News in focus: The charity that survived a scandal to win redemption

It looked grim for the Child of Achievement Awards when the charity regulator was called in to look into irregular payments. But two years on, Wavemakers has risen from the ashes. Indira Das-Gupta reports.

When the trustees of the Child of Achievement Awards resigned following the discovery of unauthorised payments, many thought that would be the end of the charity. But, like a phoenix from the ashes, a new charity called Wavemakers emerged earlier this month, proving not only that there can be life after a Charity Commission investigation, but also that it can be the making of an organisation.

This is a point that Steve Powell, who was sent in as receiver-manager of Child of Achievement while the investigation took place, is keen to emphasise. He says: "Charities are investigated for a number of reasons. It could just be that the trustees have fallen out with one another.

One possible outcome could be that the Charity Commission simply issues it with recommendations, although in the case of Child of Achievement that wouldn't have been enough."

Powell has been chief executive of Sign for 13 years but is also a trouble-shooter for the Charity Commission, called in to help charities that have lost their way or are suspected of mismanagement. He was installed at the Child of Achievement Awards following a complaint. Powell explains: "The commission was concerned about the trustees' ability to act independently and within charitable law and good practice."

And with good reason, as it turned out. The trustees were all members of the same family - Julie Fisher, her mother, Doris, and her partner Karl Phillips. The two women ran an agency called Alternative PR that in 1999 began receiving authorised payments of £500 a month from the charity.

However, by 2002 this monthly fee had risen to £5,000.

A further £21,000 was paid to Alternative Communications, also run by the two women, and £10,000 to Phillips' solicitors firm - both unauthorised payments. They also received unauthorised healthcare insurance benefits to the tune of nearly £13,000. Despite the evident conflicts of interest, Powell is reluctant to say that the payments amounted to a calculated misappropriation of the charity's funds. He says: "They did not try to hide the payments, but there is no doubt that things were done incorrectly. I think there was a culture at the charity where the trustees were not used to being questioned."

Taking the blame

Powell believes that what happened once the discrepancies were uncovered is a lesson to all charities. "Charities will always be in the news for getting things wrong, because people will make mistakes - it's just human nature," he says. "If the trustees had accepted they were in the wrong immediately and had cooperated, they might have even kept their positions. But instead they became defensive and chose to fight their corner."

Eventually, all three trustees resigned. "They were not forced to do so," explains Powell, "but they realised they had no choice."

While it might seem difficult to believe that the unauthorised payments were simply a "mistake", the Charity Commission says: "The commission found that the three previous trustees had received payments to which they were not entitled. As the report makes clear, most of these payments were in respect of services actually provided to the charity by the trustees. Others were due to poor internal controls, coupled with a failure to appreciate their entitlement to payment. The commission is satisfied that there is no evidence that the previous trustees in any way defrauded the charity."

Powell believes that the charity's problems could have been avoided.

He says: "Charities have to project a public image and are dependent on that image for funding. They can't afford to take risks, because they are open to scrutiny. That's why it's important to have good advisers and to actually listen to them. Nobody likes criticism, but a charity can work best by actively seeking out criticism."

As Powell set about tidying up the mess that the departed trustees left behind, he changed Child of Achievement Awards from a charitable trust to a charity limited by guarantee, thereby reducing trustees' liability, and was appointed chairman.

Some £57,000 has been recovered so far, but £15,000 is still outstanding.

Powell says: "A decision has been made in conjunction with the Charity Commission and the charity's solicitors that it would cost more to recover the missing money than it is really worth. But it will remain on our accounts as a debt."

Once the remaining eight staff had all gone and the offices closed, Powell started to investigate resurrecting the charity in a different form. As a favourite cause of Princess Diana, the Child of Achievement Awards enjoyed a high profile and counted former PM John Major as a patron.

But Powell knew that the Charity Commission report would substantially damage its reputation. So he consulted a number of children's charities about what possible role a new charity could have. He says: "Previously, most of the awards were given to children who had overcome illness, but after seeking advice it was decided that we wanted something accessible to children everywhere. So we came up with the idea of having awards for children who have done something original to help other kids. For example, it could be a victim of bullying that has set up a website for other victims."

New start

Powell initially registered the new limited company under the name Child of Achievement 2002. After seven new trustees and a new chief executive (former Sign fundraiser Deborah Skillicorn) were appointed, the charity was renamed Wavemakers. The remaining funds from Child of Achievement were transferred to it and it has kept the orginal registration number, while the old charity has been closed down and the name 'Child of Achievement Awards' trademarked to prevent anyone else using it.

To maintain its youthful focus, two of the new trustees, Melody Hossaini and Umar Kankiya, are 19 years-old and members of the UK Youth Parliament.

But while Wavemakers would no doubt like to bury the memory of Child of Achievement, both Powell and Skillicorn are only too aware that this isn't an option. Skillicorn says: "We have included the history of Child of Achievement on all our promotional material because we don't want people to stumble across an old newspaper story and think they have uncovered something juicy. We talked to all 150 of last years' winners and let them know what was going on."

Wavemakers has managed to secure the support of the Airways Charitable Trust which was also involved with Child of Achievement. Skillicorn adds: "We don't want to be in competition with other charities - we want to build partnerships, and hope the awards will be a vehicle for some really good ideas to come out and be adopted elsewhere."

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