The Captain Tom Foundation, a high-profile charity born out of the challenges of Covid-19 on a wave of public support and admiration for its late namesake, has found itself making headlines for all the wrong reasons over the past year and more. A case opened in March 2021 by the Charity Commission has now escalated into a statutory inquiry after serious concerns about the governance and management of the Foundation emerged. This has put a number of pertinent charity law issues under the spotlight, including management of conflicts of interest, and the need to uphold public trust and confidence in charities. Here, we consider the matter.
Background
On 6 April 2020, at the age of 99, retired British Army officer Captain Tom Moore began to walk 100 lengths of his garden in aid of NHS Charities Together, with the goal of raising £1,000 by his 100th birthday on 30 April. In the 24-day course of his fundraising, he made many media appearances and became a popular household name in the UK, earning a number of accolades and attracting over 1.5 million individual donations. By the time the campaign closed at the end of his 100th birthday, the total raised surpassed £32.79 million (worth almost £39 million with tax rebates).
Whilst the money initially raised by Captain Tom, who died in February 2021, was distributed to NHS charities prior to the incorporation of The Captain Tom Foundation, the founders of the charity, including members of Captain Tom’s family, sought to promote and prolong Captain Tom’s legacy by addressing issues that were close to his heart. The Foundation was registered as a charitable company limited by guarantee (and so dual-registered with the Charity Commission and Companies House), and operates as a grant-making charity. Its charitable objects include the advancement of health and wellbeing, relief of those in need, promotion of social inclusion, and general charitable purposes.
Issues arising
The charity first caught the attention of the Charity Commission in the spring of 2021, after it submitted an application to employ Hannah Ingram-Moore, Captain Tom’s daughter and former trustee of the Foundation. Concerns were raised about the benchmarking of the proposed salary, and the amounts proposed were rejected as being neither justified nor reasonable. During this case, further concerns about consultancy fees and payments to related third parties emerged. As a result, the Fundraising Regulator and Information Commissioner became involved.
This latest incident, however, has identified new ‘red flag’ issues including arrangements between the Foundation and a company linked to the Ingram-Moore family, ongoing anxiety surrounding the trustees’ decision-making processes and governance. In particular, the Commission is concerned that a private company controlled by Hannah and Colin Ingram-Moore applied to trademark variations of the name ‘Captain Tom’ and might have used those trademarks to generate significant profit for the company. That the Foundation failed to challenge this raises questions as to the management of conflicts, trustee benefits, and whether its trustees have acted in the best interests of the charity.
This full statutory inquiry will investigate whether the trustees have:
- Been responsible for mismanagement and / or misconduct in the administration of the charity and whether, as a result, the charity has suffered any financial losses, including through any unauthorised private benefits to current or previous trustees;
- adequately managed conflicts of interest, including with private companies connected to the Ingram-Moore family; and
- complied with and fulfilled their duties and responsibilities under charity law.
The chief executive of the Charity Commission released the following statement on 16 June 2022:
“The late Captain Sir Tom Moore inspired the nation with his courage, tenacity and concern for others. It is vital that public trust in charity is protected, and that people continue to feel confident in supporting good causes.”
“We do not take any decision to open an inquiry lightly, but in this case our concerns have mounted. We consider it in the public interest to examine them through a formal investigation, which gives us access to the full range of our protective and enforcement powers.”
All of this raises pertinent questions for practitioners of charity law and those working for, and with, charities – particularly those with high public profiles, and potential significant worth in their name or brand.
Charity trustees and senior staff will be well-advised to refresh their understanding of how best to manage conflicts such as these, as well as to remind themselves of the overarching requirement to operate for the public benefit and to uphold the public’s trust and confidence in the charity sector generally. A brief guide to these follows.
Conflicts of interest
Under charity law, trustees have a duty to avoid conflicts of interest, which most commonly occur as either conflicts of loyalty and/or financial conflicts:
- Loyalty conflicts arise where trustees are unable to make decisions with the best interests of the charity in mind, owing to individual beliefs and interests which may clash with, or compromise, their ability to make decisions based solely in the best interests of the charity.
- Financial conflicts arise where money or something of value is received by a connected person or organisation (note this does not include trustee expenses).
The Charity Commission’s guidance denotes a conflict of interest as “any situation in which a trustee’s personal interests or loyalties could, or could be seen to, prevent trustees from making a decision only in the best interests of the charity.”
