Regulator criticises charity that spent hundreds of thousands of pounds on luxury hotels and travel

The Charity Commission has criticised a charity that spent hundreds of thousands of pounds on five-star hotels and business-class travel.

The regulator said there was evidence of “serious mismanagement” at the poverty relief charity The Everlasting Arms Ministries, which awarded pay rises to senior staff and made “significant payments” to companies linked to trustees after selling its headquarters for several million pounds.

The commission’s inquiry also raised concerns about spending and record-keeping that “blurs the line between charitable and private expenditure”, after investigating more than £200,000 of credit card spending by a senior pastor at the charity.

The watchdog said it welcomed steps the charity had taken to improve its financial controls.

The senior pastor and deputy senior pastor, who are husband and wife, have remained in place but both have left the trustee board.

The commission initially opened a compliance case into the charity in January 2019, but escalated this to a statutory inquiry in December of the same year. 

The regulator decided to freeze the charity’s assets in February 2020.

The Everlasting Arms Ministries sold its main asset, a property in London, for £8m in 2016. Analysis of the charity’s finances “revealed significant payments to trustees and connected people and companies”, the commission said in a statement.

The charity’s spending between 2016 and 2018 included almost £500,000 on international outreach work, the commission found, “utilising business-class travel and stays in five-star hotels”. 

A total of £181,143 was spent on business-class flights between April 2015 and October 2020. Minutes from a trustee meeting in December 2016 showed that the charity agreed for directors and trustees to fly business class because travel overseas “can be cumbersome”.

Records showed that, on one flight to Ghana in 2016, the senior pastor flew business class at a cost of £2,580, while other employees flew economy class for £548.

The commission said: “The inquiry found that the documentation relating to the decision-making in respect of business class travel was inadequate, and consequently the evidence available does not demonstrate that the previous trustee board gave sufficient consideration to the matter.”

The commission also raised concerns about a credit card which the senior pastor used for both charitable and private spending between 2016 and 2020. 

The regulator identified at least £14,000 of private spending that “the charity appears to have covered during this period” and argued that, although trustees explained that the card was sometimes used to reimburse expenses, “this is an unusual practice which, together with the poor record-keeping, blurs the line between charitable and private expenditure”.

A sample of “purportedly charitable expenditure” using the credit card included spending at restaurants, supermarkets, Amazon and iTunes, the commission said.

In addition, “following the property dispersal, the salaries of the charity’s employees were increased”, the commission said, noting that “in 2016, the salary of the senior pastor increased from £44,536 to £72,000 per annum, and the salary of the deputy senior pastor from £45,000 to £54,000 per annum”. 

The charity told the inquiry that this reflected a cost-of-living increase, but it was unable to provide documents showing how this process was conducted.

The commission said: “It is clear that the charity was spending significant sums without proper oversight and checks and no clear long-term strategy which put the charity’s funds at risk. 

“The funds from the property disposal have been significantly depleted and it is unclear if the charity would have continued its level of spending without intervention by the commission.”

There was no answer on the telephone number The Everlasting Arms Ministries provided to the Charity Commission. Its website does not work and it does not publish an email address.

Amy Spiller, head of investigations at the Charity Commission, said: “It is essential that charities have robust financial management in place so the public can trust that all of its funds are used in furtherance of charitable objectives.

“With The Everlasting Arms Ministries, a sudden increase in income highlighted failures by its then-trustee board to have adequate policies and governance in place.

“In order to prevent further mismanagement, our inquiry had to intervene to freeze the charity’s bank accounts and issue an action plan.

“We are pleased that the current trustees have implemented the action plan and are committed to improving the charity’s financial management.

“We will continue to monitor their progress on this matter.”

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