Decision

Charity Inquiry: The Everlasting Arms Ministries

Published 14 June 2022

Applies to England and Wales

The charity

The Everlasting Arms Ministries (‘the charity) was registered with the Commission on 14 March 2002. It is a charitable company incorporated on 14 June 2001 and governed by a Memorandum and Articles of Association dated 25 April 2001 (‘the governing document’).

The charity’s objects are the advancement of the Christian religion and the relief of poverty worldwide. It runs a church based at 600-608 Old Kent Road, London, SE15 1JB (‘Old Kent Road’).

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

Background and Issues under Investigation

In 2016 the charity sold its main asset, a property on the Old Kent Road for £8 million. This was part of an agreement with a developer which permitted the charity to continue to occupy the building. However, the Commission had concerns about whether this disposal had complied with the Charities Act 2011 (‘the Act’) and how it had been recorded in the charity’s accounts.

The Commission engaged with the charity in a compliance case opened on 2 January 2019 and undertook an inspection of the charity’s books and records on 5 and 6 August 2019 (‘the inspection’).

Analysis of the charity’s bank statements during the compliance case revealed significant payments to trustees and connected people and companies. At the inspection insufficient evidence was provided in relation to these payments. It was also evident that the charity was not adhering to its own financial controls policy and there was little evidence that the Commission’s guidance on internal financial controls was being followed.

Analysis further showed that in the Financial Year Ending (‘FYE’) 31 March 2016, 2017, and 2018 the charity spent in total £457,665.94 on ‘international outreach’ utilising business class travel and stays in five-star hotels.

At the inspection the charity was also unable to provide an up-to-date fixed asset register. The fixed asset register that was provided only accounted for assets as stated in the charity’s accounts up to 31 March 2003. This was a concern given the charity’s high expenditure on musical equipment and instruments, IT, audio and media equipment throughout the FYE 31 March 2016, 2017, and 2018 and raised questions about the accuracy of the charity’s accounts in general.

In addition, concerns were identified in relation to the charity’s management of conflicts of interest and or loyalty and the charity’s overall governance and administration and a lack of adequate policies and procedures.

Due to the seriousness of the concerns outlined above a statutory inquiry under section 46 of the Act was opened into the charity on 30 December 2019 (‘the inquiry’).

The scope of the inquiry was to examine the following:

  • the charity’s financial management and whether funds have been properly expended solely for exclusively charitable purposes and can be accounted for
  • the sale of the Charity’s property, 600-608 Old Kent Road, and whether it was conducted in accordance with charity law and if the proceeds of sale were properly accounted for
  • if the trustees have avoided or adequately managed potential conflicts of interest and if there has been any unauthorised direct or indirect private benefit
  • whether the Charity has suffered a financial loss as a result of any mismanagement and or misconduct identified by the inquiry
  • whether or not the trustees have complied with and fulfilled their duties and responsibilities under charity law

At the opening of the inquiry the charity had four trustees (‘the previous trustee board’). Since the opening of the inquiry, one of the trustees has stepped down and two new trustees have been appointed. The charity’s Senior Pastor (‘the Senior Pastor’) was a trustee of the charity from 14 June 2001 until 21 April 2020, he has also been the charity’s CEO from 2001 and continues to hold this position. His wife is employed as the Deputy Senior Pastor (‘the Deputy Senior Pastor’) and Deputy CEO and was a trustee of the charity from 2001 to 2006. There are currently five trustees (“the current trustees”).

The inquiry closed with the publication of this report.

Findings

The charity’s financial management and whether funds have been properly expended solely for exclusively charitable purposes and can be accounted for.

Following the property disposal, the charity significantly increased its expenditure without any budgetary forecasting. According to the charity’s accounts for the FYE 31 March 2015 the charity’s income was £532,984 but in 2016 it decreased to £244,757, then £314,046, and £327,532 in 2017 and 2018 respectively. Meanwhile, the charity’s expenditure increased from £492,475 in the FYE 31 March 2015 to £879,477, £956,148, and £899,946 in 2016, 2017 and 2018 respectively.

Only limited documentation concerning financial planning and budgeting in relation to the charity’s financial position could be provided to the inquiry. The inquiry found that there was no long-term financial plan to sustain the charity’s spending and that funds from the proceeds of the property disposal have been significantly depleted.

The inquiry found that the charity’s financial management was poor and that there was a lack of financial expertise and planning in the charity’s administration. It also found that the charity could not fully account for all its expenditure due to a lack of proper record keeping and robust internal financial controls. As a result of this, the charity failed to demonstrate that all its funds have been properly expended solely for exclusively charitable purposes (see below).

