Decision

Charity Inquiry: Dar Ul Uloom Islamia Rizwia (Bralawai)

Published 17 October 2024

Applies to England and Wales

The charity

The charity was entered onto the register of charities (the ‘register’) on 18 April 1986.

The charity is governed by a trust deed (the ‘governing document’) dated 16 January 1986 as amended by resolution dated 29 November 2019. The charity’s objects, as set out in the governing document, are in summary, the advancement of education (particularly religious education), the advancement and practice of the Islamic religion, the relief of poverty, and the provision of facilities for recreation and leisure.

In line with its objects, the charity operates a mosque in the Small Heath area of Birmingham, known locally as Central Jamia Mosque Ghamkol Sharif. The charity also operates an education centre (‘the education centre’).

The charity’s entry can be found on the register of charities.

Issues under Investigation

In May 2019, the Charity Commission (‘the Commission’) opened a regulatory compliance case into the charity because of a safeguarding incident that took place at the education centre. The Commission found that no safeguarding policies or procedures for the education centre were in place at the time the incident occurred. The education centre was temporarily closed following the safeguarding incident.

In regulatory advice and guidance issued under section 15(2) of the Charities Act 2011 (‘the Act’) dated 22 September 2019, the then trustees were told by the Commission that it was a serious breach of trustee duties not to take reasonable steps to protect individuals who come into contact with the charity from harm. The Commission subsequently closed its engagement with the charity and issued further regulatory advice and guidance in accordance with section 15(2) of the Act. The advice and guidance was intended to enable the trustees to remedy the issues identified and to reduce the risk of harm to individuals who come into contact with the charity.

On 5 November 2021, the Commission carried out a monitoring inspection of the charity. As a result of its inspection, the Commission had regulatory concerns that:

• the trustees had failed to ensure the implementation of safeguarding policies or procedures
• the trustees either failed to implement or had neglected to adhere to other policies and procedures in relation to the use of social media, specifically in respect of a number of social media posts made by trustees and staff
• the trustees had failed to comply with their legal duties under charity law to submit the charity’s annual return, trustees’ annual report and accounts (‘annual accounting documents’) for the financial years ending 31 March 2019 and 31 March 2020 on time and were qualified by the charity’s auditor

On 18 November 2021, for the reasons set out above, the Commission opened the inquiry into the charity using its power under section 46 of the Act. The opening of the inquiry was communicated to the trustees, by email, on 19 November 2021.

Scope of the inquiry

The inquiry was opened to examine the following regulatory issues:

• the trustees’ failure to ensure that the charity’s policies and procedures relating to safeguarding were complied with
• the conduct of trustees and senior management on social media, and whether they acted in accordance with the charity’s social media policy
• whether there are unmanaged conflicts of interest in relation to working with partners
• general governance concerns including financial controls, the making and recording of key decisions and securing proper application of charitable funds.

Section 84 order

On 19 November 2021 the inquiry exercised the Commission’s power under section 84 of the Act and made an order to address governance issues. The section 84 order required the trustees to take specified action which the Commission considered to be expedient in the interests of the charity. The actions were to:

• ensure compliance with all aspects of the charity’s child protection policy
• ensure compliance with the charity’s safeguarding and protecting people policy
• take action to finalise the Charity’s drafted code of conduct and once enacted the trustees must ensure compliance with all aspects of it
• ensure the Charity’s annual return, trustees’ annual report and accounts for financial year end 31 March 2020 are filed on time in accordance with the obligations under the act
• conduct a review of the charity’s governing document, taking professional advice as appropriate, and update and/or amend the governing document in accordance with the outcome of the review
• finalise the Charity’s draft social media policy and ensure compliance with all aspects of it

Findings

Concerns about safeguarding and governance

The trustees informed the Commission that the education centre closed in November 2021 whilst action was being taken to ensure compliance with the section 84 order. While it was closed, the trustees reviewed and ensured compliance with their safeguarding policies. The trustees subsequently confirmed, and provided evidence of, DBS checks that had been carried out for all of the education centre’s employees and advised that designated safeguarding leads had been appointed and trained appropriately.

The trustees adopted a child protection policy in February 2022 and confirmed that it had been issued to all staff and volunteers. The education centre was temporarily re-opened in 2022 for an Easter holiday program, providing classes for around 30 children for a limited period. Following the Easter holiday programme, the education centre closed for renovation.

