Charity Commission

Questions

Asked by

Lord Morris of Manchester
To ask Her Majesty's Government further to the Written Answers by Baroness Crawley on 29 June (WA 3–5) and 1 July (WA 46–7), how the Charity Commission's policy of leaving disputes between trustees to resolution by those trustees, after advice by the commission, operates in a case where only one of the opposing groups of trustees is in control as a result of elections which can be challengeable as fraudulent. [HL4825]

To ask Her Majesty's Government further to the Written Answers by Baroness Crawley on 29 June (WA 3–5) and 1 July (WA 46–7) that the Charity Commission's decision to take action in a particular case depends upon the issues involved, the risks to the charity and whether its intervention is necessary and proportionate, how the commission defines or otherwise describes what is meant by “necessary” and “proportionate”. [HL4826]

Baroness Crawley
The information requested falls within the responsibility of the Charity Commission. I have asked the commission to reply.

Letter from Andrew Hind, Chief Executive of the Charity Commission, to Lord Morris of Manchester, dated 7 July 2009.

As the Chief Executive of the Charity Commission, I have been asked to respond to your Written Parliamentary Questions.

Parliamentary Question (HL4825)

From our experience, the deliberate abuse of voting procedures and rights in charity elections is rare. More often, disputes relating to the holding of trustee elections are caused by a lack of attention to governance arrangements. This may be because procedures have not been followed or because the governance arrangements are complex to manage.

In this situation, the various parties should work together to seek a solution for the future. The outcome might include the adoption of new governance arrangements and ensuring that future elections are fair and transparent, perhaps by the appointment of an independent election supervisor.

If an “opposing group” remained unhappy with the situation, it could consider what other options were available to it. This would depend upon:

the constitutional framework of the charity; for instance, is it a membership charity?
 

the provisions in the charity's governing document; is there a disputes clause or other relevant provision?
 

its own position in relation to the charity; are the members of the opposing group also members of the charity or do they have some other constitutional role?
 

As mentioned in my answer to a previous question, mediation can be a quick and cost effective way to resolve a dispute. This includes allegations of election abuse or other irregularities.

Parliamentary Question (HL4826)

The answers to the previous Questions were given in the context of a dispute or serious disagreement in a charity. The commission will become involved with a charity in these circumstances only where it has a clear role. This will usually be only:
 

if there are no validly appointed trustees; and
 

all other methods of resolving the dispute have failed.
 

If there were substantial concerns about the validity of trustee appointments, we would expect those running the charity to put the situation right. If this was not possible then it might be necessary for the commission to become involved. In certain circumstances we can, for example, use our powers to appoint new trustees.

Taking into account the principles of good regulation, we ensure that we are proportionate in all that we do. This means that we focus our priorities and resources where we believe our intervention as regulator can make most difference to charities and the people who benefit from them. In the context of a charity dispute, we would consider the following factors in assessing whether it was appropriate and proportionate to take action:

the particular circumstances;
 

the seriousness and scale of the problem;
 

the level of risk to the charity (activities, beneficiaries, property or reputation):
 

available evidence; and
 

likelihood of a successful outcome.
 

We might conclude that we could use commission resources elsewhere to greater effect in the public interest, and that we should not take regulatory action.

Our experience is that this type of situation is best solved by those involved in the dispute, using mediation if necessary. A solution imposed from outside, be it by the commission or another stakeholder, may not have the same chance of long term success.

I hope this clarifies the position.