Due to the potential risk to the charity’s assets, on 10 February 2020 the inquiry took the step of freezing all the charity’s bank accounts under section 76(3)(d) of the Act. This meant that until the freezing orders were discharged on 26 February 2021, all of the charity’s outgoing payments had to be authorised by the Commission before they could be made.

An Action Plan under section 84 of the Act was issued to the current trustees on 26 February 2021. The Action Plan required them to seek independent financial advice and undertake an extensive review of the charity’s governance and financial management.

The current trustees fully complied with the Action Plan and updated all of the charity’s policies and procedures relating to financial matters and created new policies where appropriate. They also reviewed the charity’s general spending and decided to suspend the international outreach programme and any payments to partners abroad.

A monitoring case was opened when the inquiry closed which is continuing to monitor the implementation of the charity’s new policies.

Expenditure on ‘international outreach’

Analysis of the charity’s financial information shows that in the FYE 31 March 2016 to FYE 31 March 2018 the charity spent £457,665.94 on ‘international outreach’ utilising business class travel and five-star hotels.

The inquiry found that as part of its international outreach costs the charity spent a total of £181,143.54 on business class travel from April 2015 to October 2020.

When questioned about this by the inquiry, the charity noted that the previous trustee board resolved on 15 December 2016 in a trustee meeting that ‘travelling on mission filed [sic] can be cumbersome. Hence it is agreed that directors and trustees should be comfortable when travelling. It is recommended that directors/trustees going on mission field should fly business class’.

The minutes do not record that any additional considerations in relation to this decision were discussed and the charity did not have a specific policy on travel and related expenses at the time.

Documentation provided to the inquiry shows that individuals who are not trustees of the charity including the Deputy Senior Pastor also utilised business class travel. It also shows that for a trip from London to Ghana in February 2016 the business class flight for the Deputy Senior Pastor cost £2,580 while the flight for the employee travelling economy class cost only £548, demonstrating the significant cost implications of this practice.

Trustees must consider value for money when requiring trustees or employees to travel on behalf of the charity and ensure charity funds are spent in furtherance of the charity’s objects and in the best interest of the charity. Robust financial controls additionally help ensure that only necessary and authorised purchases are made.

Considering the numerous overseas activities of the charity, the previous trustee board should have ensured that a robust policy on travel related expenses/reimbursements was in place and that it was being followed. The previous trustee board should have also regularly reviewed the decision in respect of the international outreach travel arrangements including the impact on the charity’s finances.

The Commission also expects that minutes or other formal records in relation to decisions should show that the trustees actively considered factors relevant to their decision such as affordability, reputational risks, and public perception. The Commission’s guidance on decision making also states that written records should be sufficient to allow anyone to understand the issues, the decision, and the reasons for the decision.

The inquiry found that the documentation relating to the decision-making in respect of business class travel was inadequate and consequently the evidence available does not demonstrate that the previous trustee board gave sufficient consideration to the matter. It also found that funds spent on business class flights for individuals who were not trustees were not spent in line with what the previous trustee board had agreed and it is difficult to see how these funds were spent in the charity’s best interest. This was misconduct and/or mismanagement in the administration of the charity.

Following the implementation of the Action Plan, the charity now has a clear expenses policy which sets out under which circumstances employees or trustees can fly business class.

Working with partners overseas

In addition to the expenditure on international flights outlined above, other expenditure on ‘international outreach’ represented money the charity paid to partners in China and India. Of the £457,665.94 spent on ‘international outreach, £43,707.14 represented money the charity paid to partners in China and India.

When collaborating with partners abroad, trustees should ensure there is a proper audit trail and records detailing both the transaction from the charity to the partner and from the partner to goods and services, to show how the money was utilised. The trustees should also proactively monitor the projects so they can be satisfied that the funds were used as intended.

Insufficient documentation was provided to the inquiry to fully account for funds sent to the charity’s partners abroad. Additionally, no formal contracts with partners or other documentation outlining the arrangements or any records of background checks undertaken before sending them money could be provided to the inquiry. The charity also failed to provide any written reports or other documentation showing how ‘on-site visits’ by the Senior Pastor were used to monitor the end use of funds. It also failed to provide notes taken from phone calls with partners or other documentation showing that the previous trustee board monitored the activities of their partners or the end use of the funds they sent to them.