The trustees provided minutes of trustee meetings from January 2022 and February 2022. Although the minutes acknowledged progress on the Commission’s actions specified in the section 84 Order and the education centre’s reopening, the inquiry noted a lack of records documenting the trustees’ decision-making process regarding the reopening of the education centre for the Easter holiday programme, and the Commission considered that the minutes lacked clear consideration about the trustees decision to reopen the education centre. The trustees, as a part of an appeal against the Commission’s decision to appoint an interim manager, as set out below, put forward the following by way of mitigation:

“the charity is a local community-based organisation and there is continuous dialogue between the trustees and staff, congregation and beneficiaries on a daily basis. The minutes capture the broad brush of those exchanges and the evidence shows that there was a detailed dialogue at different levels of the organisation. Therefore, by the time of the Easter camp, not only was the charity compliant with its child protection policy, but it was adhering to best practice more generally. The trustees had tasked an employee to work with a specialist advisor, and the advisor’s progress reports clearly demonstrate compliance. It is unreasonable for the Commission to expect that every conversation should be captured in great detail.”

The Commission’s guidance on charities and meetings sets out that meeting minutes should include:

• a summary of the discussion on each item of business
• information upon which the decision was based
• details of the decision, i.e. who voted and how and, in the event of an equality of votes, if the Chair used a casting vote

Clause 14(f) of the governing document explains trustees need to be able to demonstrate their decisions are based on sufficient and appropriate evidence and made in properly called meetings. It is the Commission’s view that when the charity reopened the education centre, the trustees failed to keep sufficient records regarding their decision making in this regard.

The Commission acknowledges that the trustees have made safeguarding improvements over the course of the inquiry and should continue to review their safeguarding processes going forward to ensure the provision of a safe environment.  

Concerns over the conduct of trustees and senior management in connection with their social media activity

At the opening of the inquiry, the Commission received complaints about social media posts made by trustees and staff on their personal social media accounts. Trustees, charity employees and other individuals have the right to freedom of expression within the law including when using social media. However personal social media posts by trustees and staff members became associated with the charity and resulted in the charity receiving negative media attention The Commission was concerned about the impact of the trustees personal social media use on the reputation of the Charity, and the policies/processes by which the trustees managed risks arising from the personal social media use by the trustees and members of staff.

As a result of the social media posts, the Commission considers that the Charity’s reputation suffered as a result of adverse media reporting and concerns being raised by members of the local community.

Before the posts were made, the charity had a draft social media policy, which had not been approved by the trustee board, or circulated to members of staff.

The charity had a code of conduct, dated 14 November 2019. Section 1.2 of the charity’s code of conduct stated that “You must safeguard the charity’s reputation and promote public confidence in the charitable and not for profit sector, including not acting in a way which may bring the charity itself or the wider sector into disrepute.” There was an uncertainty amongst the trustees as to who had received and signed the code of conduct, and there was no evidence of training or that the code of conduct has been made available for staff to access.

Trustees have a legal duty to manage a charity’s resources responsibly, which means that the trustees should avoid exposing their charity to undue risk. The inquiry found that the trustees failed to implement a social media policy and failed to implement the Charity’s code of conduct social media posts made by trustees and members of staff adversely affected the reputation of the Charity, and breached the code of conduct.  This was an unmanaged risk and led to damage to the charity’s reputation, which should the code of conduct have been implemented could have been avoided or mitigated. The trustees failure to manage the risks to the Charity’s reputation associated with social media use, is misconduct and/or mismanagement in the administration of the charity.

The section 84 order required the trustees to finalise the draft social media policy and to ensure compliance with it. The trustees have since provided a copy of an updated version of the social media policy, which was implemented in June 2022, having sought advice from similar organisations prior to finalising the draft.

Additional complaints about the social media activity of a senior member of staff were received by the Commission in 2023 and 2024. The complaints made were in relation to personal social media activity, which raised additional concerns about the ongoing impact and potential reputational damage as a result of social media use. The trustees provided evidence that suitable action was taken in response to these concerns, evidencing the progress made by the trustees in ensuring that polices are enforced.

The Commission acknowledges the steps taken by the trustees in this instance, to respond to the concerns and comply with the social media policy. The Commission notes that the interim manager (details of her appointment are mentioned below) has also reflected on the Charity’s social media activity and has made recommendations regarding oversight of the charity’s social media platforms.  

