Injury claim case serves as warning to charities

The Charity Commission is warning trustees to make sure they buy adequate third party insurance after an investigation revealed that a chair who failed to insure his charity against accidents had to spend more than £500,000 of the charity's funds to settle a personal injury claim.

Nottinghamshire-based charity Al Jamia Al Islamia, which provided lodging and tuition for students of the Koran, failed to keep account of £650,000 borrowed from members of the Muslim community over seven years and let its building in Flintham, near Nottingham, fall into disrepair, the report concluded.

The commission also found that, after a serious accident at the school and a subsequent court action, the trustees failed to intervene when the chair decided to sell the Feltham building and paid £10,000 deposit on and £44,000 for refurbishment of new premises in Manchester. The Manchester site was lost, along with £54,000 of the charity’s funds, when the High Court blocked the sale of assets pending the outcome of the personal injuries claim.

At no time, says the report, did the chair or trustees take professional advice or have the Manchester property valued, before spending the charity’s funds. The chair was suspended at the start of the investigation but died shortly afterwards.

A new chair, Zaheer Ahmed Rahman, and new trustees have been appointed. Now that the court case and the four-year Charity Commission investigation have been completed, the charity’s assets have been unfrozen. The Flintham property remains in the hands of the Official Custodian, a corporation that holds land on behalf of charities, and cannot be sold without permission.

The commission’s report says that the case is a warning to trustees that they must not only look after a charity’s assets, but also insure against accidents and other claims.

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