Charity Commission Inquiry Into The Ashley Foundation

• Published date: 28 February 2023
• Subject Matter: Corporate/Commercial Law, Charities & Non-Profits , Corporate and Company Law
• Law Firm: Withers LLP
• Author: Ms Hannah Brearley

Last month the Charity Commission published the results of its inquiry into homelessness charity the Ashley Foundation. The charity operates a number of hostels and flats for homeless people in need, and the objects of the charity are "The relief of poverty by the provision of accommodation to persons in need and in such other ways as the trustees think fit."

The Commission opened a Regulatory Compliance case in August 2019 in order to examine concerns relating to property transactions that may have resulted in a loss to the charity and possible misapplication of the charity's funds.

This escalated in March 2020 when one of the trustees, Lisa Edwards, successfully applied to the High Court for an interim injunction against four other trustees (including the founder and CEO and his son) on the basis that charity funds had been used to reimburse the founder's personal spending on his credit card (for items including flat screen TVs and an Apple watch).

The injunction prevented the four trustees from taking any major decisions about the charity's affairs, changing the charity's bank mandate, or accessing (or preventing access by charity employees) to the charity's IT system.

This injunction caused the Commission to investigate further, and it opened a statutory inquiry under s.46 of the Charities Act 2011 in March 2020.

Facts and Issues

The issues under investigation were:

• general concerns about the financial management and controls of the charity, and whether funds were expended solely for exclusively charitable purposes and could be properly accounted for;
• the trustees' decision-making on the disposal of properties and agreements made with third parties;
• whether the trustees adequately managed conflicts of interest;
• if there had been any unauthorised trustee private benefit;
• whether the charity had suffered any financial loss as a result of any mismanagement and/or misconduct; and
• if the trustees of the charity had complied with their legal duties in respect of their administration, governance and management of the charity.

Misappropriation of charity's funds

The inquiry found that charity funds were used to reimburse spending on the founder's credit card for electrical items including an Apple Watch, a hairdryer and a tracking system. The founder explained that some of the items were gifts for people who would help the charity, which raised concerns about the operation of the charity and compliance with the Bribery Act 2010. The tracking system was...