Evidence of the trustees implementing the charity’s social media policy has been provided to the inquiry.  The Commission expects the trustees to ensure that this policy, and the charity’s online activity including its presence on social media, are kept under close review going forward in order to protect the charity’s reputation.

Unmanaged conflicts of interest in relation to working with partners, including trustee decision making and oversight of connected party transactions

The inquiry examined complaints about the relationship between the charity and two funeral director companies. Two of the directors of these companies are trustees of the charity.

The Commission understands that income belonging to a funeral company had been collected on the charity’s premises and stored in the charity’s safe. At the time, the only person who had access to the charity’s safe was a trustee who was also the director of one of those companies. The trustee had a conflict of interest owing to his relationship with both the charity and the private company.

The charity did not provide evidence of trustee oversight of this action from an unconflicted trustee. Whilst the trustees explained that the conflicted trustee was accompanied when accessing the safe, the trustees were not able to evidence this, nor did they have oversight of this process. The trustees were not able to demonstrate awareness as to what is or was being stored in the charity’s safe, nor were the trustees able to provide sufficient record keeping in order to evidence the contents of the safe and to prove that there was no private benefit enjoyed as a result of this informal relationship.

The trustees have stated that no trustee received private benefit as a result of these arrangements. While profits were donated to the charity, owing to the lack of sufficient record keeping in relation to the collection of cash, as set out in the qualification of the charity’s accounting information by the charity’s auditor, the Commission was unable to assess whether any private benefit occurred.

In April 2023 the interim manager made recommendations to draft and implement a conflicts of interest policy and to make the funeral directors a trading subsidiary of the charity. In response to the recommendations of the interim manager the trustees recognised the need to formalise this relationship, and the Commission has been informed that the director of the funeral service decided that the company should become a subsidiary of the charity.

The Commission found that, in respect of the management of funds held in the charity’s safe, the trustee’s failure to implement effective financial controls and to manage conflicts of interest between the charity and the funeral director companies was misconduct and/or mismanagement in the administration of the charity. The trustees have provided evidence that action has now been taken by the trustees to ensure effective financial controls over access to the safe, and during the intervening period used an external funeral service to manage the conflict.

The Commission is critical of the trustees failure to manage the conflict of interest in respect of the funeral services. As of the date of this report, the funeral service has not become a subsidiary of the charity and the Commission is critical of the trustees for the length of time this has taken, while recognising that the funeral service is a private company limited by guarantee.

Failure to file annual accounting documents on time

The annual accounting documents for financial years ending 31 March 2019 and 31 March 2020 were filed 613 and 360 days late respectively. Failure to meet filing obligations is breach of the trustees’ statutory duties under sections 162, 163, 164 and 169 of the Act, and may also be a criminal offence under section 173 of the Act. This breach is misconduct and/or mismanagement in the administration of the charity.

Additionally, the charity’s annual accounting documents for financial years ending 31 March 2019, 31 March 2020 and 31 March 2021 had been qualified by the charity’s auditor.  He explained the reason for the qualification was “due to a limitation of scope, as previously the charity did not have in place appropriate internal financial policies or controls with regard to the receipt, recording and banking of donations and as a result of this there were no detailed records of donations ‘receivable’ or ‘received’, the only records available being those of such income that was banked into the charity’s bank accounts.”

The Commission acknowledges that work has been undertaken by the charity, with support from the charity’s auditor, to remedy this matter. Therefore, the qualification in the accounting information for financial year ending 31 March 2021 relates to the inclusion of historic financial period. Unqualified accounts have been filed in line with the trustees legal duties for the financial years ending 31 March 2022 and 31 March 2023.

The charity’s activities

The inquiry investigated a number of concerns in respect of the charity’s activities, whether they were in the best interests of the charity and in accordance with the governing document.

These concerns included funds that had been collected in the name of Fitrana, with a restriction for the use of donated funds set out on the Ramadan 2022 prayer timetable. That restriction stated that the funds “will help make a difference to the lives of some  of the most disadvantaged people accessing services at Darbar-e-Aaliya Ghamkol Sharif, in the Kohat region.”

