Archive for the ‘Regulation’ Category

One in the Eye for Christ Church

A bit of a mouthful but too much to swallow when the powers that be at this mega charity demonstrates their bullying and outdated views.

Professor Martyn Percy Dean of Christ Church has been under suspension since November 2018. He is accused of “conduct of an immoral, scandalous or disgraceful nature incompatible with the duties of the office or employment”. There has been no explanation or reasons for this action taken by a cabal of potentially only 7 out of 64 governors. Nor can the dean talk about the suspension even though he has not been given any details of the accusations.

The dean may be being punished for trying to ‘throw some light on the “poor governance” of the self-serving body which sets the salaries of College fellows. They objected to his interference, and determined to rid themselves of this meddlesome priest’. further details of bullying on blog

Fact or Fiction

  • Christ Church is both a cathedral, an Oxford college and a registered charity.
  • It has enormous funds and reserves of over half a billion pounds and large land and property assets conservatively valued in the accounts on a  historic cost basis.
  • In the past, Percy has been a thorn in parts of the hierarchy of the Church of England. He criticised its reform programme saying it was “driven by mission-minded middle managers” who were alienating clergy, congregations and the general public.
  • Revd John Witheridge, Honorary Chaplain at Christ Church, and a Chaplain to Her Majesty the Queen recently said about ethics that they are “an integral ingredient in Christian theology”. “Let each of you look not to your own interests, but to the interests of others.”


Martyn Percy is not allowed to perform his duties in the cathedral or the college and potentially has lost his permission to officiate within the Church of England. There is no known appeals or grievance procedure until a tribunal reports. Shame on someone!

We often hear about the tip of the iceberg. When things are bad they are often far worse. Public bodies such as churches, charities and universities should be open frank and forthright. We are left to wait and see in this case but don’t hold your breath.

Improvements Needed on Charity Reporting – Public Benefit

In a charity commission survey only 51% of charities surveyed demonstrated a clear understanding of public benefit reporting requirements. Only 74% of charities with income over £25,000 produced annual report and accounts of acceptable quality, so what of the other  26%? Among smaller charities the acceptable level of reporting was lower at only 64%.

The commission checks a random sample of trustees’ annual reports for the quality of reporting, including about public benefit, and would consider persistent non-reporting of public benefit a potential regulatory issue.

Poor or nonexistent reports are a missed chance for a charity to show how they are making an impact and how its core purpose is being delivered. As the commission say it ‘helps you demonstrate the value and impact of your charity’s work to its supporters, beneficiaries, grant makers and funding bodies’.

Report on public benefit

If your charity is registered, your trustees’ annual report must explain how you have carried out its purpose for the public benefit. A detailed report is only required if your charity’s gross income exceeds £500,000; otherwise a brief summary is all that’s needed.

You must also state whether you and the other trustees had due regard to the commission’s public benefit guidance when exercising any powers or duties to which the guidance is relevant. This means making sure that any personal benefits people receive (having regard both to its nature and to its amount) are no more than a necessary result or by-product of carrying out the purpose.



Breech of Regulation by Charities Professionals

Auditors are failing in their statutory duty to report matters of material significance to the relevant charities regulator. The regulators have a hard enough job without those paid professional auditors abdicating their duties. The obligations include those brought in from May 2017 after the collapse of Kids Company and the conclusions of the Public Administration& Constitutional Affairs Select Committee.

In the last 6 months 114 modified audit reports have been issued by auditors but  only 6 immediately complied and passed on their concerns (22 more did so later). That leaves 86 charities and auditors in default.

Charity SORP  changes since December 2017 will a require 21 changes to FRS 102 including comparatives and clarification on gift aid.

FRC regulate auditors, accountants and actuaries, and set the UK’s Corporate Governance and Stewardship Codes. They should promote transparency and integrity in business.  They claim to understand that auditors and charities are often overburdened by ever increasing regulatory guidance but that can obscure the needs of a charities donors, beneficiaries and other parties.

Charity Finance Group (CFG) was founded in 1987. It is the charity that works to improve the financial leadership of charities, promote best practice, inspire change and help organisations to make the most out of their money so they can deliver the biggest possible impact for beneficiaries. CFG has over 1300 members and membership manages nearly £21 billion in charitable income. In addition to qualified audit reports auditors may prefer to use management letters rather than ‘damage’ there personal relationship with clients and trustees.


Internal and external audit can be a mixed blessing for charities but they should inform a wider audience than individual managers and trustees. They need to be on top of there game to help the charity sector take timely action and avoid bad publicity after issues are uncovered.


