Charity slammed for paying trustee £56,000 to act as its CEO

A charity that allowed payments of more than £50,000 to a trustee to double up as its chief executive has been criticised by the regulator.

The Charity Commission has rebuked Moss Side and Hulme Community Development Trust for a raft of financial failures.

This includes paying one of its trustees £56,000 over three years to act in the role as chief executive for the charity over three years.

Under the charity’s governance rules payments of this nature to a trustee are prohibited without the prior approval of the Commission, which said “no such approval had been obtained”. The payments were made to the trustee in the financial years ending August 2013 to 2015.

The Manchester based regeneration charity was investigated by the charity after being part of the Commission’s ‘double defaulters’ class inquiry into charities that failed to file proper accounts on two or more occasions in the last five years.

Other failings at the Trust included the charity only having three serving trustees since 2009, when its governing document says it must have at least four to make valid decisions.

Furthermore, over the last two years it emerged there were only two trustees at the charity after one was removed by the remaining two. The removed trustee “considers they were improperly removed from the register and that they remain a trustee of the charity”, said the regulator.

The trustees were criticised for late filing of the charity’s accounts and were found to have “consistently failed to comply with their duty to ensure the charity is accountable to the public and its benefactors”.

The purpose of the charity’s work was also not clear. There were inconsistencies on what the charity’s learning centre did in its annual report. While its annual reports for 2014 to 2018 reference a need to upgrade the centre, its 2015 report describes how it had helped more than 400 people at a cost in excess of £60,000 a year.

The charity has been ordered to recruit new trustees, hold an AGM, review its decision-making processes as well as ensure conflicts of interest are avoided. It has also been asked to ensure there are no further unauthorised payments to trustees.

“The Commission has opened a separate case to monitor the trustees’ compliance with this order and will consider further regulatory action if the trustees fail to complete all the actions required,” said the regulator.

It added regarding the payment of trustees: “The law states that trustees cannot receive any benefit from their charity in return for any service they provide to it or enter into any self-dealing transactions unless they have the legal authority to do so.

“This may come from the charity’s governing document or, if there is no such provision in the governing document, the Commission or the courts.”

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