06/04/11

By Andrew Holt

The Charity Commission has today published a report on its statutory inquiry into the charity Alzheimer’s UK Research Education and Care, finding a case of financial misuse in the charity.

The charity was registered in July 2006. Its objects include “to preserve and protect the health of the public through the promotion of research leading to the cure for Alzheimer’s, and the relief of people suffering from Alzheimer’s disease by promoting or assisting in the promotion of improved care”.

The source of the Commission’s concern was a complaint received about the remuneration of the acting chief executive officer in relation to the level of charitable expenditure.

After considering further information from the charity’s trustees, the Commission had serious concerns about the use of charity funds and the governance of the charity.

The Commission opened a statutory inquiry into the charity in October 2008 to look at the appointment of the acting CEO and her relationship with companies providing services to the charity, the use of charity funds, in particular the proportion being applied to charitable activities, the appointment of the trustees and the general governance of the charity.

The Inquiry established that in the two financial years ending 31 March 2007 and 31 March 2008, over 92% of the charity’s expenditure was accounted for by the costs associated with fundraising mail shots and the acting CEO’s salary.

The Commission concluded that the charity trustees had spent none of the charity’s funds on charitable activities since its registration in July 2006.

The charity had become no more than a fundraising vehicle.

In the course of the inquiry the Commission took steps to protect the charity’s property by freezing its bank accounts.

The charity engaged two private companies, previously known to the acting CEO, at a significant cost, to raise funds.

These funds were then used to pay the salary of the acting CEO and to pay for further fundraising contracts.

The trustees failed to oversee and properly scrutinise the activities of the charity and their fundraising strategy.

The Inquiry concluded that the trustees did not manage the charity effectively; they met infrequently, had little input into the running of the charity, had no control over the charity's finances and relied too heavily on the acting CEO.

Following a decision by the Commission to give the trustees authority to wind the charity up, the Official Receiver appointed to the charity advised the Commission that the remaining funds would not be enough to cover the money that was due to creditors of the charity, and consequently no money would be available to be distributed for charitable purposes.

Wider lessons for other charities include that charity trustees must ensure that their charity has adequate financial and administrative controls in place and that the funds of their charity are applied for the benefit of the public, for which it has been set up.

Charity trustees must retain overall responsibility for every aspect of the charity’s activities and should have proper mechanisms for delegating activities such as fundraising, with clear terms of reference for those exercising the delegated authority.

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