Charity Inquiry: Dream It Believe It Achieve It
Published 7 April 2022
Applies to England and Wales
© Crown copyright 2022
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The charity
Dream It Believe It Achieve It (“DIBIAI” / “the charity”) is a charitable company incorporated on 18 November 2009. It is governed by a Memorandum and Articles of Association dated 18 November 2009 as amended by Special Resolution dated 4 July 2013 (the “governing document”). Its details can be viewed on the Commission’s register of charities.
The charity’s objects are stated to be:
‘For the public benefit, the advancement of the physical education of children and young people, the promotion of amateur sport and the relief of disability, in particular but not exclusively by the provision or assistance in the provision of funding or facilities to enable disabled people to access and compete in sport and healthy recreation.’
Although DIBIAI was formed as a company in 2009 it originally did not have charitable objects. It only became a charity on 4 July 2013 when it substantially amended its memorandum and articles of association. It was registered as a charity on 29 July 2013.
During the process of registering the charity with the Commission the composition of the trustee body changed as did the proposed content of the governing document. Matthew Dimbylow has at all times been the driving force behind the charity. During the registration process he was provided with clear advice by the Commission regarding trustee remuneration and management of conflicts of interest. Mr Dimbylow initially proposed that he and his wife would be the charity’s only trustees, and that they would receive benefit in the form of salary [footnote 1]. He was advised that this was not acceptable. Mr Dimbylow subsequently indicated that trustees would not be paid and registered the charity with four trustees, including himself and his wife. The charity was registered using the Commission’s model governing document with one modification that was not drawn to the Commission’s attention. The governing document had been amended to remove restrictions upon payments to connected parties.
At the time of registration the charity’s trustees were Matthew Dimbylow, his wife Emma, and two further trustees, Trustee A and Trustee B [footnote 2]. Trustee A resigned on 1 November 2013. Trustee B resigned on 4 April 2016, and on the same date a further trustee, Trustee C, was appointed. Emma Dimbylow resigned on 14 April 2016.
Issues under investigation
The Commission initially engaged with the charity in 2014 following press reports alleging 74% of the charity’s expenditure was spent on fundraising and following complaints from members of the public about fundraising activities conducted in the charity’s name. The Commission met with the trustee Matthew Dimbylow seeking to clarify the charity’s structure, banking and fundraising arrangements. The Commission established there were insufficient independent trustees in post to enable conflicts of interest involving the trustees Matthew and Emma Dimbylow to be managed, and significant payments had been made to three companies under the control of the Dimbylows.
The Commission provided regulatory advice and guidance at meetings and in correspondence but the identified regulatory concerns regarding the charity’s governance were not addressed and evidence to explain or support the payments to the related party companies was not provided. As a result, the Commission opened a statutory inquiry under s.46 of the Charities Act 2011 (“the Act”) into the charity on 5 January 2017. The inquiry examined:
- the administration, governance and management of the charity by the trustees, including its financial controls
- the charity’s relationship with connected companies and whether these relationships were in the best interests of the charity
- transactions between the charity and companies connected to the trustees and former trustees, and whether any unauthorised benefits have been received
The inquiry closed with publication of this report.
Findings
The inquiry found that trustees A and B had minimal involvement with the operation of the charity given their understanding that Mr Dimbylow was actively managing the charity. They failed in their duty to hold their fellow trustees to account for their actions, and whilst they were not responsible for the serious mismanagement and/or misconduct set out in this report, their lack of oversight and scrutiny created an environment where the charity’s funds could be misapplied. Trustee C was appointed only after the serious mismanagement and/or misconduct set out in this report had taken place.
Between 2011 and 2014 the charity raised over £6 million via a series of scratch-card lotteries. The scratch-card lotteries were run by an external lottery manager who received approximately 70% of the donated funds for the service they provided. Information from the charity’s own accounts indicated that only approximately £300,000 or 5% of the proceeds of the lotteries was applied for charitable purposes unconnected with the Dimbylows.
Trustees of the charity at the time, specifically Matthew Dimbylow and his wife Emma Dimbylow, had failed to manage conflicts of interest with regard to the charity’s relationship to the connected companies Aragorn Sport Limited, DBA Sport CIC and Socatots (Mid-Cheshire) Ltd, each of which had as its directors and shareholders Matthew and Emma Dimbylow. The trustees Matthew and Emma Dimbylow caused the charity to make payments to those companies totalling around £975,800. The inquiry found that the actions of Matthew and Emma Dimbylow amounted to serious mismanagement and/or misconduct in the administration of the charity.
