The charity Alzheimer's UK Research Education and Care Ltd spent 92 per cent of its total outgoings on fundraising and the acting chief executive's salary, and nothing on charitable activity, according to a Charity Commission report published yesterday.
The commission opened a statutory inquiry into the charity, which existed to provide research and education about Alzheimer's disease, in September 2008 after receiving a complaint about the acting chief executive's salary and the level of charitable expenditure.
The regulator's investigation found that, in the two financial years to the end of March 2008, the charity raised £351,000, but spent £361,000 on fundraising mailshots and the acting chief executive's salary of £40,000 a year.
The report says the acting chief executive of the charity, who is not named, was previously involved with two other small Alzheimer's organisations. At these, she worked with the proprietor of two private fundraising companies, which she appointed on lucrative contracts to work for Alzheimer's UK Research Education and Care.
She founded the charity and was involved in appointing the four trustees, who had been recruited by the proprietor of the two fundraising companies, says the report. The trustees then ratified her appointment as chief executive.
The commission froze the charity's accounts in October 2008 and did not allow them to be unfrozen again. It issued permission for trustees to wind up the charity on 5 March 2009, but it was not finally shut down until 10 February 2010, after a creditor was granted a winding-up order.
The report says trustees "fully accepted that they had paid insufficient attention to the charity's objects and activities". It says they failed to carry out their duties properly.
"The trustees failed to oversee and properly scrutinise the activities of the charity and their fundraising strategy," the report says. "The commission found that the charity trustees had spent none of its funds on charitable activities since its registration on 19 July 2006.
"The charity had become no more than a fundraising vehicle."