A charity has closed after the Charity Commission removed one of its trustees for serious misconduct and mismanagement.
That individual (the ‘dominant trustee’) was the trustee primarily responsible for the management and administration of The Catalyst Trust, a charity whose stated activities included providing project management and advice, loans, grants and guarantees to other charities. In reality, however, the charity focussed primarily on the development of a software project that provided no tangible benefit to the charity.
The commission’s investigation found the dominant trustee had effectively operated the charity and made decisions for it with minimal input from other trustees. Consequently, the charity had made investments and loans to companies in which the dominant trustee had a personal interest or connection.
The inquiry arose after a member of the public raised concerns about the rental payments for a property the charity owned. Upon inspecting the charity’s books and records, the commission found unexplained transactions totalling over £60,000 and that the trustees had breached their obligations to prepare annual accounts.
Following the commission’s decision to remove the dominant trustee, the other two trustees decided to close the charity. The trustee who was removed is now permanently barred from acting as a trustee in the management of any charity.
Gemma Ritchie (pictured), Associate Solicitor with Gaby Hardwicke, commented: “This case highlights the importance of all trustees being aware of how a charity differs from a private business and being familiar with their roles and responsibilities as trustees.
“If you have an idea for a project and are considering setting up a charity to implement it, you should take advice at an early stage to check that setting up a charity is the best means for achieving that project or whether a different legal structure would be more appropriate.
“If you have been recruited to join a charity as a trustee, you need to ensure you receive training on your responsibilities as a trustee, including your responsibility to take an active role in the governance of the charity and how to recognise and avoid conflicts of interests.”
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