Charity Commission 'will intervene to recover property lost by trustee wrongdoing'

A new policy on the recovery of charitable funds means the regulator will not hesitate to take action where appropriate, says chief legal adviser Kenneth Dibble

Kenneth Dibble
Kenneth Dibble

The Charity Commission has said it will not hesitate to intervene in cases where charities fail to recover property lost through wrongdoing by trustees.  

The Charity Commission’s new policy on "restitution and the recovery of charitable funds misappropriated or lost to charity in breach of trust", published today, says trustees are responsible for the property of the charity, for protecting it and ensuring it is used only to further the charity's purposes.

In cases where charity property has been lost through wrongdoing by trustees or others, such as trustees receiving unauthorised benefits from the charity or making poor decisions that result in losses for the charity, trustees should take the appropriate steps to recover the property, the policy says.

Board members should take legal advice and consider how likely they are to succeed in reclaiming the property and the possible effects of their actions.

But in some cases, trustees might be unwilling or unable to take these steps, the policy says. Recovering the property might present a conflict of interest for trustees, the charity might not have sufficient funds or it might no longer exist.

In cases where trustees will not take steps to recover the property, and where the amount involved is significant and the breach of trust is sufficiently serious, the commission says it "will not hesitate to use its powers of intervention and remedy to secure the recovery of lost funds".

The policy says: "In exceptional appropriate cases, the commission will consider bringing legal proceedings in the public interest, with the Attorney General's consent, to recover funds lost to charity."

Kenneth Dibble, the commission’s chief legal adviser, said: "This policy serves to reassure existing and potential trustees that they will not be pursued as a result of honest failings or mistakes, even where losses might occur.

"At the same time, however, it also serves to remind charities that, in appropriate cases of serious misconduct and avoidable loss, the charity itself should pursue the matter – the public has a right to expect this. Where trustees are unwilling or unable to do so, the commission will not hesitate in appropriate cases to protect and recover property by the use of its powers or, if necessary, take action through the courts."

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