The only documentation provided to the inquiry to evidence how the funds amounting to over £40,000 were monitored consisted of a number of pictures showing employees of the charity abroad and Western Union slips showing money being transferred to individuals in China.

The previous trustee board failed to demonstrate that they had any oversight over the activities of their overseas partners and that they monitored the end use of funds sent abroad. In the absence of proper record keeping the previous trustee board also failed to account for all the funds sent to partners abroad and the inquiry has thus been unable to establish that all funds sent to partners abroad have been properly expended solely for exclusively charitable purposes. This was misconduct and/or mismanagement in the administration of the charity.

Following the implementation of the Action Plan, the charity now has a partnering abroad policy and other relevant procedures to help inform its international outreach, including Anti-Bribery and Anti-Money-Laundering policies.

Expenditure on the American Express card

Payments totalling £215,948.79 were made by the charity to the private American Express card (‘the Amex card’) of the Senior Pastor between April 2016 and March 2020.

The Amex card was used by the Senior Pastor for private expenditure as well as for charitable expenditure. The two were not clearly distinguishable.

The inquiry requested the Amex card’s statements from April 2016 to March 2020 together with a breakdown of charitable and private expenditure from the Senior Pastor. The breakdown provided showed that during the period there was private expenditure amounting to £61,169.62. However, only £46,365.39 of the payments into the Amex card were from accounts that did not belong to the charity. This leaves £14,804.23 (£61,169.62 less £46,365.39) of private expenditure which the charity appeared to have covered during this period.

When questioned about this, the charity explained that the trustees adopted the use of the Amex card to reimburse expenses incurred as part of its international outreach as the charity does not have a debit or credit card, and that payments amounting to £8,870.00 were made in error and were subsequently paid back to the charity through the Senior Pastor’s private bank account. A further £6,510 relate to reimbursements for a trip to India in October 2015 which was paid through the Senior Pastor’s private bank account but reimbursed by making credits to the card. In any case, this is an unusual practice which together with the poor record keeping blurs the line between charitable and private expenditure. It leaves no clear audit trail of how the charity’s funds have been expended, as is a legal requirement under section 130(1) of the Act.

The inquiry selected a sample of purportedly charitable expenditure items on the Amex card and directed the charity to provide supporting documentation such as invoices or receipts.

Of the 112 expenditure items selected, the charity was unable to provide supporting documentation for 34 items amounting to £11,081.80. As directed by the Action Plan, the charity reviewed all payments made to the Senior Pastor and later found additional documentation reducing the number of unsupported items to 26 amounting to £5,094.54.

The inquiry was unable to fully assess if the unsupported expenditure was indeed charitable and in furtherance of the charity’s objects. The inquiry acknowledges that a description of the unsupported expenditure was provided, however this was insufficient to fully assess the various amounts which included expenditure at restaurants, supermarkets, Amazon and iTunes.

The inquiry also found that the previous trustee board was unable to demonstrate sufficient oversight and control in relation to payments made to the Amex card.

As part of the Action Plan, the current trustees were directed to investigate all payments made to the Amex card and satisfy themselves that they represent reimbursements for exclusively charitable purposes in line with the charity’s objects. The current trustees were also directed to consider whether it is in the best interest of the charity to take action to recover any funds which may have been paid in error or otherwise were not used for exclusively charitable purposes in line with the charity’s objects.

The current trustees decided not to recover any funds and to stop the use of the Amex card. They also resolved to obtain a debit card for the charity and adopted clear policies on reimbursements.

Payments to the Senior Pastor and Deputy Senior Pastor

The inquiry found that in 2016, following the property disposal, the salaries of the charity’s employees were increased. Prior to this, a decision was also taken that all employees were to become self-employed. This decision has since been reversed and three people were put back on the charity’s payroll on 1 February 2020. Additionally, the Senior Pastor resigned on 21 April 2020 from his position as a trustee.

Documentation provided to the inquiry shows that in 2016 the salary of the Senior Pastor increased from £44,536.20 to £72,000 per annum and the salary of the Deputy Senior Pastor from £45,000 to £54,000 per annum. The salaries of other employees rose as well however not by such a significant amount.

The reason given for the salary increases as recorded in the meeting minutes documenting the decision was the rising cost of living. No documentation could be provided to the inquiry showing that the previous trustee board undertook a benchmarking exercise or other research in arriving at the level of remuneration. The charity says that this process was undertaken informally.

