The Charity Commission has opened a statutory inquiry into a children’s humanitarian charity having been alerted to concerns about its "significant" debt to a US-based direct mail agency.
In a statement announcing the investigation this morning, the regulator said the Child Survival Fund had failed to show that it was complying with a commission action plan to deal with the charity’s "fragile" financial situation.
The charity, based in west London, has aims to relieve poverty, distress and suffering among children and young people throughout the world. It had an income of £489,100 and spending of £485,900 in the year to 1 March 2016.
In its statement, the commission said it had "a history of regulatory engagement with the charity regarding concerns over high fundraising costs and a significant debt owed to the direct mailing agency".
The agency is not named by the regulator.
"The commission undertook proactive monitoring of the charity amid further concerns about the charity’s fragile financial position and the trustees’ apparent failure and inability to address ongoing issues within the charity," the commission’s statement said.
The regulator issued the charity with an action plan in January 2016, designed to address its concerns, but said trustees had failed to provide reassurance that this had been followed.
The inquiry, opened last month, will look at whether the plan has been followed, whether trustees have acted in the charity’s best interests and whether they have "responsibly managed the charity’s resources and financial affairs, particularly with regard to the charity’s significant debts, fundraising costs and the proportion of fundraising income applied directly for charitable purposes", the commission said.
It will also look into whether trustees acted with reasonable care and skill in respect of its fundraising agreement with the direct mailing agency and whether they have protected the charity’s reputation. In particular, it will examine how fundraising activities by the charity or on its behalf were conducted, and how transparent the charity was about its fundraising.
No one from the Child Survival Fund responded to Third Sector’s request for comment.