The Charity Commission recently published the report on its investigation into the Big Society Network charity, Society Network Foundation. You may remember (how could you forget if you read this blog!?) that that investigation arose over questions asked about the Charity’s actions over funding received from the Cabinet Office and suggestions of impropriety of payments made to trustees.
Their report won’t take long to read…and I suspect it took about the same time to carry out the investigation. In summary it says that the payments to a trustee were made prior to the charity becoming operational and that they ceased when the charity started properly running.
This is interesting as of course the Big Society Network was set up some time before the Society Network Foundation was established as a charity. BSN was set up as a for-profit venture. Only latterly (perhaps in order to access funds only available to charities?) was SNF established and, I believe, BSN then became a wholly owned subsidiary of the new charity.
So whilst the Charity Commission are undoubtedly correct in their assessment, the payments probably do not pre-date the operations of BSN. Of course the actions of a private company are beyond the remit of the Charity Commission and there is nothing illegal with payments being made to company directors in this way…but it doesn’t feel quite right to me, even if it is legal.
The second matter the Commission investigated was whether the SNF trustees inappropriately used restricted funding (that is money which is given for a specific purpose and cannot be used for anything else). This relates to a Cabinet Office grant which was awarded to support their failed ‘Get In’ project which never saw the light of day. The allegation was that SFN’s trustees allowed this money to be used for ‘general purposes’, rather than spending it on the project. On this matter the Charity Commission say that they can’t tell whether the Cabinet Office agreed to this money being used in this way, though they do note that the Cabinet Office ‘takes a different view’ of the matter. The Cabinet Office have said they are seeking to recoup a whopping 1.5% of the money they gave to SNF for the project.
In a classic piece of fence-sitting the Commission conclude that this is a matter between the Cabinet Office and SFN which ‘lies outside our jurisdiction’. In a blog post a few weeks ago I suggested that we should expect:
“…a continuation of the ‘he said….she said’ mud-slinging between the former allies as they seek to absolve themselves of any blame.”
Sadly it seems that the Charity Commission were unwilling to referee the mud-fight.
I’m not a lawyer, but it does occur to me that the burden of proof should rest with the party claiming that something changed. There’s clearly evidence that the grant was made as ‘restricted funds’. But there is no evidence to show that this was changed. SNF say that the agreement was provided verbally.
The Charity Commission do criticise the trustees over spending the money on general purposes with only verbal authority. But I am surprised that a lack of evidence that the Cabinet Office agreed to the change has not led the Charity Commission to conclude that SNF had breached charity law.
Since the Society Network Foundation Charity is now being wound up the Charity Commission concluded that it wasn’t worth pursuing the matter any further.
However, one thing occurs to me…There is a test that is supposed to be applied to people who run or work for charities which was introduced under the Finance Act 2010. The ‘fit and proper persons test’ is supposed to prevent ‘fraudulent or sham charities’. Are there not questions to be asked about the suitability of the people involved in this affair over whether they are ‘fit and proper persons’?
Just a thought…