Regulator probes charitable foundation set up by businessman

The Charity Commission is trying to establish whether there are conflicts of interest at the Middleton Foundation, established by Jeremy Middleton and his wife, Catherine

The Charity Commission is to look into potential conflicts of interest at a charitable foundation set up by the businessman Jeremy Middleton.

The Middleton Foundation was founded in 2016 by Middleton, co-founder of the emergency repairs company Homeserve, and his wife Catherine.

The commission will also look at the foundation’s trading subsidiary company, Charity Escapes, which matches companies willing to donate prizes to charities hosting fundraising events.

The foundation has only two trustees, one fewer than its governance document requires.

Both trustees are also employees of Middleton Enterprises, the venture capital company of which Middleton is managing director. One trustee, David Alprovich, is its commercial director; the other, Mike Elliot, is its finance director.

According to the foundation's accounts for the year ending 31 March 2018, it owed Middleton Enterprises £164,823.

A Charity Commission spokeswoman said: "We have written to the charity requesting clarification on a number of matters. We expect the trustees to provide full and frank disclosure, which can then be assessed alongside our risk framework.

"It is best practice for a charity to have more than two trustees. This charity’s governing document requires a minimum of three trustees.

"We will be taking this matter up with the trustees as part of our engagement, as well as seeking to understand how the charity plans on addressing potential conflict of interests with the charity and the trading subsidiaries."

The foundation, Charity Escapes and Middleton Enterprises share the same Newcastle upon Tyne address.

Middleton told Third Sector he had "gifted" the foundation about £250,000 since it had begun and this had covered the trading loss of Charity Escapes, which has two staff.

He said he didn't expect to get any of it back. "There is no return to me besides feeling good about it," he said.

Asked whether there were any potential tax benefits for Middleton Enterprises donating this way, he said he was unaware of any, adding: "The normal rules apply."

A spokeswoman for Middleton said he gifted shares worth £233,000 in June last year, but it took a while for the foundation to get a shares account set up to receive the gift.

This meant Middleton Enterprises Ltd funded expenditure through a loan, which was repaid when the shares were received.

The spokeswoman said: "Our independent trustee has only very recently resigned because she could not be as involved as she had initially hoped.

"As part of the thinking behind the origins of the foundation and Charity Escapes, David and Mike were well placed to guide things as initial trustees.

"We recognise that we need replacement external influence and are planning to bring in additional trustees."

A third trustee – Richard McCordall – was added to the foundation's entry on the commission’s register after Third Sector's investigations began.

Middleton said he was confident the commission would be satisfied with its arrangements.

But he added: "If it comes up with a single thing that isn't appropriate, we will change it.

"We set up the foundation only recently. I'm open to any suggestion that we aren't doing anything right."

Middleton said it was his ambition for Charity Escapes to generate £1m a year for charity and for his annual contribution to be £100,000.

A spokesman for the foundation said Charity Escapes had raised £156,222 for 175 UK charities.

He said the total value of commission paid to Charity Escapes was £27,835.

A voluntary sector source, who did not wish to be identified, alerted Third Sector to concerns about the foundation and its links to Middleton Enterprises. The source said they hoped the commission could encourage the foundation to be more transparent.

Third Sector has submitted further questions about the gifted shares, including whether they were shares in Middleton Enterprises and whether they were gifted as a loan, but has yet to receive a response.

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