The Moss Side and Hulme Community Development Trust was registered with the Charity Commission on 29 August 2002. The Charity's objects are the promotion for the public benefit of urban or rural regeneration in areas of social and economic deprivation, in particular, Moss Side, Hulme and adjacent areas of Manchester.
The Charity Commission opened a statutory inquiry into the Charity in August 2018 following its failure to submit its accounting information. The Commission also issued the Charity's trustees – Mr Hartley Hanley and Mr Mike Bisson – with an order made under s.84 of the Charities Act 2011 requiring them to undertake the following tasks:
- recruit new trustees;
- advertise and hold an annual general meeting;
- review the Charity's decision-making procedures;
- review the Charity's processes to ensure future compliance with statutory responsibilities (like submission of the Charity's accounts);
- produce new policies to manage conflicts of interest;
- review the Charity's activities; and
- ensure that there was no further unauthorised trustee remuneration.
Facts and issues
Following the issuing of these directions, the Charity's trustees were required to produce a report to the Commission within six months on their compliance with them. No report was submitted, and despite numerous attempts by the Commission to contact the trustees, the Commission was met with a very limited response (and in the case of one of the trustees, no response at all).
The Commission received complaints from the Charity's beneficiaries that no AGM had been called, and in September 2021 the Commission opened an additional inquiry into the Charity which looked into whether the trustees were complying with their legal duties in respect of their administration, governance, and management of the Charity, whether the trustees were complying with the previous order, and if the trustees were acting in line with the regulatory advice and guidance previously issued by the Commission.
The inquiry found that the trustees had not complied with the s.84 order:
- No new trustees had been recruited (and there was no evidence provided to confirm that any attempts to recruit trustees had been made) despite that Charity's governing document requiring a minimum of four trustees;
- No evidence was provided that an AGM had been held or advertised (again, as required by the Charity's governing document). Complaints were also received from members of the public which confirmed no steps had been taken to hold and AGM;
- Although no evidence was provided to support the trustees' compliance with the order's requirement that no further unauthorised trustee remuneration took place, the Charity's bank accounts suggest that no further payments to trustees were made; and
- No evidence was provided to suggest that a review of the Charity's procedures/ policies had been undertaken.
The inquiry found that found that Mr Hanley and Mr Bisson's failure to comply with the s.84 order of the Commission demonstrated misconduct and/or mismanagement in the administration of the Charity, in particular because the trustees had failed to ensure that the Charity was operating in accordance with its governing document. To remedy this, the Commission exercised its powers to appoint an additional three trustees who (along with the original two trustees) were directed to call an AGM within three months. An AGM was held on 1 March 2022. Prior to the AGM, the two original trustees were removed (Mr Hanley by trustee removal, Mr Bisson by resignation). At the AGM, the Charity's members elected new trustees.
The inquiry found that the failures perpetrated by Mr Hanley and Mr Bisson were "persistent and prolonged" and during the five years that Mr Hanley and Mr Bisson were trustees, the Charity was the subject of three separate Commission inquiries. As a result, the Commission further concluded that Mr Hanley and Mr Bisson should each be disqualified from holding the office of trustee or senior management functions at any charity. Mr Hanley and Mr Bisson were disqualified for a period of seven years.
Key lessons for charity trustees
The inquiry suggested the following key points for the wider sector, including trustees, to consider:
- Charity trustees must comply with all their legal obligations, and an important duty is managing the charity in compliance with the charity's governing document and the wider law.
- Charity trustees must also ensure that they comply with any orders and directions of the Commission. In some circumstances it may be a criminal offence (or contempt of court) for a charity or a trustee to fail to comply.
- Charity trustees are representatives of the charity in the charity sector, and the Commission describes the conduct of trustees as "a key driver of public trust and confidence in the charity sector". In relation to the disqualification of Mr Hanley and Mr Bisson, Amy Spiller, Head of Investigations at the Charity Commission said that "[t]rustees of charities should show accountability towards the communities they serve, and the wider public."
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