Charity Commission says girls boarding school in Lancashire would breach the objects of Islamic Help

Regulator acts after complaint by Pendle MP Gordon Prentice and orders refunds to donors

The Charity Commission has told Islamic Help that plans to build a 5,000-pupil boarding school for Muslim girls are not within its objects and it must return money raised for the project to donors.

The Birmingham-based charity, whose income in 2008 was nearly £1.2m, bought a disused mill in Pendle, Lancashire, last year with the intention of building the largest Muslim boarding school in the UK.

It has also held a £1m fundraising appeal to help pay to equip the school.

Gordon Prentice, the Labour MP for Pendle, has argued that building the school would breach the charity's objects, which are listed on the Charity Commission's website as the relief of financial hardship.

In an early day motion posted on Monday, Prentice says the commission's order to return donors' money should be "reported prominently" on Islamic Help's website.

It also notes "with incredulity the explanation from the charity that the £10,000 reportedly raised by the appeal to date has not been applied in furtherance of the boarding school project".

More than £350,000 of the purchase price of the mill allegedly came from "pledges and backdated Gift Aid", the motion says, and calls for a full audit of the charity's accounts.

In response to an earlier complaint from Prentice, the commission met the charity's vice chair last week.

A spokeswoman for the commission said it had been told that Islamic Help had no immediate plans to create a boarding school and would use the mill building as its headquarters instead.

"The commission has informed the charity that it should not have appealed for funds for the purpose of creating a boarding school and that all funds raised as part of the appeal should be returned to the known donors," the spokeswoman said.

"The trustees have expressed their willingness to work with the commission and we will be meeting them again."

She also denied the charity's claim that it had already widened its objects to include education.

"We are aware that the trustees had intended to widen the objects," she said. "However, to do this the charity would require permission from the Charity Commission – and it has not sought this."

In a statement, the charity described the meeting with the commission as constructive.

"We have not been issued with any specific orders from the commission, but we want to assure members of the community that Islamic Help has and always will be working within the framework of charity law," it said.

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