under a separate statutory inquiry. The two charities that were referred to a separate inquiry during the reporting period are as follows:

Citygate Christian Outreach Centre - 1111470: serious regulatory concerns were identified regarding the administration of the charity following an examination of its accounts. A separate inquiry was opened on 20 August 2021. See the published press release dated 24 September 2021 for further information.

Shire Way Community Association - 283301: there has been repeated failure to comply with statutory reporting obligations and other concerns identified regarding the administration of the charity. A separate inquiry was opened on 13 January 2022. See the published press release dated 26 January 2022 for further information.

Conclusions

The trustees of the charities, listed in Annex A and B, were in default of their legal obligations to file their annual documents and keep their registered details up to date. The Commission regards this as misconduct and/or mismanagement in the administration of the charities.

As a result of its pre-inquiry and inquiry work during the reporting period, the Commission ensured that those charities that continue to operate complied with their legal obligations to submit their annual documents. In total, a further £40,630,826 of charitable income is now accounted for (£4,648,604 at the pre-inquiry stage and £35,981,922 at the inquiry stage).

The Commission also arranged for five charities to be removed from the register which it considered had ceased to exist or did not operate.

Charities ceased to be part of the inquiry when they were no longer in default of their accounting obligations and filed the missing annual documents; or the Commission was satisfied that they had ceased to exist or do not operate; or they had been issued with an Official Warning by the Commission.

Regulatory action taken

The inquiry used the Commission’s information gathering powers under section 52 of the Act 49 times during the period to order and obtain bank records and financial information of the charities relating to the years with missing annual documents. These were used in connection with the inquiry’s examination of the annual documents once they were received.

The inquiry exercised powers under section 84 of the Act 33 times during the period to direct the trustees to prepare and complete the relevant missing annual documents for the charities and provide copies of these to the Commission.

The inquiry also exercised powers under section 75A of the Act in the inquiry during this period, issuing an Official Warning to one charity.

The Commission provided regulatory advice and guidance about the trustees’ duty to file the charities’ annual documents.

Issues for the wider sector

Failure to submit the annual documents to the Commission may be a criminal offence. The Commission also regards it as mismanagement and/or misconduct in the administration of the charity.

Providing timely, accurate and informative financial information that will help funders, donors, beneficiaries and others to understand the charity and its work, will encourage trust and confidence in it.

Annex A

The following 21 charities submitted their outstanding annual documents and continue to operate as charities:

The Joshua Wilson Brain Tumour Charity: 1151518

Millbrook Combined and Nursery School Fund: 1103983

The Bender Family Trust: 1163501

Griffin Association: 292348

Grimsby Central Hall Trust: 1107521

The Jasoda Foundation: 1170925

The Tendring Furniture Scheme: 1108869

Citygate Christian Outreach Centre: 1111470

Celestial Church of Christ Winners Parish: 1153314

Guildford City Swimming Club: 1148907

Maritime + Engineering College North West: 1071609

Ghausia Committee Aylesbury (Aylesbury Mosque): 288864

Mountfield Pleasure Ground: 305274

Hawkinge Community Centre: 1120519

Indian Muslim Patel Society: 517213

Wellington Methodist Church: 1130091

Sharedimpact: 1145471

Sharedimpact Foundation (UK) Limited: 1158243

King George’s Field, Mile End: 1077859

Muhammadi Trust of Great Britain and Northern Ireland: 265673

Phenomen Trust: 1161745

Annex B

The following 5 charities were found to have ceased to operate and were therefore removed from the register of charities.

The Big First Aid Project: 1139794

Acton Community Forum: 1140149

Nirvair Khalsa Jatha UK: 1174418

Centre of Life Church International: 1078127

The A690 Youth Initiative: 1103271