It is clear, that the salaries for the Senior Pastor and the Deputy Senior Pastor increased far more than would normally be expected if in line with inflation. Furthermore, until April 2020 the Senior Pastor was a trustee of the charity and the charity relied on clause 6.2 of the governing document to remunerate him. Clause 6.2 allows payment ‘Of a proper and reasonable salary (as determined by the trustees from time to time) of one executive officer of the Company who may also be a trustee hereof provided that any such Trustee shall not attend or indirectly affect any meeting of the Trustees held to consider his or her remuneration or terms of service’.

The inquiry accepts that setting the level of remuneration for the Senior Pastor and Deputy Senior Pastor was at the discretion of the trustees. However, it finds that the decision to increase their salary wasn’t properly documented and that insufficient consideration was given to the requirements of the governing document by the previous trustee board when agreeing the salary increases.

Fixed Asset Register

During the inspection, it was found that the charity’s fixed asset register was outdated with the last update on 31 March 2003. Consequently, the net book value of assets shown in the charity’s accounts after the FYE 31 March 2003 has been estimated and there is no assurance in relation to its completeness or correctness. This is particularly concerning as the inquiry found that the charity spent £287,820.11 on audio and video equipment from the FYE 31 March 2016 to FYE 31 March 2021.

The independent auditor who audits the charity’s accounts would have been expected to review the fixed asset register to verify the assets owned by the charity. The lack of an updated fixed asset register raises concerns in respect of the quality of the audit conducted prior to the accounts for FYE 31 March 2021, and the charity’s oversight of its assets.

The inquiry found that the audio and video equipment purchased was part of a project to improve the music systems at Old Kent Road. The charity was unable to provide any documentation relating to how much was budgeted for this project and the available documentation suggests that there was no agreed budget for the purchases.

As part of the Action Plan, the current trustees undertook a full inventory to create a new and up-to-date fixed asset register. The current trustees have also been made aware of the importance of keeping their new register up to date and reviewing it at appropriate intervals.

The sale of the Charity’s property, 600-608 Old Kent Road, and whether it was conducted in accordance with charity law and if the proceeds of sale were properly accounted for

When disposing of charitable land, trustees must comply with the requirements of sections 117 to 121 of the Act.

In 2016 the charity disposed of Old Kent Road as it could no longer satisfy related mortgage payments. Land Registry documentation and documentation provided by the charity to the inquiry show that the property was sold for £8 million.

The charity has remained in occupation of the property. While there have been delays due to the Covid-19 Pandemic to the development, planning permission has recently been granted.

The inquiry understands that £2 million was withheld by the purchaser and once refurbishment and development of the property has taken place, the charity will be granted a 999-year lease to occupy the property which was considered worth £2 million. The £2 million were not reflected in the charity’s accounts.

The inquiry found that the proceeds of the property sale were wrongly accounted for in the accounts for financial year ending (‘FYE’) 31 March 2016. The accounts note that the property was sold for £6 million, understating the charity’s assets by £2 million. This error impacted on the correctness of the charity’s accounts for the following years up to and including FYE 31 March 2020. This is a breach of The Charities Statement of Recommended Practice ‘SORP’ (FRS 102) which provides guidance for the preparation of charity accounts. As a result, incorrect and inadequate financial information was supplied to the Commission and made available to the public.

The inquiry found that the previous trustee board took legal advice in relation to the property disposal. However, the valuation report which the trustees were legally required to obtain before disposing of the property is not compliant with the requirements of the Act as it does not adhere to the criteria stipulated in the Charities (Qualified Surveyors’ Reports) Regulations 1992. A final report should have also been obtained advising on the terms of the final agreement, however, it is acknowledged, that the final agreement with the developer is worth more than the initial valuation.

Additionally, the inquiry found that the documentation relating to the previous trustee boards’ decision-making in respect of property disposal was inadequate given the value of the transaction.

As part of the Action Plan, the current trustees were required to improve the quality of the charity’s accounts for the FYE 31 March 2021 including rectifying the error relating to the property disposal.

The accounts for FYE 31 March 2021 have been submitted on time, the property disposal is now sufficiently accounted for, and the quality of the accounts has significantly improved overall.

If the trustees have avoided or adequately managed potential conflicts of interest and if there has been any unauthorised direct or indirect private benefit.

A conflict of interest is any situation in which a trustee’s personal interests or loyalties could, or could be seen to, prevent them from making a decision only in the best interests of the charity. Trustees must manage conflicts of interest appropriately, for instance by the conflicted individual absenting themselves from any decisions which affect their personal interest. However, trustees must also ensure that a quorum, which is the minimum number of trustees that are needed to make a valid decision, can still be achieved when conflicted individuals withdraw from decisions in order to manage conflicts of interest.

