The charity behind the disgraced Presidents Club annual dinner breached charity law and the Code of Fundraising Practice, investigations by the Charity Commission and the Fundraising Regulator have concluded.
In January, two undercover reporters from the Financial Times newspaper attended the charity’s annual men-only fundraising dinner and alleged that some young women hired as hostesses for the event had been subjected to sexual harassment.
After experiencing criticism in the media, the charity, which existed solely to host the event and distribute the funds to various good causes, generally children’s charities, announced that it would be closing down.
The commission opened a regulatory compliance case and, in a statement released today, said it had found "significant failures" at the charity.
The regulator's report says the charity's trustees had exposed its reputation to undue risk and failed in their duty to act with reasonable care and skill by not having a written contract with the agency that hired the hostesses.
In the report, the commission pointed out that its role was not to determine whether any sexual harassment or other abuse took place. That, it said, was a matter for the police and the courts.
But it added: "The absence of any clear procedures and policies to deal with harassment or improper behaviour was in stark contrast to the measures taken to protect the privacy of the guests."
Helen Stephenson, chief executive of the commission, said the trustees had "thought insufficiently about the welfare of the women hired to work at their charity’s event" and that this attitude "fell short of what would be expected in the 21st century".
She said there was no evidence trustees had acted in bad faith, but they had demonstrated poor judgement and a lack of awareness of their legal duties.
The commission has issued the trustees with a regulatory action plan, urging them to take urgent steps to finish collecting donations pledged on the night and distribute the money before winding up. It said it would be closely monitoring trustees’ progress.
But Dan Corry, chief executive of the think tank NPC, said he was disappointed the commission was not taking action against the charity's trustees.
"At a time when the commission itself has identified public trust in charities as a key issue, we believe in a strong regulator for the sector," he said.
"Trust should grow from the conduct of charities, but the public must also have confidence that a strong regulator will both protect and represent them."
Responding to Corry's comments, a spokeswoman for the commission said: "As the report makes clear, the trustees have been issued with formal regulatory advice under section 15(2) of the Charities Act 2011 to ensure future compliance and a regulatory action plan."
The Fundraising Regulator ruled that, because the hostesses hired for the event through the agency were also expected to encourage the attendees to make donations, their activity fell under the Code of Fundraising Practice.
Its report, also published today, concludes that the charity breached the code because it did not have any formal processes in place to monitor the agency’s activities.
In a statement, the regulator said: "We saw no evidence that the charity intentionally ignored the code."
But it said it was disappointed that the charity had little awareness of the expectations placed on fundraisers, such as the code.
The Fundraising Regulator’s report says charities applying for funds raised by such events were not directly accountable for ensuring the money was raised in a way that complied with the code.
But, it says, they should consider what assurances they had that it was raised properly in order to protect their own reputation.
Lord Grade, chair of the Fundraising Regulator, attended the Presidents Club event in 2006, but said in January that he had recused himself of any decisions related to the charity as soon as the story broke.