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Charity Commission inquiry finds serious financial mismanagement at charity which only filed one annual return in twenty-three years.

The Charity Commission has today (17 October 2023) published the report of its statutory inquiry into the Birmingham Education Trust.

The inquiry found that the management of the charity fell significantly below the standard expected of charity trustees, particularly regarding financial controls and record-keeping. As a result, the two original trustees, who were husband and wife, have been removed and disqualified from acting as trustees of any charity.

The original trustees repeatedly failed to comply with their legal duty to file the charity’s annual accounting information despite comprehensive advice and guidance from the Commission. From the charity’s registration in 1997 until the opening of this inquiry in 2020, it had only submitted an annual return once.

For a prolonged period of time, the trustees also failed to maintain sufficient financial records, which is a serious failing in the management of the charity and means that they were unable to fully account for all of the charity’s expenditure. In addition, only one of the trustees acted as a signatory to the charity’s bank account, which is a breach of its own governing document and put charitable funds at risk.

Given the trustees’ relationship, the Commission found that they were unable to manage any potential conflicts of interest that may have arisen. This was further complicated by the employment of one of the trustees as head teacher of the school. This was again in contravention of the charity’s governing document which prohibits the employment of trustees. The two daughters of the trustees were also employed as teachers at the school, with no evidence to indicate that conflicts of interest had been managed or that the decision was in the best interests of the charity.

Amy Spiller, Head of Investigations at the Commission, said:

The conduct of the original trustees of Birmingham Education Trust fell far below the standards the Commission, and the public, expect. Basic duties of financial record-keeping and reporting, which are essential in maintaining trust in individual charities and the sector as a whole, were neglected.

Our intervention has rightfully culminated in the removal of the original trustees and the appointment of new ones. The charity’s recent outstanding accounts have been submitted, and I hope it is now back on track to deliver for its beneficiaries.

The full report detailing the findings of this inquiry can be found on GOV.UK.

Notes to Editors:

1. The Charity Commission is the independent, non-ministerial government department that registers and regulates charities in England and Wales. Its purpose is to ensure charity can thrive and inspire trust so that people can improve lives and strengthen society.
2. The statutory inquiry was opened into the charity on 21 July 2020.
3. The former trustees were removed as trustees of the charity by an Order made under section 79(4) of the Act on 2 August 2022.  As a consequence of this Order the trustees are disqualified from acting as a charity trustee or a trustee for any other charity under section 178 of the Act.
4. The Commission’s ‘5-minute guide’ on trustee decision-making can be found here: Making decisions at a charity - GOV.UK (www.gov.uk). The guide on managing conflicts of interest is available here: https://www.gov.uk/guidance/managing-conflicts-of-interest-in-a-charity.

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