In accordance with clause 6(a) of the charity’s governing document, the quorum for valid decision making is three.

The inquiry found that the initial decision to employ the Deputy Senior Pastor at a trustee meeting on 31 July 2007 was not quorate and that between 2007 and 2008 her salary was increased from £36,000 to £45,000. The meeting deciding the salary raise on 27 July 2008 was also not quorate.

In relation to the decision to employ the Deputy Senior Pastor, while there were 6 individuals present at the meeting, only two of them were trustees at the time. When the Senior Pastor declared a conflict and left the meeting there remained only one trustee and a decision could not validly have been made as there were insufficient trustees present to form a quorum in line with clause 6(a). The decision taken was therefore an invalid decision and a breach of the governing document which is mismanagement and/or misconduct in the administration of the charity. In relation to the meeting deciding the salary raise, there were four individuals present but only two of them were trustees.

In relation to the salary increase, there was no explanation for the increase recorded in the meeting minutes when the decision was made. Furthermore, at the time the Senior Pastor was also a trustee of the charity which means that the Deputy Senior Pastor as his wife was a person connected to a trustee. The salary is an unauthorised trustee benefit to the Senior Pastor (her husband) due to the concept of the ‘shared purse’ and their financial interdependency.

The inquiry also found that payments amounting to £27,056.42 were made to a company connected to the Deputy Senior Pastor between the FYE 31 March 2016 and 26 February 2019. The company is a company limited by guarantee and the Deputy Senior Pastor is a Director of the company.

No documentation outlining the arrangements between the company and the charity could be provided, only the meeting minutes of the decision to support the company which included no detail about the arrangement or its monitoring Additionally, no documentation other than the company’s accounts could be provided to the inquiry to show that the funds going to the company were monitored by the previous trustee board. In the absence of any documentation showing the contrary, the inquiry found that this arrangement was insufficiently monitored. The decision to support the company was also inquorate as only two trustees were present according to the minutes of the meeting on 1 August 2016. This was therefore an invalid decision and a breach of the governing document which is mismanagement and/or misconduct in the administration of the charity.

The inquiry also found that one of the current trustees (‘Trustee A’) was receiving payments for ‘IT services’ as resolved in a trustee meeting on 1 November 2015. The trustee received a total of £62,041.79 from September 2015 to February 2020. The charity was unable to provide supporting documentation for payments to the trustee amounting to £12,447.66. Additionally, the supporting documentation which was provided for the remainder of the £62,041.79 only had limited details of the services provided making it unclear how the costs for ‘IT services’ have been calculated. Some of the payments to Trustee A just state ‘reimbursement’ or ‘reimbursement for IT services’ but it is unclear what exactly was reimbursed.

The charity argues that the payments to Trustee A which do not relate to reimbursements fall within clause 6.1 as he is being paid as an ‘IT professional’ which is accepted by the inquiry. Clause 6.1 states that “the usual professional charges for business done by any trustee who is a solicitor, accountant or other person engaged in a profession” can be paid under certain conditions.

It is acknowledged that Trustee A left or was not part of any meetings where his renumeration for this service was discussed. The previous trustee board should have nevertheless ensured payments and reimbursements to the trustee are fully documented. In the absence of sufficient records, the inquiry has been unable to determine if all of the payments were expended for exclusively charitable purposes in line with the charity’s objectives.

While the charity was able to demonstrate that it managed conflicts of interest and/or loyalty by individuals absenting themselves from trustee meetings when decisions in relation to them were taken, the record keeping in relation to those decisions and some of the payments made to Trustee A is inadequate. The charity also did not keep a conflicts of interest register. It also did not have a conflicts of interest policy and no conflicts of interest forms were completed by the previous trustee board in breach of the charity’s previous finance policy. This was mismanagement and/or misconduct in the administration of the charity.

Following the Action Plan, the charity now has a policy on Conflicts of Interest with clear procedures to follow should a conflict arise as well as a Register of Conflicts.

As part of the Action Plan the current trustees were also required to consider whether it is in the best interest of the charity to take action to recover any funds which may have been paid in error or otherwise were not used for exclusively charitable purposes in line with the charity’s objects.

