The Charity Commission, independent regulator of charities in England and Wales, publishes its report of its inquiry into Khalsa Centre (registered charity number 289347). The charity’s activities include the advancement of education of the Sikh community in Greater London and the Home Counties.
The inquiry was opened in October 2012 following extensive engagement with the Interim Trustees of the charity. It had become clear that as the result of an internal dispute at the charity there was a contested membership list for the charity which had prevented new trustees being properly appointed. This meant that the current management and control of the charity’s assets was in question. The Commission’s view was that there were significant ongoing risks to the charity’s assets, property and ongoing governance.
The inquiry examined the financial management and the future governance of the charity. The regulator had identified a number of specific financial concerns and following a records inspection in December 2012 these were resolved. However, the Commission did conclude that without validly appointed trustees there continued to be a general risk to charitable funds.
(see endnote 1)
Although the regulator considered appointing an Interim Manager (IM) to the charity at this point, it appeared that the charity held insufficient unrestricted funds to cover this. As a result, the regulator gave consideration to exercising its power under section 111(1)(b) of the Act to determine the membership of the charity. Whilst this action was being taken, the Commission became aware that funds which had been classified by the charity as restricted funds were in fact unrestricted. This meant that there were sufficient funds to cover the cost of an IM.
Mr Michael King of Stone King LLP was appointed to the charity in October 2013. He took over responsibility for determining the membership of the charity and overseeing an election.
During his appointment, the IM received complaints about some members of the charity, and in particular some complaints relating to one individual volunteer. The Commission widened the responsibilities of the IM to allow him to address the new allegations. He concluded that there was insufficient evidence to support the allegations and went on to focus on the election.
The IM determined the membership of the charity. He undertook a membership application process for members and all applications were verified to ensure they were valid. In total 419 members were verified and confirmed and an election for new trustees was held in February 2014; 87% of members voted in the election. The newly elected trustees took over the management and administration of the charity in March 2014.
Michelle Russell, Head of Investigations and Enforcement at the Charity Commission said:
Internal disputes in charities have the potential to grow into a situation that affects the proper governance and control of the management and administration of a charity.
Trustees have to take responsibility for resolving disputes if they arise. This might mean that they need to look into concerns raised, seek external advice and/or work with a mediator but it is imperative that they resolve the dispute before a breakdown in governance occurs that risks the operation and financial stability of a charity. This is one of the rare cases, where we have had to become involved. The best way forward here was the Commission using its legal powers to appointment of an IM but this came at a cost to the charity.
To help avoid such situations arising our advice to trustees is to keep their governance arrangements under constant review so that they recognise when problems are arising and can act quickly to resolve them and for membership charities - keep your membership records up to date and check they are accurate.
The statement of the results of the inquiry can be read in full on the Charity Commission website.
Notes to Editors
- The Charity Commission is the independent regulator of charities in England and Wales.
- Our mission is to be the independent registrar and regulator of charities in England and Wales, acting in the public’s interest, to ensure that:
- charities know what they have to do
- the public know what charities do
- charities are held to account
- Please see the full statement of the results of the inquiry for the full findings of the records inspection.