Love Saves the Day Foundation: case report
Published 28 June 2018
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1. About the charity
Loves Saves The Day Foundation was a Charitable Incorporated Organisation registered in June 2015. Its charitable objects were ‘such charitable purposes for the public benefit as are exclusively charitable according to the laws of England and Wales as the trustees may from time to time determine.’
2. Why the Commission got involved
Concerns were raised about the charity in the media. In particular, we were concerned by reports that information in the charity’s accounts regarding its expenditure did not appear to correspond with information on the charity’s website.
The charity’s accounts for the financial year ending 31 May 2016 reported no income or expenditure. However, the charity’s website indicated that the charity had made significant donations to a number of projects during this time period.
Where there are questions about how a charity is reporting on its activity and finances, the Commission has an important role to play in ensuring trustees are properly fulfilling their duties.
3. The action we took
We closely examined the charity’s records, including its annual return, trustees’ annual report (TAR), accounts and website. It was clear that there was a discrepancy between what was being reported in the charity’s TAR and accounts and what was shown on the charity’s website.
We were aware that, at the time of registration, the charity was due to receive a £10,000 donation. However no explanation had been provided in the 2016 or 2017 accounts as to what had happened to this money. In order to ensure that there had been no misuse of charitable funds, we required the trustees to provide additional documentation including bank statements.
4. What the trustees told us
The trustees explained that the donations referred to on the website had been made in a personal capacity by one of the trustees, who had also provided funding for a number of visits carried out by the charity. The trustees also informed us that Love Saves The Day Foundation had been inactive and they had taken the decision to close the charity.
5. What we found
After checking bank statements we confirmed that the £10,000 was never received by Love Saves The Day Foundation. Instead, the trustees had instructed the donor to transfer the funds directly to another charity with objects that were consistent with the charitable aims of Love Saves The Day Foundation, as is required under charity law.
If a trustee provides funding to a charity, then it must be declared as income in the charity’s accounts, along with any related expenditure. By not doing so, the trustees were not properly accounting for all charitable funds. We therefore considered that there had been a serious flaw in the administration of this charity, and provided regulatory guidance to ensure the trustees fully understood their financial reporting responsibilities.
When closing a charity, there are specific processes that trustees must follow in order to ensure it is wound up properly and can be removed from the register of charities. We provided formal advice on these requirements, and the trustees subsequently submitted accounts for the financial year ending 31 May 2017 stating formally that they intended to dissolve the charity.
We also found that the charity’s website risked misleading the public due to the charity’s inactivity. We therefore set out in clear terms to the trustees that it must be taken offline as a matter of urgency.
6. Conclusions
Whilst we did not find evidence of misuse of charitable funds, we concluded that the trustees’ management and administration of Love Saves The Day Foundation was inadequate.
It is, rightly, concerning to the public if charities do not accurately or clearly report how they are fulfilling their charitable purposes, so the Commission’s work to hold charities to account is vital to maintaining public confidence in charities more generally.
7. The impact of our involvement
Where we become aware of inconsistencies in the information that charities are reporting, we will investigate. Where it is proportionate to do so, we will seek clarification from trustees or from external sources of information such as banks or funding bodies.
In this case, we obtained satisfactory evidence which allowed us to verify and reassure the public that charitable funds had been used appropriately.
We provided advice and guidance under section 15(2) of the Charities Act 2011 so that the trustees were aware of their duties under charity law and we have ensured that the trustees have followed the necessary steps to formally close the charity.
The charity was removed from the register of charities on 31 May 2018, and its website has now been taken offline.
8. Wider lessons for trustees
Transparency is a key principle of running a charity, and trustees have a duty to ensure that their charity is accountable, both to the general public and the regulator. This duty includes making sure that their charity’s trustees annual report and accounts meet accounting and reporting requirements. Trustees have a legal obligation to include certain information about their charity’s activities, income and expenditure in their annual report and accounts. Further information can be found in our guidance on charity reporting and accounting.
Trustees have independent control over, and legal responsibility for, a charity’s management and administration. Setting up a charity is therefore a serious commitment which carries important responsibilities. More information can be found in our guidance on How to set up a charity (CC21a) and The essential trustee: what you need to know, what you need to do (CC3).
In this case, the trustees were cooperative with the Commission and provided us with the information that we required to enable us to fulfil our regulatory functions. However, in circumstances where trustees are unable or unwilling to provide us with the information that we need, we have powers to gather information under Sections 47 and 52 of the Charities Act 2011. These powers allow us to order or direct any person to provide information to us which is relevant to the discharge of our functions. The use of Section 47 will be specifically in connection with a statutory inquiry. Section 52 gives a broader power to seek information that is relevant to the discharge of any of our functions and can be used whether or not an inquiry is open.