The defunct charity BeatBullying did not comply with its own reserves policy before going into liquidation last year, but there is no evidence that its demise was due to financial mismanagement, a Charity Commission report has concluded.
The regulator today published its report on its operational compliance case into the anti-bullying charity, which was founded in 2003 and received a £1.3m Cabinet Office grant in 2011 to expand its work, fuelling a period of rapid expansion.
But it made losses of £280,865 in 2012 and £417,814 in 2013, and in September 2014 sent a serious incident report about its financial plight to the commission. The following month it closed its website and announced that it was looking for a buyer. On 6 November, it went into liquidation owing more than £1m to its creditors.
The commission’s report says the charity "had been experiencing financial difficulties for some time as a result of its reliance on grant funding and its lack of reserves". It says the liquidation was triggered by a number of events in 2014, including the non-receipt of two key expected grants totalling £1.4m and a Department for Education decision to reconsider its funding arrangements for the charity.
"BeatBullying was not in compliance with its own reserves policy and had no reserves," the report says. "It was therefore quickly affected by the cancellation of anticipated funding."
It does not set out what the charity’s reserves policy was.
The report says that charities cannot assume they will receive funding: "However, the suggestion to be more conservative needs to be balanced with the reality of the environment in which charities operate, and the nature of applying for funding."
Concluding its report on BeatBullying’s demise, the report says: "We have seen no evidence that this arose due to financial misconduct or mismanagement, or misapplication of funds.
"The trustees appear to have been fully engaged with the operation of the charity, and we have seen no evidence to demonstrate that they attempted to mislead or hide the extent of their financial difficulties. It is up to the trustees to make decisions that a reasonable body of trustees would make, and we found that they had done this and had fulfilled their duties."
The report contains a section on the various lessons for other charities. It points trustees to a 15-question checklist, published by the commission today, suggesting issues that should be raised when trustees meet at, for example, awaydays and annual general meetings.
The report also directs trustees to various other commission guidance documents, and reminds them of the need to make serious incident reports to the commission, as the trustees of BeatBullying did when its financial plight became apparent.
BeatBullying’s insolvency process, overseen by the insolvency firm Antony Batty & Company, continues.