Charity Lottery ‘and the Winners are for Profit’

Charities across many sectors must think they have won the lottery!  From Oxfam to the Royal Mencap Society, Fire Fighters to Sue Ryder there are a burgeoning number of number of ‘lottery schemes’ to redistribute your wealth. The Gambling Commission records 520 licensed lotteries that range from big bookies to bigger charities.

The  for Profit Sector

Google ads for these schemes rake in money for guess who? You got it, Google! TV ads are becoming more frequent for example back to back ITV 3 adverts for the  Cats Protection lottery and the RNIB must have cost a few months prize money. ‘Your Charity Lottery’  works in conjunction with Dove House Hospice Ltd   509551 – and says it offers other charities and fundraising groups the opportunity to add a weekly draw to their fundraising portfolio’.

Set up and management costs for these schemes must have been calculated to be cheaper than other fund raising activities, or more likely it is just one more money raising method. Private commpaies have latched on to the opportunity for their business eg. ‘ Zaffo can manage lotteries, raffles, prize draws, free prize draws, instant win games’…….. ‘ Woods is already leading the market. We act as an external Lottery manager, providing clients with a comprehensive charity lottery service ……….’  ‘Clubdraw is designed to give good causes large and small – from village playground fund to international club – the chance to gain support and raise valuable funds through their own weekly lottery draw ………’ Other similar organisations are available.

The Gambling Commission

A lottery is a kind of gambling which has three essential ingredients:
■You have to pay to enter the game
■There is always at least one prize
■Prizes are awarded purely on chance

Types of lottery under the Gambling Act 2005 are classified as

Small society lotteries The society in question must be set up for non-commercial purposes eg sports, cultural or charitable. There is a top limit of £20,000 in ticket sales.

Large society lotteries Similar to the small society lottery, but there is a minimum of £20,000 in ticket sales and more onerous controls.

Local authority lotteries to help with any expenditure it normally incurs. They must hold a Gambling Commission licence.

The following types of lottery do not require permission.

  • Private society lotteries must raise money for the purposes for which the society is conducted or to raise funds to support a charity or good cause. No rollovers.
  • Work lotteries for colleagues who work at the same single set of premises/people who live on the same single set of premises. No rollovers. make no profit or be to raise funds for a charity or good cause.
  • Customer lotteries can only be run by a business, at its own premises and for its own customers. No prize can be more than £50 in value. This type of lottery cannot make a profit, and so is unsuitable for fundraising. No rollovers.
  • Incidental lotteries  can be held at commercial events (such as exhibitions) or non-commercial events (such as school fetes) and must be for charitable or other good causes. They cannot be run for private or commercial gain.


  • Is enough of the donor/player cash returned to the good or charitable cause.
  • Both the Gambling and Charity commissions have supervision roles and need to be coordinated to prevent abuse.
  • Gambling is a potential problem for those less able to manage their finances. Our local Credit Union (set up to to help borrowers) is happy to promote its regular lottery and annual raffle.

Unity Lotto is a bit of a Gamble

I recently referred to Unity Lottery when discussing Pets at Home’s pet charity ‘Support Adoption for Pets’. During research I was taken by the strong assertions by Unity Lottery that they had no connection to Unity Lotto. That set me wondering what was going on.

Unity Lotto

Unity Lotto operate a lottery syndicate, rather than a lottery so they maintain they are not required to be regulated or authorised by the Gambling Commission. If you are one of the many who have a complaint they suggest in the T’s&C’s ‘For more information, please visit the Gambling Commission Website. (Not much use if they are unregulated).  We are not required to be regulated by the Financial Services Authority, as the syndicate we operate is not an investment scheme.’

As far as we can ascertain Unity Lotto is not connected with Camelot Group PLC, any charitable good works or any other lottery providers nor is it in receipt of commissions.

UnityLotto EuroMillions syndicated service  enables members to play the lottery together by buying a number of tickets at a shared cost and splitting any prizes won.

This is a sample costing and reward calculation: assume ‘150 syndicate members pay £37 each for 4 weeks of 150 tickets a week. Total income £5,550 Money spent on tickets = £1,200.
Profits before costs for Unity Lotto £4350.
Not actually illegal and pretty much on a par with every scam online syndicate I have seen – most of them also offer existing members incentives to drag more victims in.
Good luck trying to get anything back and avoid online syndicates in the future.’ (Money Saving Expert forum).

