Decision

Ripon Community Link Company Limited: case report

Published 23 January 2019

This decision was withdrawn on 18 January 2022

This report has been archived as it is over 2 years old.

About the charity

Ripon Community Link Company Limited, (“the charity”) is an incorporated charity that has been registered since September 1995. It was established to support adults with a learning disability in the Ripon area by providing facilities for social education and leisure time. It also promotes any other charitable purpose for the benefit of adults with a learning difficulty.

Why the Commission got involved

The charity came under financial pressure after the terms of its service contract was enforced in full in November 2017. The charity made a serious incident report to the Commission in March 2018 when it was consulting on how it could deliver its services under a reduced budget. Then, in July 2018, the charity told the Commission that it had closed its Ripon Community House site, resulting in the loss of provision for twelve service users. A number of redundancies were made, including the role of CEO.

There was significant local media interest and a number of stakeholders expressed concerns to the Commission over:

• how the trustees had reached their final decision on the future of the charity
• the loss of provision to twelve long-standing beneficiaries and the very short notice given to them in ending their support
• alleged financial irregularities
• the financial viability of the charity

The Commission’s role is to ensure that trustees fulfil their duties and responsibilities under charity law in making decisions and governing their charity. It cannot challenge decisions properly made by trustees about the delivery of the charity’s services.

The action we took

We opened a regulatory compliance case in July 2018 to examine the concerns raised. We met with the charity trustees and held meetings with representatives of the Ripon Walled Garden and Community House Action Group (a community group comprised of ex-employees of the charity as well as the parents/guardians of the 12 beneficiaries) and Ripon Council to hear their concerns.

In October 2018 we used our powers under section 15 of the Charities Act 2011 to issue the charity with formal regulatory advice.

What we found

Trustee decision making

We reviewed evidence that assured us that the trustees’ decisions about the future of the charity and its services appeared to have been properly made and we found no serious breaches of charity law or best practice. Meeting minutes could have been better in detailing the trustees’ discussions and decision-making.

We consider that the consultation with stakeholders and the communication of the decision should have been better. In particular, as the trustees acknowledge, it was not reasonable to give beneficiaries less than ten days’ notice of the loss of their service (even if the contract only required seven days’ notice) which meant they had to find another provider at such short notice.

Some stakeholders were concerned about the trustees’ decision to buy the freehold of the Ripon Walled Garden whilst the charity was suffering financial stress. The trustees told us that they made the decision to negotiate and buy the site in 2015 when the previous owners said they would not renew the lease to the charity. They considered the purchase to be in the best interests of the charity and completed it in August 2017 when they had the necessary funds. It enabled the service to continue to the benefit of around 65 people. We were satisfied with the trustees’ explanation.

Conflicts of interest

The trustees should have considered, managed and recorded potential conflicts of interest in relation to:

• the people appointed to lead an external consultation carried out by the charity in January 2018
• external advice sought over the redundancy consultation exercise
• the appointment of the interim CEO
• aspects of staff training.

Safeguarding

There was no designated safeguarding officer for some three months between the departure of the CEO in 2017 and the appointment of a social care manager, posing a risk. Given the charity’s activities, it should have a safeguarding lead at all times as part of its strategy to keep people safe.

Governance

The structure of the charity could cause confusion because it has different types of membership, such as trustee members and beneficiary members, but it is not clear what rights (if any) they have. As beneficiaries were often referred to as “members”, some assumed they had a role in the administration of the charity.

The Board’s membership had included a representative for the beneficiaries until November 2017. We believe it to be good practice to have user involvement to help a charity achieve its aims more effectively.

Financial Mismanagement

Although we received concerns about the financial management, we found no regulatory issues to warrant our intervention.

Conclusion

We conclude that the decisions by the trustees were made in good faith in the best interests of the charity.

A charity should be open and accountable. As the decisions about the withdrawal of service provision impacted directly on the beneficiaries, we would particularly expect effective communication and consultation with stakeholders. We found this was not adequate.

We have assurance from the Board that there are no current financial difficulties and the Board has taken steps to ensure the ongoing provision of services for all the current beneficiaries and that the future of the charity is not at risk.

Impact of our involvement

The Commission provided the trustees with regulatory advice and guidance about the steps necessary to ensure they comply with their legal duties and responsibilities. The trustees have already undertaken a review of the charity’s governance following this advice and have put in place an improvement plan. They will be implementing the actions, including making changes to the governing document and developing a new strategic plan.

Wider lessons for trustees

Trustees should ensure that when their main source of income is from public sector contracts that they:

• have a full understanding of the services they will provide
• recognise any limitations in what they can deliver
• identify any unique or distinctive qualities of the service they will provide
• use all these and other relevant information to set a price for those services

Note: Charities are allowed to achieve a surplus on funding agreements.

Trustees must manage their charities within charity law. Being transparent in decision-making, no matter how hard this is to do, is vital for trustees in maintaining this trust.

Trustees have independent control and legal responsibilities in the management of and administration of a charity. Ensuring the ongoing provision of a safe environment for all beneficiaries is a serious commitment which carries a number of important responsibilities.

Find out more about trustees and decision making.