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 enquiry 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. Senior Associate Frances Godden and trainee Florence Paul consider the matter.
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.
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 moved to trademark variations of the name ‘Captain Tom’, generating significant profit for the company. That the Foundation failed to challenge this raises questions as to the management of conflicts, trustee benefits, and implies that its trustees may not have been acting in the best interests of the charity.
This full statutory inquiry will investigate:
- Trustees’ responsibility for mismanaging the charity including misconduct in the administration of the charity and unauthorised private benefits to current or previous trustees;
- Whether trustees have properly managed conflicts of interest; and
- If the trustees have 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.”
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. A ‘connected person’ for the purposes of the Charities Act 2011 is a person who is a charity trustee, someone who donated land to the charity, a relative of any such trustee or donor, an employee or agent of the charity, and a spouse or civil partner of any of these persons. Also connected are institutions or bodies corporate which are controlled by any of the aforementioned individuals.
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:
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.
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.
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 enquiries relate to unauthorised personal benefits received by the charity’s 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; moreover, trustees must be able to explain how any private benefit is incidental to the charity’s purpose.
In assessing if 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. It is a fundamental component of charity law that charities must uphold public trust and confidence in donating to charities. The public expect that when donating to charities the majority of funds should be spend on beneficiaries. Any high-profile scandal relating to charity mismanagement will negatively impact public perception of charities.
This type of scandal overshadows the charitable work being carried out and causes reputational damage. The public have a right to transparency when donating to charitable causes, any vague accounting can cause mistrust. 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, transparency and accountability are key to good management of a charity.
These issues demonstrate the importance of good governance for charities of all kinds, but 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.
You might also be interested in our recent webinar by Liz Brownsell, Head of Charities at Birketts, on understanding conflicts of interests, a recording of which is available to view on our YouTube channel.
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.