The trustees decided not to recover any funds in relation to the above but in line with the independent financial advice provided, salaries of all of the charity’s employees, including the Senior Pastor and the Deputy Senior Pastor were significantly reduced from June 2021 onwards.

Whether the Charity has suffered a financial loss as a result of any mismanagement and or misconduct identified by the inquiry

As outlined above it is clear that the charity was spending significant sums without proper oversight and checks and no clear long-term strategy which put the charity’s funds at risk. The funds from the property disposal have been significantly depleted and it is unclear if the charity would have continued its level of spending without intervention by the Commission.

It is noted that the property disposal took place out of necessity, because the charity was unable to satisfy the mortgage payments. This points to a long-standing lack of sound financial management within the charity which is further highlighted by the way in which the funds of the sale proceeds were spent.

For instance, payments were also made to a now dormant company of which the charity’s registered contact who is also the Head of Finance was the majority shareholder. The charity explained that the payments made to the company were for security personnel because the charity had been burgled several times.

From the information available to the inquiry, it is unclear how payments to the company have been calculated. In June 2016 payments amounting to £120,960 were paid to the entity while in September of the same year only one payment of £20,960 was made. In support of the expenditure, the charity provided an unsigned ‘security services contract’ which referred to ‘£15 per hour’ dated 1 April 2015 and incorrectly completed cheque requisition forms totalling £297,600 which give an inadequate description of the services being provided.

In summary, the charity was unable to fully account for all of its expenditure due to its poor record keeping and the absence of robust financial controls. Had the previous trustee board taken more care when considering purchases and raising salaries, and if a clear expenses policy had been in place, it is likely that the charity would not have depleted the sale proceeds from the property disposal as quickly as it did.

Whether or not the trustees have complied with and fulfilled their duties and responsibilities under charity law

In order to discharge their legal duty to act in the best interests of their charity and protect charity property, trustees must ensure they put proper systems and controls in place and keep appropriate records to be able to monitor and demonstrate the legitimate movement and use of charitable funds.

As outlined above, the inquiry has found that there has been significant mismanagement and/or misconduct in the administration of the charity by the previous trustee board. The inquiry also found that the previous trustee board breached their trustee duties and lacked the necessary skills to manage the charity in line with Commission guidance and best practice and/or were not aware of the Commission’s guidance and best practice, especially in relation to governance and financial matters.

Conclusions

The previous trustee board is responsible for serious management and/or misconduct in the administration of the charity. How they governed and managed the charity prior to the Commission’s intervention falls well below the standard that the Commission expects.

However, the previous and current trustees have fully cooperated with the inquiry and implemented a comprehensive Action Plan. There have been changes to the trustee board and significant efforts have been undertaken by the current trustees to strengthen the charity’s overall governance and its policies and procedures. Because of the inquiry, the current trustees are more aware of their trustee duties, the importance of proper record keeping and decision making, and have taken measures to reduce expenditure.

The charity continues to be supported by an independent financial advisor and monitored by the Commission.

Regulatory Action Taken

The inquiry used its information gathering powers under section 47(a) and (b) of the Act six times during the inquiry. It also used its powers under section 52 of the Act seven times.

The inquiry made three orders under section 76(3)(d) of the Act on 10 February 2020 which had the effect of freezing all of the charity’s bank accounts. The freezing orders were discharged on 26 February 2022.

The inquiry issued an Action Plan under section 84 of the Act on 26 February 2021 which was fully implemented by the current trustees.

Issues for the wider sector

The purpose of this section is to highlight the broader issues arising from the Commission’s assessment of the issues raised publicly that may have relevance for other charities. It is not intended as further comment on the charity in addition to the findings and conclusions set out in the earlier sections of this report but is included because of their wider applicability and interest to the charity sector.

Trustees must take decisions in a way that meets the requirements of charity law and their governing documents. This includes:

  • taking decisions jointly (collectively), making sure all trustees have the opportunity to participate
  • recording decisions properly, so there is no doubt about what was decided and why. Written records should be sufficient to allow someone to understand the issues involved, decisions made and the reasons for them, particularly for important or controversial decisions

If a charity is to achieve its aims, then the trustees need to ensure that assets are properly used, that its funds are spent effectively and its financial affairs are well managed.

Trustees are under a legal duty to ensure funds are used only in furtherance of their charity’s purposes and are legally responsible and accountable for their proper use.

Trustees must be able to demonstrate that funds have been used for the purpose for which they were intended. This means that they need to take reasonable and proper steps to ensure that any money or resources have reached their intended beneficiaries.

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.

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.