The trustees made it clear to the Commission that charitable funds had been, for a period of 40 years, applied in Pakistan for the purpose of Fitrana. Fitrana is an obligatory charitable donation of food for the needy, to be donated before Eid al-Fitr prayer at the end of the holy month of Ramadan. In addition to this overseas expenditure not being declared in the charity’s annual accounting documents, a review of the charity’s accounts showed no reference to overseas activity. When directed to provide records in accordance with a Direction under section 47 of the Act, dated 9 June 2022, no evidence was provided to show how Fitrana funds had been applied prior to financial year ending 31 March 2021. The trustees’ response of 8 July 2022 stated “We have already notified our accountants and auditors, we will be going through in detail the financial years 2018/19, 2019/20, 2020/21 & 2021/22 to establish the total amount of restricted funds the charity has collected and making an adjustment in the accounts for 2021/22. As we are now using a recorded financial ledger, introduced as part of our new financial record keeping in late 2020, going forward we do not envisage this omission happening again.” The Commission noted that an adjustment for funds raised for Fitrana has been included in the Charity’s most recently filed accounts.

Securing proper application of charitable funds

The inquiry found that in May 2019 the charity paid £2,320.80 towards the legal fees of a then trustee following an incident that occurred on the charity’s premises. While the payment of the legal fees was agreed by the trustees, the trustees did not seek legal advice as to whether they had the power to make such payments at the time, and did not provide the Commission with any records to support this decision, including how it was considered to be in the charity’s best interests to pay the legal fees. As a result of the Commission’s engagement, and subsequent legal advice being taken, the trustees reviewed their decision to pay the legal fees and agreed that the funds must be repaid to the charity, but no formal agreement to that effect was put in place.

The trustees failed to ensure that the debt was repaid promptly, with the first repayment only being made following the issuing of a direction dated 9 June 2022, by the Commission, under section 47 of the Act, which directed the trustees to provide information specifically in relation to the repayments. The response provided to the Commission set out that the repayment schedule, following the initial payment of £1,500 of 9 June 2022, was to be split across two payments to be made on 15 August 2022 and 15 September 2022. Only following the Commission’s intervention did the charity start to recover the funds owed to it, something which the trustees had agreed should happen in 2019. The Commission doubts whether the trustees would have taken any meaningful steps to recover these funds without the Commissions intervention as part of the inquiry. With regard to this matter the trustees failed to prudently manage the charity’s resources, which is misconduct and/or mismanagement in the administration of the charity.

Conclusions      

The Commission concluded that there was misconduct and/or mismanagement in the administration of the charity on the part of the trustees.

Since the Commission opened the inquiry, the trustees have taken a number of positive steps to address the failures and weaknesses in the charity’s governance. The trustees have also shown a willingness to take on board regulatory advice and guidance provided by the Commission. The inquiry has issued further regulatory advice and guidance to the trustees to ensure the recommendations of the interim manager are adopted and to ensure further improvements to the charity’s governance.

The trustees co-operated throughout the inquiry as they are expected to do, including providing information and updates as required.

Regulatory Action Taken

On 17 September 2021, the inquiry issued the trustees with regulatory advice and guidance in the form of an action plan, under section 15(2) of the Act, to ensure the trustees comply with their legal duties and responsibilities to act in the best interests of the charity and to facilitate and encourage the better administration of the charity.

The inquiry used its information gathering powers under section 47 of the Act on multiple occasions to obtain information and copy documents from various sources, including from the trustees.

The inquiry exchanged information with partner agencies via the statutory information sharing gateway under sections 54 to 59 of the Act.

As set out above, on 19 November 2021 the inquiry exercised the Commission’s power under section 84 of the Act and made an order to address governance issues. The section 84 order required the trustees to take specified action which the Commission considered to be expedient in the interests of the charity. The actions were to:

• ensure compliance with all aspects of the charity’s child protection policy
• ensure compliance with the charity’s safeguarding and protecting people policy
• take action to finalise the Charity’s drafted code of conduct and once enacted the trustees must ensure compliance with all aspects of it
• ensure the Charity’s annual return, trustees’ annual report and accounts for financial year end 31 March 2020 are filed on time in accordance with the obligations under the act
• conduct a review of the charity’s governing document, taking professional advice as appropriate, and update and/or amend the governing document in accordance with the outcome of the review
• finalise the Charity’s draft social media policy and ensure compliance with all aspects of it

On 6 December 2022, the inquiry exercised the Commission’s power under section 76(3)(g) of the Act to appoint Virginia Henley of HCR Hewitsons as interim manager to the charity. This was publicly announced by the Commission on 8 December 2022. The interim manager was appointed to conduct a review of the charity’s governance and administration to the exclusion of the trustees and make recommendations to the Commission based on her findings. The trustees retained control over the day-to-day running of the charity whilst the interim manager carried out her work.

