The Charity Commission has launched a statutory inquiry into the fundraising arrangements and low level of charitable expenditure at a charity that gives grants to hospices.
The commission said in a statement that it opened its inquiry on 28 August after assessing concerns about the Kent-based Hospice Aid UK as part of an operational compliance case that started in January.
The regulator is looking into the charity’s administration and governance, and the financial management of the charity by its trustees, including whether the trustees have complied with charity law.
It is also examining whether the charity is being used for private advantage, and looking at its trustees’ decision to enter into a contract with a direct marketing company. There are additional concerns about "the charity’s fundraising activities, the proportion of funds applied directly for charitable purposes and the potential impact of this on public trust and confidence in the charity and more widely", the statement says.
Hospice Aid UK was registered with the commission in 2002. In the year to 31 March 2013, the charity received £263,759 in voluntary income, its accounts show. It spent £200,634 on generating voluntary income in the year, and distributed £63,228 to hospices, also paying £11,478 in governance costs.
It has spent more money on generating voluntary income than it has given to hospices in each of the previous six years, its accounts show, and in all but one of those six cases more than half of its expenditure went on income generation. Three-quarters of last year’s money generating voluntary income went to a company named Euro DM Ltd, the charity’s accounts show.
Despite the commission’s concerns about private advantage, there were no registered party transactions recorded in last year’s accounts and no trustees were remunerated for their services. Its chief executive and other staff work on a self-employed basis, with the exception of one staff member who was paid £10,000 during the year, the accounts say.
A spokeswoman for the charity said its solicitors were preparing a response to the commission’s statement.