The need for charities to exercise strict controls over the disbursement of significant sums was made clear in a recent report by the Charity Commissioners into a small charity.
The charity, which operated to promote active sports among the disabled, suffered a theft by a trustee who had subsequently died. More than £10,000 was recovered and the Charity Commission informed. The Commission’s investigation revealed that the charity’s annual returns and accounts had been filed late and that the details of the trustees as returned were out of date.
However, the chief issues relating to finance were that the charity’s finances were under the exclusive control of a single trustee and that although a professional fundraiser was used, there was no evidence of the legal agreement with the fundraiser, who was effectively under no control.
If you are involved with a charity as a trustee, you have significant responsibilities. The Charity Commission publishes a guide called ‘Internal financial controls for charities’ and another called ‘Managing charity assets and resources’, which should be read, understood and complied with by all charity trustees. These can be downloaded from the Charity Commission website.
In principle, losses to a charity which result from the negligence of trustees can leave the trustees personally liable. It is common for small charities to depend on very few people and to adopt a casual attitude to financial controls, but this is a risky strategy.
Source: Concious