The Charity Commission has issued a guide to help councillors avoid conflicts of interest when their local authority is sole trustee of a charity.
The Councillors' guide to a council’s role as charity trustee, was published in March, shortly before the commission found Liverpool City Council to be in breach of trust for allowing a council employee to live rent-free in property owned by a charity of which the council was sole trustee.
The guide says some councils might not have realised the use restrictions that apply to some charitable assets, that they might find conflicts between the wishes of the electorate and the terms of the charity and that they might not realise that some assets left to them have charitable conditions attached.
The finances of these charities must be kept separate from those of the council, the guide says, and the management of the two organisations should also be separate where possible. It says the terms of the charity must also be followed.
In 2010 community groups threatened to take legal action against Birmingham City Council, the sole trustee of Highbury Hall, which the council used as an office social services staff without paying rent.A spokeswoman for the Charity Commission said the publication of the guide had not been prompted by any particular case. "We recognised this did crop up from time to time and we wanted to make sure they were clear on what they needed to do," she said.