Editorial: Charity isn't a job creation scheme

The Charity Commission has reported on a charity where there was no charitable activity and the income went to pay the acting chief executive and employ two fundraising companies, says Stephen Cook

Stephen Cook, editor
Stephen Cook, editor

A Charity Commission inquiry report published last week lifted the lid on the scandalous case of a charity that was little more than a job-creation exercise for its acting chief executive and two associated fundraising companies.

The inquiry into Alzheimer's UK Research, Education and Care Ltd found that, in the two years to March 2008, the charity raised £351,000 and spent £361,000 on the executive's salary and fundraising mailshots - and nothing at all on charitable activities.

The watchdog's conclusion was that the charity had become no more than a fundraising vehicle and, because fundraising is not a charitable activity that benefits the public, it gave the trustees power to dissolve the charity - closing it down, in effect.

"The charity engaged two private companies, previously known to the acting CEO, at a significant cost, to raise funds," says the report. "These funds were then used the pay the salary of the acting CEO and to pay for more fundraising contracts."

The report says it can be justifiable for charities to spend nothing on charitable activity while becoming established, but only if there is a well-founded plan to move on into charitable work.

But this was evidently not the case here, and - to make matters worse - the acting chief executive had worked a comparable trick earlier with another charity and the same two fundraising companies. The reputation of charities generally is at risk of serious damage from such episodes.

This case came to light only because someone blew the whistle and the commission intervened. But it is quite possible that something similar is going on, unchallenged and undetected, in any number of the country's 180,000 registered charities.

There is no way that the commission can systematically check every charity, especially at a time when its budget is being reduced by a third. But it should perhaps be asking itself if its reporting requirements could be framed in such a way as to flag up more effectively those charities with low or no charitable expenditure.

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