Charity Commission warns UK charities about the risks of ‘dominant individuals’

December 17, 2015 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: News, Ethics and Canadian Charities, Avoiding 'Charity' Scams

Here is part of a press release from the Charity Commission of England and Wales concerning "dominant individuals".

The Charity Commission is urging trustees to guard against dominant individuals taking inappropriate control of their charity’s management.

The regulator of charities in England and Wales has today published its annual report of compliance and investigations case work, Tackling abuse and mismanagement. This year’s report highlights the risks that arise when trustees fail to take collective decisions, because individuals or small groups of individuals take on excessive levels of control or dominance.

The regulator says this problem is often at the root of serious mistakes in charities and is urging trustees to ensure that they make important decisions collectively, fulfilling their 6 core trustee duties.

Michelle Russell, the commission’s Director of Investigations, Monitoring and Enforcement, says the regulator is helping charities identify the root causes of poor governance:

Our case work shows that serious problems often arise because of basic failures of governance. So it is important that we identify the cultures and behaviours that prevent trustees collectively from doing a good job, and share these insights with trustees. The impact of dominant individuals is one of those underlying factors that we know can hinder good governance. Strong leadership is important, and often charities rely on the passion, drive and volunteer time of key individuals but when they are allowed excessive power or influence within a charity, the other trustees are likely to disengage, fail to contribute to or challenge ideas or decisions. They are not given the opportunity to use the skills and expertise they have and are not fully discharging their legal duties. This can also lead to serious problems for the charity, including unmanaged conflicts of interest or unauthorised personal benefit.

Michelle Russell says the impact of poor financial management and abuse can be devastating:

Financial abuse and mismanagement continues to be prominent in our case work. The effect of these problems is almost always that money intended to help beneficiaries is lost or misapplied. We know that the public cares passionately about their donations reaching the end cause. So it is vital that trustees follow the simple steps in our guidance to ensure they have good financial controls in place to protect their charity’s money and ensure it is used properly. In the meantime, we as regulator are doing more to proactively identify concerns about financial mismanagement in charities, for example through our programme of themed reviews of charities’ financial accounts.

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Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.

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