Should the role of councils as sole trustees of charities be reviewed?

Recent cases have highlighted the need for more checks on public bodies, say some experts. David Ainsworth reports

Highbury Hall in Birmingham: Birmingham City Council is sole trustee
Highbury Hall in Birmingham: Birmingham City Council is sole trustee

Last week, a group of community organisations in Birmingham wrote to the city council to allege that it was mismanaging at least six charities of which it is the sole trustee.

The group claims the local authority has used charitable land for council purposes and has asked it to pass responsibility to new trustees. Local residents in other areas have also challenged council management of charities.

In Waltham Forest, north-east London, the Charity Commission has been asked to look at a council decision to build a school on charitable land; and in Dartford, Kent, two local residents went to the Charity Tribunal after charitable land was sold to a property company for a new development, including a large Tesco.

These cases have led the director of one Birmingham charity to argue that there should be more checks on the power of public bodies when they act as sole trustees.

"In Birmingham, the council doesn't even know what land it's responsible for," Tony Thapar, who runs Moseley Community Development Trust, told Third Sector. "Councillors have no idea what their responsibilities are.

"The Charity Commission seems reluctant to replace councils as trustees, even when they've ignored their responsibilities for many years. The system needs to change."

Birmingham City Council, which is sole trustee for about 185 organisations, declined to respond to these claims.

Sally Cooke, third sector policy consultant at the Local Government Association, said councillors would always act in the best interests of charities if they understood the job of trusteeship correctly.

"Some councillors are not aware of their responsibilities," she said. "We've recently drafted new guidance with the Charity Commission to address this."

Chris Harris, resources director of the Chartered Institute of Public Finance and Accountancy, also said there should be a review of sole trusteeship. He said the problem had been highlighted by the introduction of new accounting regulations, which say that a public body's accounts should incorporate those of the organisations it controls.

The Charity Commission wants this changed so that sole-trustee charities can continue to publish accounts independently, but according to Harris it might be the trusteeship rules that need to be looked at instead.

"You're relying on the goodwill of councillors to administer charities as independent entities," he said.

Philip Kirkpatrick, a partner at charity law firm Bates Wells & Braithwaite, said that if local residents felt there had been mismanagement of a charity they could seek a court judgement to have a trustee removed. But Charity Commission approval was required to take a case to court and was often not granted, he said.

However, he said he did not support increased checks on the powers of councils as sole trustees.

"People elect councils, and they trust them to carry out any number of activities that are far more central to their lives than stewardship of charities," he said.

Topics:
Governance

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