Conclusions
The Commission concluded that there had been significant breaches of trust. Failures to manage conflicts of interest in respect of payments to connected parties resulted in substantial unauthorised financial benefit to Matthew and Emma Dimbylow. The charity applied approximately £300,000 for its charitable purposes from the fundraising activities carried out in its name that raised over £6 million. The companies connected to the Dimbylows received circa £1 million. The Commission concluded that these arrangements disproportionally benefited the Dimbylows and were not in the charity’s best interests.
The Commission concluded that from the time Matthew Dimbylow had sought to register the charity he had intended to extract funds from it. Having been advised by the Commission that it was not acceptable for the trustees to be in receipt of remuneration given the proposed charity structure Matthew Dimbylow amended the governing document to ensure that the Dimbylows could receive funds from the charity via their companies. The actions of Matthew and Emma Dimbylow amounted to serious mismanagement and/or misconduct in the administration of the charity.
The Commission further concluded that the above abuse may not have occurred had trustees A and B fulfilled their statutory duties and been actively involved in the administration of the charity.
Regulatory action taken and outcomes
The inquiry determined that there was a sound legal basis for the recovery of misapplied charity funds from Matthew and Emma Dimbylow and issued a claim in the High Court to recover the funds. The Commission and the Dimbylows engaged in formal mediation and the Dimbylows subsequently agreed to settle the claim on 12 September 2019.
On 7 March 2019 the Commission, exercising its powers under section 79(4) of the Act, removed Matthew Dimbylow as a trustee, charity trustee or senior manager of the charity, with the effect that Matthew Dimbylow is disqualified from acting in any such capacity for any charity in England and Wales. His name has been entered upon the Commission’s register of removed trustees.
The Commission subsequently sought and obtained a voluntary undertaking from Emma Dimbylow, the former trustee of the charity, not to be (or act as) trustee or charity trustee of any charity in England or Wales.
The Commission’s decision to take regulatory action against Matthew and Emma Dimbylow, and not against the other current and former trustees, is based upon their involvement in the mismanagement and/or misconduct established by the Commission. Matthew Dimbylow and Emma Dimbylow were directors of DIBIAI from the outset and were, through companies under their control, the beneficiaries of the funds transferred away from the charity in breach of trust. Matthew Dimbylow was the driving force behind the charity throughout the period when it was active.
On 6 February 2020 the Commission empowered trustee C to accomplish the orderly winding down of the charity by way of an order made under section 105 of the Act because he was unable to make quorate decisions to close the charity. Once this process is completed the charity will be removed from the register.
To protect the charity whilst the inquiry was ongoing the Commission took temporary and protective action to restrict more than 30 bank accounts held in the charity’s name, prohibiting payments being made from those accounts without the Commission’s prior written approval.
The Commission referred the activities of the external lottery manager employed by the charity to The Fundraising Regulator [footnote 3], who engaged with the external lottery manager. The Fundraising Regulator was satisfied with the response received and took no further action.
Issues for the wider sector
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.
Conflicts of interest are more likely when there are only a small number of trustees on the board, when trustees are closely related, or when the charity has dealings with organisations in which the trustees have interests. It is vital that trustees avoid becoming involved in situations in which their personal interests may be seen to conflict with their duties as trustees. The trustees should put in place policies and procedures to identify and manage such conflict.
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.
Professional fundraisers and commercial participators are responsible for ensuring that the specific legal rules that apply to them and the arrangements they make with charities are followed. However, the commission’s view is that, to comply with their charity law duties, trustees must also ensure that their arrangements with these fundraisers are in line with these rules. Failure to do this will generally amount to misconduct and mismanagement of the charity’s affairs.
Trustees must comply with their legal duties and responsibilities when overseeing their charity’s fundraising and should take steps to ensure the costs of running a fundraising appeal are proportionate to the income it is expected to generate. Trustees entering into contracts with commercial organisations should take professional advice as appropriate and must satisfy themselves that the terms of the contract are in the best interests of the charity.