Charity made £79,000 mortgage repayments for property it does not own, regulator finds

A charity that made mortgage repayments for the family home of its founder has been criticised by the Charity Commission.

Oldham based Alauddin Siddiqui Trust had made mortgage contributions amounting to £79,000 between 2008 and 2020 for the property, the regulator found.

The charity was under investigation after the property “appeared to be potentially an asset of the charity but was not registered as such with the Land Registry”.

This led to concerns that there was a “potential loss of charitable assets”.

The Charity Commission investigation found that the Trust, which is involved in overseas aid and famine relief, had also been solely responsible for the property’s maintenance, despite it being used as a home by the charity’s founder and his family.

A settlement has since been negotiated with the founder, of £44,220. In addition, he has agreed to pay the ongoing mortgage payments, with a below market rental fee agreed for the charity to use a section of the building.

The regulator found evidence of misconduct and/or mismanagement in the administration of the charity by its trustees, although it acknowledges that they have made improvements since.

They also note that the charity had been able to recoup “a significant sum of money as a part of the negotiated property settlement”.

Governance concerns

The Commission had also been concerned around the governance arrangements at the charity and a linked limited company of the same name.

“Those two entities had become merged to some extent and were being treated as if they were one because the charity’s then trustees thought this was how they could incorporate an unincorporated charity,” said the regulator.

But it adds that the trustees have “resolved the confusion” around this situation and the regulator is now satisfied with the charity’s “more transparent governance structure”.

The trustees have been issued with regulatory advice and guidance and an action plan to ensure they comply with their legal duties.

The Charity Commission hopes that trustees of other charities learn lessons from the case in understanding their legal duties and role.

“Charity trustees are responsible for governing their charity and making decisions about how it should be run,” it said.

“Making decisions is one of the most important parts of the trustees’ role. Trustees can be confident about decision making if they understand their role and responsibilities, know how to make decisions effectively, are ready to be accountable to people with an interest in their charity.”

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