Charity hit by fall of Powerhouse

Tens of thousands of pounds raised for one of the UK's largest charities for deaf and blind people are likely to go towards paying the creditors of the electrical goods retail chain Powerhouse, which went into receivership last month.

The money was donated by staff and customers of Powerhouse, which twice chose Deafblind UK as its charity of the year, and has so far handed over £35,000. But it emerged this week that there was no formal contract between the charity and the firm, and a separate trust account had not been opened for donations. This means the charity could lose a further £35,000, which had yet to be handed over.

"When a company is placed into administration, it is often the case that money raised for a charity is used to pay creditors," said Stephen Lloyd, charity law expert at solicitors Bates, Wells & Braithwaite.

"The company must have a formal contract with the charity and open a trust account. The administrator cannot put his hands on the money placed in such accounts."

Two weeks before it crashed, Powerhouse agreed at a meeting with Deafblind UK that it would soon hand over £10,000 from its head office and £25,000 raised by staff and customers.

Powerhouse also said that they were planning to extend their partnership with Deafblind UK for a further year. Victor Sheret, head of fundraising at the charity, said company representatives must have known what was happening.

"Despite making several calls to the administrator, Deloitte & Touche, we can't get hold of anyone who can advise us on what will happen to the money already raised on Deafblind UK's behalf," he said.

Meanwhile, staff from several stores have called Deafblind UK because they are concerned that any donations put into the till will go directly to the administrator.

The collapse of Powerhouse is a blow to Deafblind UK, which was counting on £100,000 through the sale of pin badges, payroll giving and fundraising events. It was relying on these large donations to finance some of its activities.

The charity is now seeking to contact Powerhouse's suppliers to to discuss partnership opportunities, because they will be among the first to be reimbursed by the administrator, and might decide to support the charity.

Powerhouse went into receivership mainly because of concerns about its ability to continue paying suppliers. Deloitte & Touche has said it will try to sell the company as a going concern after closing 93 of its 223 stores with the loss of 800 of its 3,000 staff.

Powerhouse and Deloitte & Touche both failed to return calls from Third Sector asking for their account of what is to happen to money intended for Deafblind UK.

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