Charity Commission Issues Its First Official Warning To National Hereditary Breast Cancer Helpline

On 3 July 2017, the Charity Commission (the 'Commission') published its case report on the National Hereditary Breast Cancer Helpline (the 'Charity') further to its decision to issue an official warning to the Charity on 25 April 2017. The power to issue official warnings was introduced by the Charities (Protection and Social Investment) Act 2016 and came into force on 1 November last year, and this is the first time that the Commission has used this power. The Commission determined that an official warning was appropriate because the trustees committed a breach of trust or duty or have engaged in misconduct/ mismanagement in the administration of the Charity by:

making unauthorised payments to a connected person; entering into an informal loan agreement with a connected person; improperly delegating the administration and management of the charity; failing to keep proper minutes and other records of decision making; and failing to properly implement and manage financial controls. The Charity was randomly selected from a group of 94 charities whose accounts signalled that they may be in financial difficulty, as they included an 'emphasis of matter in relation to going concern'* relating to their financial position.

The Commission carried out a detailed study of the Charity's latest accounts and identified a number of concerns relating to the management of the Charity's finances. It then contacted the Charity to engage in further discussions and made two separate compliance visits to meet with the trustees and examine the Charity's records.

The Commission initially found that the Charity's assets had been exposed to undue risk because of a lack of financial controls and because the Charity's financial model was unsustainable (several of its shops were running at a loss and the Charity was heavily reliant on loans). Further, the Commission found that the Charity had made unauthorised payments to the chair of trustees. These payments were made for running the Charity's operations on a daily basis, and the trustee in receipt of the payment, was the only authorised signatory on the Charity's bank account and was therefore authorising payments to herself.

Additionally, the Commission found that the trustees were not meeting regularly to make collective decisions about how the Charity should be run to further its objects. Rather, the chair made decisions following discussions with individual trustees, and no records were kept of these discussions...