In recent months, the Charity Commission have published reports following the conclusion of a number of statutory inquiries, many of which have been in respect of charities that have failed to file accounts for two consecutive years, these are known as double defaulter charities.
The published reports give brief details as to why accounts had not been filed and the reasons (or excuses) given by the trustees for their failings. It is important to note that a failure to file accounts is always due to the failings of trustees and is a criminal offence. Any new trustee assumes a responsibility to rectify the failings of the past as soon as they take on the role.
Reading the reports, some common themes emerge. In particular trustees leave the job of getting the accounts prepared to just one of their number, something happens to that person and the other trustees have no idea about how to rectify the position so they just let things drift. It is important to remember that legal obligations apply to all trustees equally and it is neither sufficient nor advisable to be reliant on a single trustee. Charity governance is a corporate activity, trustee meetings should take place and a record of the meetings and decisions made should be kept.
Another point to note is that trustees need to ensure that their charity is operating within its objects, so they should know what the objects are, and be ready to take appropriate action if their charity gets into difficulties. Then if the charity ceases to operate the Charity Commission are informed and the charity is dissolved in accordance with its governing document.
It may also become apparent that the objects for which the charity was originally established are no longer relevant in current society. These objects should be regularly reviewed.
By Ian Huggett, Partner and member of both the Charity and non-profit Team and Property and Construction Team
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