An education charity had poor financial controls and was unable to demonstrate its funds were being spent appropriately, according to a Charity Commission statutory inquiry.
The commission's investigation of the now-defunct Caring for Children in the Gambia, also found the charity had failed to adequately separate the affairs of the charity from the affairs of its sister company, Caring for Children in the Gambia Ltd.
The charity, which was registered with the commission in 2005 with the aim of promoting children’s education and alleviation of poverty in Gambia, first came under the scrutiny of the Charity Commission in 2011, when it applied to turn the company into an incorporated charity, replacing the existing charity.
But the regulator’s report, published on Monday, says it "found the objects of the company were not exclusively charitable and insufficient evidence was provided to the commission to demonstrate that the company met the definition of a charity under the Charities Act 2011".
It says "further periodic attempts" were made to register the company as a charity but were unsuccessful each time for the same reason.
In April 2013, the commission deregistered the charity after it failed to file its annual return for the year ending 31 October 2011, and its income was below the £5,000 threshold to be on the register.
In October 2013, the commission opened a regulatory compliance case into the charity, which failed to allay its concerns and in February 2014, it opened a full statutory inquiry.
The report says: "Based on the evidence gathered from the examination of the charity’s books and records, the commission found that there were poor financial controls and record keeping and insufficient separation between the affairs of the company and the affairs of the charity.
"It was difficult to draw a distinction between the respective activities of the charity and the company.
"The trustees were only able to provide the commission with limited evidence of charitable activity."
A spokesman for the commission said the charity ceased to operate as a result of the inquiry’s findings and the company ceased trading shortly after the charity trustees were notified of the statutory inquiry in March 2014. It was dissolved in June last year.
Carl Mehta, head of investigations and enforcement operations at the commission, said: "Charities often work closely to good effect with other organisations, but they have to keep their affairs separate from them, especially when they are carrying out activities which are not charitable.
"Otherwise they risk making the charity vulnerable to abuse, and being in breach of their legal duties as charity trustees."
Third Sector was unable to contact anyone from the charity or the company for comment.
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