The Charity Commission stepped in at Smart Kids at No 1 Playgroup after being contacted by a prospective purchaser of the charity’s meeting hall, an inquiry has revealed. The buyer was concerned that the purchase was being arranged as if it was a private sale, despite checks suggesting the property belonged to the charity.
The founder, a former trustee of the playgroup, believed she was entitled to all or some of the £225,000 proceeds from the sale of the hall, the commission’s inquiry found.
Confusion arose because the property’s deeds said it belonged to the founder but the loan to finance it was in the charity’s name. The playgroup had also been started as a private business and subsequently registered as a charity. There was no suggestion of any criminal intent on the former trustee’s part.
The regulator ruled that the hall did belong to the charity and appointed trustees to manage its sale to ensure the proceeds were not lost. The founder relinquished her claim over the property.
The commission found that the charity’s former trustees had been responsible for mismanagement. “The failure of the trustees to maintain proper records of the charity’s assets and to control its activities had resulted in a situation where the charity’s entitlement to the proceeds of the sale of its property had been jeopardised,” the report said.
The money will be handed to the Pre-School Learning Alliance and the charity will be wound up by the end of the year.