It took more than eight months, but the Charity Commission has finally got an opportunity to use its new powers to issue an official warning. And it’s a case that has prompted widespread – albeit slightly delayed – media interest.
The National Hereditary Breast Cancer Helpline received a warning from the Charity Commission last month after the charity paid its founder and then chair, Wendy Watson, £31,000 for running the charity’s helpline, among other concerns about how the charity is governed. The payment was not properly authorised – normally payments to trustees must be included in governing documents or approved by the commission or the courts – and Watson claims she was paid in error following some poor advice.
The charity’s significant spending on fundraising and staff costs was also highlighted. The charity had an income of £974,555 in 2015, which it mostly spent on its chain of charity shops. Only £27,403, or 2.8 per cent of income, was spent on its charitable activities – in this case the running of a support helpline.
In fact, between 2013 and 2015 the charity regularly spent less than 6 per cent of its income on charitable activities. Such low amounts going to the cause are concerning on their own, but it is the charity's lack of knowledge about the rules regarding payment to trustees that is arguably the most worrying.
It is not the first example of a trustee receiving unauthorised pay. In 2013, the cleft lip and palate charity Smile Train UK won a High Court case against its former trustee Brian Mullaney, the former chief executive of its US parent charity, over the decision to have the UK charity pay part of his wages. He was ordered to repay more than £633,000 to the charity.
In Watson’s case, no one can doubt her intention to deliver a necessary service, but good intentions are not good enough on their own. Charities have to be properly governed and run. The National Council for Voluntary Organisations said it is "alarming" that Watson did not properly understand her role, and the whole incident should give the sector food for thought about how to reach trustees who are unsure of their duties.
Cases like Watson’s are always bad news for a charity sector that has seen a number of high-profile scandals in recent years that have had an impact on public trust. But if there is any silver lining it is that at least the prominence of this case in the national media might act as a wake-up call to other trustees unaware of the law and their duties to their charity.
In this case, the use of the official warning is a good move by the Charity Commission. It highlights a particularly extreme example of bad practice, reminds trustees in other charities of their duties and shows that the commission will take action where necessary. There is plenty of guidance out there for charities, and at least what has happened at National Hereditary Breast Cancer Helpline might prompt a few more trustees to actually read it.
It is embarrassing for the sector to once again see its good name tarnished by one isolated example of poor governance, but it is worth it if these cases become a thing of the past.
Liam Kay is senior reporter at Third Sector