The Charity Commission investigated almost 2,000 charities in the year to March 2014 and used statutory inquiry powers four times as often as the previous year, according to a new report.
The number of charities placed under statutory inquiry by the Commission rose to 64 from just 15 the previous year, the Tackling Abuse and Mismanagement report said. A further 68 charities were placed under inquiry between April and September 2014 whilst 1,865 were subject to an operational compliance case.
The Commission said in its report that it had also used compliance powers more frequently than the previous year and was more effective at appointing interim managers during inquiries to oversee the process.
The primary reason for opening a compliance case was financial abuse and mismanagement by charities. Some 25 of the 30 statutory investigations that concluded in 2013-14 were opened for that reason.
Paula Sussex, chief executive of the Charity Commission said: “Concerns about financial abuse and financial mismanagement featured heavily in our compliance case work again last year. We know the public places enormous value on sound financial management and accountability in charities and it is vital that charities live up to those expectations and manage their charities in a way that inspires public trust and confidence.”
Serious governance failures and concerns about mismanagement accounted for 135 operational compliance cases. Some 95 cases involved general concerns about poor governance, the report said.
In September 2013, the commission launched a class inquiry into charities that failed to file annual documents for two or more years. The report reveals that by November 2014, the inquiry ensured that charity funds of over £47m were publicly accounted for.
Of the total number of charities registered with the Commission, only a small amount becomes the subject of a compliance case, the report said. In the year, this amounted to 1.2 per cent of all registered charities.
“This report confirms the progress we have made over the past 18 months,” added Paula Sussex. “Most trustees are volunteers who do their best for their charity and we recognise when trustees make innocent mistakes. But some charities get into trouble because their trustees do not take enough care in their role. When we see serious abuse or mismanagement in charities, we must intervene to put a stop to the problems and protect charities against further harm.”
Seeking professional advice can be a sensible step in ensuring that your charity is compliant. For more information on how Milsted Langdon’s charities team can help, please contact us.