The Charity Commission has today published a report on its inquiries into two charities: Brent Educational and Recreational Support Youth Challenge (BEARS) and Gate Lane Community finding serious mismanagement at the former and mismanagement and unmanaged conflicts of interest at the latter.

BEARS worked with disadvantaged children, aiming to minimise the risk of their involvement in violence and gun crime.

Gate Lane Community’s activities focused on the creation of a community centre.

Two of BEARS’ trustees were also the only two trustees of Gate Lane Community.

The Commission’s inquiries were opened, to run parallel to each other, after irregularities relating to the payment of trustees were identified in accounts filed by BEARS, which were unresolved after an independent review.

Shortly after the inquiry into BEARS was opened the Commission used its powers to suspend the charity’s Chair and to protect its bank accounts.

It also appointed an Interim Manager to deal with the charity’s administration, protect its property and control its assets and funds.

The inquiries examined whether there were conflicts of interest regarding the charities, whether they had been properly managed and whether the charities had adequate financial systems and controls.

The inquiries also examined whether the trustees had received inappropriate private benefit and whether there had been misappropriation or misapplication of the charities’ funds.

The inquiry into BEARS found that there had been serious mismanagement and misconduct in the administration of the charity.

There had been a clear breach of duty by three of the charity’s trustees, as a result of conflicts of interest and unauthorised trustee benefits, which they failed to resolve.

The inquiry into Gate Lane Community found that there had been mismanagement, unmanaged conflicts of interest and that the decisions taken by the trustees were invalid.

It was also unclear to what extent the charity had furthered its charitable objects for the public benefit.

Both charities have since been removed from the Register of Charities as BEARS was no longer operational and Gate Lane Community was dissolved.

The chair and the director of BEARS have since been convicted of theft and deception offences and the police are initiating proceedings against the Chair to recover the stolen money.

The Commission has also taken steps to seek restitution of the remaining charitable funds misappropriated by the Chair.

The report highlights issues for the wider sector.

The misapplication of charitable funds for a private purpose is a serious concern and can do irreparable damage to the charitable sector.

All trustees must act only in the interest of their charity, and not for their own private interest or gain.

Trustees cannot receive any benefit from their charity in return for providing a service unless they have express legal authority to do so.

They must accept ultimate responsibility for directing the charity’s affairs and ensuring that it is solvent, well-run and delivering charitable outcome for the public benefit.

The report highlights the Commission’s resolve to seek and support prosecution where it believes that criminal activity is occurring in relation to a charity.

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