Charity Commission Applies To English High Court For Permission To Apply Funds To Pay A Charity's Interim Manager

In December 2019, the Charity Commission announced its intention to make an application to the High Court in relation to the residual funds held by the insolvent Dove Trust (registered charity number 287401). The application comes following the third and final distribution of the charity's assets to creditors by the Commission-appointed interim manager and seeks the court's permission to apply the remaining funds of around £84,000 towards the interim manager's fees and related costs (in excess of £650,000) after which the Dove Trust will be wound up.

Background

The Dove Trust was established in 1983 for “such charitable purposes as the trustees with the consent of the settlor during his life shall in their discretion from time to time think fit“. To carry out its purposes, the trustees established and ran a website called http://www.charitygiving.co.uk/ (the “Website“) to facilitate charitable giving by online donations from members of the public for the benefit of other charities or good causes (the “Creditors“), with Gift Aid being claimed by the charity on behalf of donors.

On 25 August 2011, the Charity Commission opened a statutory inquiry in light of the trustees' failure to file accounts (the last accounts filed were for the year ended 5 April 2009) and other serious governance and financial mismanagement concerns, including potential unlawful payments from the charity's restricted funds. The Commission appointed an interim manager (the “Interim Manager“) on 6 June 2013 initially to work alongside the trustees although his powers were later extended to act exclusively. Contrary to usual practice whereby interim managers' fees are paid out of charity funds, the Commission decided it would pay the Interim Manager's fees and expenses at the outset. This was because the charity had no unrestricted funds from which it could pay those fees and expenses.

On investigation, the Interim Manager found a substantial shortfall (of potentially £1 million) between the Dove Trust's restricted funds and donations received but not yet paid to intended Creditors and that as a result of the shortfall, donations intended for one Creditor were being used to fund payments that had earlier become payable to another. The Website was suspended while the Interim Manager sought to reconcile the charity's accounts. In November 2013, The Interim Manager presented his proposals for the distribution of the charity's funds to the Charity Commission.

The Application

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