The Charity Commission, the regulator of charities in England and Wales, has concluded that 2 trustees were responsible for acts of mismanagement and misconduct in their running of a North Lincolnshire cancer therapy centre.
Odyssey (Tendercare) Limited was registered in 2004 and provided therapies and healing treatments such as reiki, aromatherapy and reflexology to people with cancer and their carers; the charity was based in Barton-upon-Humber in North Lincolnshire. The charity went into liquidation in 2014.
The commission opened a statutory inquiry into the charity in 2009 to investigate, among other things, the trustees’ decision making and the complex legal structures they created to run the charity. These structures included 2 trading subsidiaries, one of which ran a hotel business, and a social enterprise set up by one of the trustees.
In a report published today, the commission concludes that, while the charity may have provided some valuable services to people with cancer, the primary focus of the trustees was on running and maintaining the hotel business. The charity’s income, including a donation of around £3 million, was used to fund the hotel business with little to no return to the charity. The structure chosen by the founding trustees to fund and manage the charity was not a viable business model.
During the inquiry, the commission identified acts of misconduct and breaches of fiduciary duty on the part of 2 of the charity’s trustees. Both these 2 individuals are now disqualified from trusteeship.
The regulator’s report makes clear that the only reason it did not use its powers to remove these 2 particular trustees in 2013, was that at that point it would have left the charity with no trustees. Finding new trustees was unlikely and there were insufficient funds in the charity to appoint an Interim Manager.
Michelle Russell, Director of Investigations, Monitoring and Enforcement at the Charity Commission, said:
The 2 dominant trustees of this charity failed in their duties. Not only did they fail to make decisions in the charity’s best interests, they also acted at times without the knowledge of other trustees and in breach of directions from the commission. The 2 trustees were also less than open and transparent in their dealings with us.
A number of issues arose in this charity that other trustees should be aware of, particularly trustees of charities which have trading companies. There are lessons on managing conflicts of interest, the care needed in investing and borrowing funds and not exposing a charity to undue risk. Investing in a company which is not economically viable, and has no real prospect of becoming so, is not a prudent investment and diverts charitable funds away from its beneficiaries, in this case, people with cancer and their carers.
There are also reflections for the commission. This was a complex inquiry, involving other agencies and varying levels of cooperation from the trustees. Various orders against the trustees in the inquiry were not complied with. The inquiry’s initial approach was to work consensually with the trustees to try and put the charity back on a secure footing, but later changed its approach and sought to petition for the charity to be wound up, all of which resulted in an unusually long running case.
Under our current more robust regulatory approach, we would be much quicker to take decisive regulatory action. It also highlights the importance of a more effective power for the commission itself to direct the winding up of a charity, which we have asked for in the Protection of Charities and Social Investment Bill, currently in Parliament.
The full report is available on GOV.UK.
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 and charities are held to account.