Most of the complaints we have seen are based on recruitment of new members, taking money without clarity or due authority, misleading phone calls purporting to be from the National Pension Service and disappearing without responding to problems.

Unity Lottery

The Unity Lottery is a ‘common brand lottery jointly promoted with individual society lotteries. Each Lottery operated under Unity (part of Sterling Lotteries) is a separate licensed lottery, operated by and supporting that particular good cause.’ It is registered with the Gambling Commission.

Members sign-up to pay £1 per week for a unique six-digit lottery number. Numbers are entered into a weekly draw, with various prizes including a £25,000 jackpot. For every £1  received  50p will go directly to your chosen charity or cause. (50%) The rest covers prizes, profits and administration costs.

According to their parent organisation web site ‘in 2014, Sterling enabled over 250 organisations to raise a total of almost £45 million through fundraising lotteries. Their lottery members shared over £7.5 million in prizes.’ That looks like £45m less £7.5m prizes leaving about £27.5m for running costs and profits.


Neither of these organisations is a charity. Unity Lotto  needs to be supped with a very long spoon if at all.

Unity Lottery raises lots of money for lots of good causes from the supporters of those causes.

Lotteries offer significant potential for big business, fund raisers, managers and charities alike. They tend to rely on data bases of existing causes.

The National Lottery may have a lot to answer for in how it has changed our approach to charity.

Sporting Land Development


Still hitting the headlines, this charity is involved with  land around The Den Millwall FC’s football ground, offshore company Renewal and the new multi-million pound Bermondsey development. The media continue to question loans and funding arrangements and  relationships with Sports England and Lewisham council. To add to the problems a member of the public contacted the Charity Commission in January 2017 with some specific concerns including that:
  • the charity was a vehicle for money laundering and/or tax avoidance
  • there were conflicts of interest in the charity’s decision making, and links between the charity, a developer and local officials
  • the charity’s income was low, while its expenditure was high
  • that the charity had failed to achieve its stated aims

After  investigating the issues raised that were within their regulatory remit  the commission issued a report that included a conclusion ‘We considered that the charity had addressed our regulatory concerns and demonstrated that it was acting independently, we had no ongoing concerns about the funding of the charity. We closed our case in March 2017.’ The full report can be read here.

The Commission was able to provide public assurance that  the charity is operating in compliance with charity law. They did not examine the merits of the development scheme and the compulsory purchase orders that fall outside their regulatory remit.

‘We have ensured the trustees are clear that they need to continue to ensure that the charity is independent and that any decisions are made in the best interests of the charity. Charities can attract considerable public scrutiny where they are involved with decisions that are unpopular or controversial.

The public expect that charities and trustees should be as open and transparent as possible regarding the decisions they make. It is especially important where there may be an impression that individuals have conflicts of loyalty that trustees always act in the best interests of their charity. The key to making the right decisions (and being able to defend them) as a trustee is knowing your role and responsibilities.’

Reinforcing guidance for trustees

  • ensure your charity is carrying out its purposes for the public benefit
  • comply with your charity’s governing document and the law
  • act in your charity’s best interests
  • manage your charity’s resources responsibly
  • act with reasonable care and skill
  • ensure your charity is accountable

Nesta a Business or Charity

The National Endowment for Science Technology and the Arts NESTA was a public body designed to promote creativity, talent and innovation across a wide spectrum of areas and interests. In 1998 it received an endowment from the national lottery and has benefited from various government support.  An investigation and report in 2010 concluded ‘that, while NESTA provided a valuable role, it did not need to be a public body and that its activities were better suited to the voluntary sector’. This led to NESTA becoming an independent charity in 2012 when it changed its name to Nesta with gifted assets of £343m.

In summary the main object and purpose of the charity is  to advance education, and in particular the study of innovation by the promotion of research and the publication of the useful results. By working to improve the conditions in which great ideas can flourish – addressing the policy and structural conditions that can either energise or stifle creativity.

Key Items from 2016 Report & Accounts

  • Assets and funds carried forward from March 2016 were £384m with less than 7% held in ‘mixed motive early stage companies.
  • A significant proportion of investments are in overseas quoted companies and showed a loss in the year. ‘In 2016 global equities generated a loss of £10.2 million, compared to a gain in 2015 of £25.1m.’
  • Income from investments and endowment fund was £1,956,000 but investment management costs of £1,257,000 wiped most of this out.
  • Staff levels have increased by 75% in four years to 167 full time equivalents with 27 of those earning over £60,000 pa.
  • The Nesta trust which holds the endowment fund has a Protector appointed by Government to oversee the administration of the Trust – with a principal trustee being Nesta. Additionally Nesta has 9 committees and 10 trustees running a complex operation.
  • Grants of £2,126,000 were made to 120 organisations during 2015/16 including charities and public bodies  compared to £12,288,000 in the prior year.

