Analysis: a question of governance

Bart's hospital charity is appointing its own trustees, but most hospital charities share the same trustees as the related health authority, raising issues of independence and conflict of interest. Kaye Wiggins reports

St Bartholomew's Hospital
St Bartholomew's Hospital

For most charities it would be unthinkable to have the same objects as a related public body, especially one that also appointed all of the charity's trustees or was itself the charity's only trustee.

But exactly that set-up was highlighted last month when the Office of the Scottish Charity Regulator published a report that mentioned the Lothian Health Board Endowment Fund, a charity that gives to NHS hospitals in southern Scotland.

The charity had appointed all the board members of the Lothian NHS board as its trustees without first telling them. The OSCR was suggesting that members should be informed before being made trustees and that the charity and the public body should hold separate meetings - albeit of the same people. There was no suggestion by the regulator that the charity should appoint its own trustees or have objects that differed from those of the health board, on the grounds it would have no power to do so.

"The way charity trustees are appointed to NHS endowments under the National Health (Scotland) Act 1978 is a consequence of that act," says an OSCR spokesman. "It is not open to such bodies to appoint trustees in a different way."

The most obvious concern is that an NHS board could, in practice, decide to use a charity's resources for costs that should be covered by the state.

The spokesman accepts that there might be a conflict of interest, and the OSCR is understood to be in talks with the Scottish government about the issue.

In England and Wales, the law does permit NHS charities to become more independent from health authorities, but few have chosen to take this path because of the time and expense involved.

Stuart Reynolds, deputy chair of the Association of NHS Charities, says there are 285 NHS charities in England and Wales, of which 264 have a hospital as their sole trustee.

Measures have been developed to avoid conflicts of interest, says Reynolds. These include giving authority to certain hospital employees to make decisions on behalf of the charity and setting "clear terms of reference" for charity trustees.

Jonathan Brinsden, a partner at law firm Bircham Dyson Bell, says: "Some of the contortions are very strange and do not go far to avoid a situation in which the charities are seen as piggy banks for the hospital.

"But advice from the regulators is tempered by the reality of the situation - that most NHS charities are unlikely to become fully independent soon."

Barts and the London Charity, which funds equipment for London's St Bartholomew's and the London hospitals, is pioneering a new governance set-up that would make it independent from the Department of Health, which at present appoints the charity's trustees.

Andrew Douglas, the charity's chief executive, says: "We decided to separate because we wanted to show that we weren't just a subsidiary of the public purse. It will also safeguard our ability to make sure donors' wishes are met."

Douglas says that if the scheme is approved by the Department of Health, it would be the first of its kind and could set a precedent for other NHS charities.

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