The Charity Commission should act to amend the governance of the Royal Albert Hall

The current arrangements appear to contravene a basic principle of charity law, writes Stephen Cook

Stephen Cook
Stephen Cook

The governing body of the Royal Albert Hall is controlled by 19 people who can, and in some cases do, make money from selling tickets above their face value for the seats they and their families own in the hall. The sums of money can be considerable. This appears to contravene the basic principle of charity law that any private benefit to trustees must be no more than incidental. So the question arises: what is the Charity Commission doing about this?

The commission has been on the case for eight years, during which time various possible solutions have been under discussion. It was established early on that, quite apart from the question of ticket-selling, various decisions taken by the hall’s ruling council to vary the number of events for which seatholders give up their tickets were at variance with the Albert Hall Act 1966. A plan to deal with this difficulty was scuppered not long ago when the incumbent president of the hall was voted out. Now yet another president, elected last year, has defied an ultimatum by the commission for the hall to apply for a scheme to make seatholders a minority rather than the controlling element on the council.

In the wake of the Cup Trust scandal of 2013, the commission has emphasised a more robust approach to regulation and said that charities will no longer be given the benefit of the doubt. It has been making an example of charities, many of them small and less well known, that have repeatedly filed their accounts late, and has opened many more statutory inquiries than in the past. Its interpretation of its role in increasing public trust and confidence in charities has been pursued with such zeal as to draw criticism from the Lord Chief Justice for the pressure it put on the Joseph Rowntree Charitable Trust over the funding of the advocacy group Cage.

In the case of the hall, however, it appears to have set aside robustness and zeal in favour of caution and further delay. It has told the hall it is prepared to wait and look at the constitutional review the hall itself is conducting, and has not set a fresh deadline. This might partly be because it would have to demonstrate, if it exercised its powers to impose a scheme for revised governance, not only that the hall should have applied for the scheme itself, but also that it had unreasonably refused or neglected to do so. In that context the commission might have deemed it wise to take account of the hall’s review before initiating further action, which could easily end up in court.

More generally, the commission is in a difficult position because the hall is an unusual type of charity. When it was set up in 1856, it was partly funded by individuals who bought, for £100 each, 1,276 of the 5,200 seats in the hall; ownership of the seats, which have been inherited or traded over the years, confers membership of the hall – and members elect from their own ranks the majority of the council that governs the hall. From the start, in other words, this is a charity that has, quite legally, been run by the equivalent of shareholders.

For much of the hall’s history, this has mattered little because tickets for the seats have not been particularly valuable. The members have continued to help finance the hall by paying an annual – and sometimes a supplementary – seat levy, and many of them have – and still do – put their weight behind the many and laudable charitable activities of the hall. They have often donated their unwanted tickets to charity, for example, and for decades any earnings from the sale of seats have tended to be minimal.

But that has changed dramatically over the past 20 years, not least because of the £40m of public money injected in 1996 to put the hall on a fresh, more commercial footing. Since then it has attracted bigger-name performers and is open nearly every night. Ticket prices, official and unofficial, have rocketed, stimulated partly by internet marketing. This has increased the value of seats as investments – they now change hands for £100,000 and can produce better returns than any stock market. The temptation to treat them as a business is obvious, and some have not resisted.

But the difficulties do not justify inaction. Critics are bound to see the latest developments as delaying tactics and to speculate that the commission applies one set of standards to charities that don’t answer back or that its board members disapprove of, and another to big institutions led by potentially litigious individuals with deep pockets. It is close to scandalous that the trustees of a high-profile, iconic national institution are in a position to receive tens – in a few cases rather more – of thousands of pounds by virtue of their commercially-based connection with the charity. The commission will be neglecting its duty as a regulator unless it moves decisively and soon to rectify a long-standing anomaly that may be every bit as damaging to the reputation of charities as the possibility that, for example, a liberal grant-maker might in future make another award to an organisation that helps what it calls the "victims of the war on terror". The logical move in the end might  be for the hall to be converted into a business with a charitable arm, rather than operating the other way round, as at present – but that would entail the kind of political interest and will that seem unlikely. As things stand, the commission is holding the baby.

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