The Charity Commission has defended its decision not to take action against the Cup Trust, the charity that spent just £55,000 of the £176.5m it raised over two years on good causes.
Yesterday it was revealed that the Cup Trust, which makes grants to smaller charities that help children and young adults, received £97.58m in 2009/10 and £78.93m in 2010/11, yet declared spending only £55,000 on good causes during that period. The charity’s latest accounts, for the period 2010/11, reveal it also had outstanding Gift Aid claims worth more than £46m.
Sir Stephen Bubb, head of the chief executives body Acevo, said the commission had "a lot of questions to answer" for failing to take action against the charity. And Sir Stuart Etherington, chief executive of the National Council for Voluntary Organisations, said the case "raises important questions about the regulation of the charity involved".
The commission said in a statement that it was "not comfortable with the charity’s set-up" and opened an investigation into its activities in March 2010. It "seriously considered" whether or not the Cup Trust was a charity and whether it should be removed from the register, but concluded it could not be struck off because it was "legally structured as a charity". After taking independent legal advice, the investigation was closed in March 2012.
The statement added: "We cannot take action against a charity unless we are able to demonstrate that its trustees have breached their legal duties. Nor can we take action against a charity simply on the basis that it spends a relatively small proportion of its income on charitable activities in any given year. It is acceptable under charity law to invest in a fundraising scheme and to plan expenditure over a number of years. It is for trustees to decide how to apply their charities’ funds."
The statement said that the Cup Trust had a "highly unusual structure" and that it remained to be seen whether HM Revenue & Customs would approve its Gift Aid claims.
Today, it was reported in The Times newspaper that William Shawcross, chair of the Charity Commission, would face questioning from the Public Accounts Committee over its handling of the Cup Trust next month. But a spokesman for the committee told Third Sector that no decision had been made about hearing evidence on the case.