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Sole trustee arrangements: a recipe for trouble

Public bodies that are sole trustees of charities have cropped up many times in Third Sector and on Thirdsector.co.uk in the past few months. Most recently, the Charity Commission and Department of Health have continued a year-long argument over NHS charities controlled by the hospitals and primary care trusts they are attached to.

The answer, in this case, is far from clear, but it highlights a question of good governance. Can a charity really be independent of an organisation that can appoint and dismiss its trustees, often at will? Can two bodies maintain separate identities despite having the same people in charge of both?

The issue has caused problems across the country over the last year, At the Livesey Museum in Southwark, the local council forgot altogether that it was a trustee, when it closed down the museum, in a move that paved the way for it to sell the asset to fill its own coffers. In Dartford, the council did sell land belonging to a charitable trust, with the result that land left in perpetuity for local people will now end up under a Tesco car park. Now the council has been told by the charity tribunal to appoint independent trustees to the charity’s board.

And at Alexander Palace and Highbury Hall, the accusations of mismanagement go back a quarter of a century.

Even at charities that are better run than this, though, it’s surely very difficult to be a sole trustee without laying yourself open to conflicts of interest. Councillors are often likely to be excellent trustees – they’re hard-working, skilled administrators with excellent local contacts – but others will always suspect them of using the charity’s assets to boost their first master, the public body they represent.

It is far better to avoid the problem altogether. Appoint an equal number of corporate trustee representatives and independents to the board, and employ an independent manager using charitable funds. The charity is likely to be much better run.

  • Tony Thapar

    for me this is a big issue and appears to have been swept under the carpet for far too long. Lessons I’ve learn’t from the problems over Higbury tell me that Councillors and Officers haven’t been able to manage the conflict of interest that exists in their role as sole trustee and this has led to the mismanagement and neglect of charity assets. Alongside this, in my opinion the Charity Commission has been reluctant to enforce any change. Local authorities as sole trustee shouldn’t be allowed to continue. They don’t have all the skills and knowledge needed. Instead they should work the third sector to develop sustainble independent charitable organisations that can make a difference.