When considering conflicts of interest, charities must discern the personal interest of trustees and those connected to them. The Charity Commission guidance on conflicts of interests defines ‘connected person’ as follows: “in broad terms this means family, relatives or business partners of a trustee, as well as businesses in which a trustee has an interest through ownership or influence”. If in doubt as to whether or not a person is considered “connected” the Commission encourages charities to seek professional advice.
Managing conflicts
Regardless of any benefit enjoyed by connected persons, the presence of a conflict alone requires management. This means trustees have to manage all potential conflicts irrespective of any benefits flowing from decisions of the charity. The Charity Commission recommends a number of steps to manage conflicts of interest:
- Declare!
Conflicts should be actively avoided by trustees, but where they do occur, or may potentially arise, charity trustees must declare them immediately. This can be done at the start of trustee’ meetings, and/or at the relevant agenda item, and ‘rolling’ or ongoing arrangements likely or possible to give rise to conflicts should be kept under review at all times.
- Record!
The Commission recommends recording all conflicts of interest detailing what the conflict was, when it was declared, how it was managed, and who or what was affected. Charities should keep a register of all interests, updated regularly and fully. Meeting minutes must note when conflicts are declared and by whom, and to note any steps which can or should be taken in order to mitigate, lessen or avoid the conflict in future.
- Comply!
Charity staff and trustees should familiarise themselves with their charity’s governing document and any policy on managing conflicts it adopts from time to time. This includes steps such as removing the conflicted trustee from discussions and votes on the matters arising, and ensuring that only a minority of trustees are affected.
Where conflicts do occur, trustees must ensure that they are properly authorised by the charity’s governing documents, the law, and the Charity Commission or the Court. Situations where a majority of trustees are conflicted constitute a serious conflict. In such high-risk cases, best practice guidelines recommend early applications to the Commission for their consent to affected transactions or appointments of connected persons.
Who benefits? Public versus private
A further issue arising out of the Captain Tom inquiry relates to unauthorised personal benefits received by charity trustees and/or connected persons. Charity law stipulates that charities must predominantly provide a public benefit and that any private benefit flowing from the charity’s activities must be merely incidental. Charity trustees must be able to explain how any private benefit is incidental to the charity’s purpose.
In assessing whether a private benefit is incidental, trustees should look at the nature and the amount of the benefit and decide if it is a necessary result or by-product of activities conducted to further the charity’s purpose. When carrying out an activity which may give rise to private benefit, trustees should seek professional advice as to whether the Commission’s consent may be required, in order to avoid a breach of duty.
Public confidence and trust
Excess publicity generated by this inquiry into the Captain Tom Foundation risks more than reputational damage to the Foundation and its associated persons; it can impact gravely on the wider public perception of charities in the longer term. The Charity Commission has an important role in upholding public trust and confidence in charities. The Charity Commission takes seriously any high-profile scandal relating to charity mismanagement, which risks negatively impacting public trust and confidence in charities.
This type of scandal overshadows the charitable work being carried out and usually causes reputational damage. The public have a right to transparency when donating to charitable causes and it is essential for a charity to maintain trustworthiness, competency, and to uphold charitable values in order to operate effectively.
The Fundraising Regulator and the Charity Commission worked alongside The Captain Tom Foundation to develop its governance and fundraising, highlighting the importance of public confidence in charities scrutinised by the public. A spokesperson for the Fundraising Regulator stated:
“As a newly established and high-profile charity, we advised the foundation of its regulatory obligations when it comes to fundraising so that the public’s confidence and trust in donating to charity is protected.”
The Regulator drew particular attention to accurate representation when describing its activities, and that transparency and accountability are key to good management of a charity.
Conclusion
These issues demonstrate the importance of good governance for charities of all kinds, and highlighting in particular the additional vulnerability of high profile and household name charities as well as those established through personal or family connections. Charities should operate according to best practice guidelines at all times and, if in doubt, seek advice.
Birketts’ charities team is multi-disciplinary, advising charity clients on matters relating to all aspects of their constitutional, governance and operational needs. We assist trustees and charities of all kinds and sizes.
For further information and advice on the issues raised in this article, or anything else, please get in touch with Liz Brownsell, Head of Charities at Birketts or any other member of our Charities Team.
You might also be interested in our recent webinar by Liz, on understanding conflicts of interests, a recording of which is available to view on our YouTube channel.
Key Contacts
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at July 2022.