On 22 March 2023, the interim manager provided recommendations to the Commission. There were 23 recommendations in total, including proposed changes to the charity’s structure and governing document, making the funeral directors a subsidiary of the charity and taking steps to ensure staffing levels and staff authority are sufficient. The Commission recognises that the trustees are in the process of complying with these recommendations.

Having successfully completed the scope of her appointment, the interim manager was discharged from her role on 26 April 2023, with costs totalling £14,654 + VAT.

An appeal was submitted to the First-Tier Tribunal (Charity) against the Commission’s decision to appoint an interim manager by the trustees. However, the trustees voluntarily withdrew this challenge following the Commission’s discharge of the order on 26 April 2023, following the completion of her work.

On 25 October 2023, the Commission issued further regulatory advice and guidance to the trustees under section 15(2) of the Act. This advice and guidance is intended to ensure the recommendations of the interim manager are adopted and to ensure further improvements to the charity’s governance.

Issues for the wider sector

Financial Controls

Trustees must ensure that their charity has adequate financial controls in place. It is important that the financial activities of charities are properly recorded, and their financial governance is transparent. Charities are accountable to their donors, beneficiaries and the public. Donors to charity are entitled to have confidence that their money is going to legitimate causes and reaches the places that it is intended to, this is key to ensuring public trust and confidence in charities. In this case there was no clear audit trail of cash donations from donor to bank, or to expenditure.

The Commission has produced guidance to assist trustees in implementing robust internal financial controls that are appropriate to their charity. Internal Financial Controls for Charities (CC8) is available on the Commission’s website. There is also a self-check-list for trustees which has been produced to enable trustees to evaluate their charity’s performance against the legal requirements and good practice recommendations set out in the guidance.

Governance

Trustees are representatives of the charity they govern or the charitable funds they are responsible for, in the charity sector. Trustees must be aware of and act in accordance with their legal duties. The conduct of trustees can be a key driver of public trust and confidence in the charity sector. When the conduct of trustees falls below the standards expected there can be damage to the reputation of individual trustees, the charity and possibly the wider charity sector.

Charity Accounting Requirements

Trustees of charities are under a legal duty as charity trustees to submit annual updates, returns, annual reports and accounting documents to the Commission as the regulator of charities depending upon the level of the charity’s income. Failure to do so is a criminal offence.

Principles of Trustee Decision Making

Charity trustees are responsible for governing their charity and making decisions about how it should be run. Making decisions is one of the most important parts of the trustees’ role. Trustees can be confident about decision making if they understand their role and responsibilities, know how to make decisions effectively, are ready to be accountable to people with an interest in their charity, and follow the 7 principles that the courts have developed for reviewing decisions made by trustees.

Trustees must:

• act within their powers
• act in good faith and only in the interests of the charity
• make sure they are sufficiently informed
• take account of all relevant factors
• ignore any irrelevant factors
• manage conflicts of interest
• make decisions that are within the range of decisions that a reasonable trustee body could make

It is important that charity trustees apply these 7 principles when making significant or strategic decisions, such as those affecting the charity’s beneficiaries, assets or future direction.

Further information can be found in the Commission’s guidance:

The essential trustee: what you need to know, what you need to do (CC3)

It’s your decision: charity trustees and decision making (CC27)

Conflicts of Interest Policy

Charity trustees should ensure that they have a conflicts of interest policy in place to ensure that they are fully aware of their responsibilities and that any conflicts that do arise are appropriately managed.

Where a charity trustee has a conflict of interest they should follow the basic checklist set out in the Commission publication Conflicts of interest: a guide for charity trustees (CC29) and where necessary or appropriate take professional advice.

The law states that trustees cannot receive any benefit from their charity in return for any service they provide to it or enter into any self-dealing transactions unless they have the legal authority to do so. This may come from the charity’s governing document or, if there is no such provision in the governing document, the Commission or the Courts. Further information is available from Trustee expenses and payments (CC11).

Trustees who receive an unauthorised payment or benefit from their charity have a duty to account for (i.e. repay) it. The Commission cannot relieve trustees from this duty.