A common-sense response to the recent findings of the Charity Commission about the Our Local Heroes Foundation might be to say "this is ridiculous – throw the book at them".
The charity has outsourced its fundraising to a company that takes 80 per cent of the proceeds and was found to have " a very low level of charitable expenditure, substantial spending outside the charity’s objects, poor governance, conflicts of interest and an insufficient focus on providing grants to beneficiaries". Does it get much worse than that?
But in the world of charity regulation, common sense is not necessarily the only factor in play. The commission’s regulatory case report on the charity says it considered opening a statutory inquiry, which would have empowered it to take various forms of drastic action; but it decided instead, because of the "open and responsible" approach of the trustees, just to issue a three-point action plan.
This involves telling potential donors about the fundraising costs, maximising grants to ex-service beneficiaries, minimising operating costs and sticking more closely to the charity’s objects. The charity says, and the commission confirms, that it has already made progress on these and other fronts. It is, in effect, being given a second chance.
This is all well and good, and comes as an example of lighter-touch, charity-friendly, enabling regulation. A potential twist, of course, is that the action plan might have just as salutary an effect as stronger intervention by the commission: if everyone is told that 80 per cent goes to the fundraisers, will they still choose to give? What kind of future does the charity now face?
The company acting on behalf of the charity, Targeted Management Ltd, was set up by Tony Chadwick, who was a director of Prize Promotions, which the charity had reportedly also engaged and which went into compulsory liquidation last year. The charity has signed a five-year contract with TML, which is now being trusted to use scripts telling donors that it will take a proportion of proceeds that the commission quite rightly describes as unacceptable. It will be instructive to see how that plays out in practice.
It is welcome in one sense that the commission is giving this charity the benefit of the doubt – an indulgence that its chief executive said not long ago it would no longer grant. But given the particular circumstances, was this the right case for an outbreak of relative leniency? Our Local Heroes was not, after all, the first charity to find itself in thrall to a company that appears to be getting a better deal than the beneficiaries. Nor will it be the last. As the commission’s report warns, some fundraising arrangements can create the impression that the charity is being exploited for private gain.
What is needed is a detailed and forensic examination of an example of how this kind of relationship comes about, not least as a cautionary tale to the wider sector. As it is, the rather perfunctory case report published by the commission about Our Local Heroes raises as many questions as it answers, and in that sense might be a missed opportunity.