Concerns and Issues

Nesta is well recognised in the business fraternity and shares some wider business ethics and aspirations to good effect. It is less known as a charity.

The endowment has been protected in scale if not in real terms but is it time to set a date for the ultimate use and expiry of the trust fund.

In the same way that NESTA did not need to continue as a public body should all or part of Nesta become a commercial and financial business.

The reduction in the value of grant awards seems logical and could go further to avoid none productive costs being incurred both by Nesta and the recipients.

Is the existence within Nesta too comfortable and in danger of drifting from the core purpose and intent. How do this and similar charities retain focus.

Costs of holding investment reserves, growth of staff levels and control of outsourced charitable work need to be kept under review.

The 2017 reports and accounts are awaited with interest. Detail of the numerous schemes, ventures and investments may then be worth further comment

Dissing The National Trust

An Easter witch hunt has broken out and Kraftily it is Dame Helen Ghosh who is being pelted with rotten eggs. That is too soft a target and much as I distrust this trust I am sticking up for the National Trust this time. Who has never seen a marketing or communication exercise hit the wrong note.

The Church of England ( of Wonga investment fame) have condemned the use of Cadbury inspired Great British Egg Hunt questioning where the word ‘Easter’ has gone. Not gone to church recently I guess.  ‘He that is without sin let them cast the first’ egg.

Our correspondent in the Middle East the prime minister scrambled to join the furore and helped the media fill some more time and space.

All this extra publicity may help fuel an increase in the number of attendees at the 250 eggstravaganza sites then the yoke will be on the naysayers.

Concerns about the National Trust

  • 9 senior eggsecutives each earned an average of £145,000 in 2015 – chocks away for an increase in the next accounts.
  • On a serious note the NT membership and the public deserve to know and influence the National Trust raison d’être.
  • The funding and many dubious activities, poor decisions and lack of clarity needs investigation.  When you think it is bad it is normally far worse!
  • Is the NT with it’s income of over  half a  billion pounds too large, cumbersome and powerful.
  • As a curate one said  ‘…….. it is good in parts’

Give to Charity if you Break the Law

The UK government facilitates  many benefits for charities and their supporters.   Tax breaks, constructive regulation and financial support immediately spring to mind. Corporate payments to charity for law breaking is a benefit I haven’t come across before. When a company breaks the law, in this case the UK Packaging Waste Regulations, they can avoid prosecution and fines by making a payment to a suitable  charity.

The Environment Agency is responsible for enforcing the packaging regulations that are designed to reduce and control excess packaging, cut landfill and ensure recovery and recycling of packaging waste. Last year 2016 more than 25 large companies breached the regulations and paid out over three quarters of a million pounds for the privileged.

If you fail to meet your legal obligations, or provide false or misleading information, you may face prosecution under criminal law. In England and Wales there are also civil penalties. These include:

  • fixed penalty fines for minor offences
  • higher fines for more serious offences
  • an enforcement undertaking: an offer, formally accepted by your environmental regulator that redresses the impact of your non-compliance

Example Penalties Paid to Charity

The primary purpose of the enforcement undertaking is to allow the offender to restore and remediate any environmental damage they have caused. Arrangements accepted in lieu of further legal action by the Environment Agency in the period 1 August 2016 to 27 January 2017 include:-

  • Kerry Ingredients (UK) Limited made a financial contribution of £127,975 shared between Gloucestershire Wildlife Trust (£40,451), Wildfowl and Wetlands Trust (£19,766), Severn Rivers Trust (£52,758) and Bristol Zoological Society (£15,000)
  • Olive oil company Filippo Berio UK Limited were caught on three counts and paid out a  contribution of £253,906.91 to Herts & Middlesex Wildlife Trust
  • Heineken UK Limited didn’t refresh the parts other beers failed to reach so paid a financial contribution of £160,000 shared between the Wye and Usk Foundation (£150,000) and ‘Bugs & Beasties’ (£10,000).
  • Anglia and Northumberland Water paid a combined £490,000 in environmental restitution to charities.
  • NEC exhibition center were stung for a contribution of £14,858.98 to the Canal & River Trust


  • Who selects  the charities and how is the influence controlled
  • What other crimes could start a new cluster of restitution charities.