Local authorities still failing to serve effectively as charity trustees

This week has brought another example of just how bad local authorities are at serving as trustees of charities.

In Shetland, island councillors have buried their heads firmly in the sand and refused to reform the board of a £200m charitable trust where they make up 21 of 23 trustees, despite being told to do so by islanders, the Office of the Scottish Charity Regulator, their own lawyers, and one of the charity’s two independent trustees.

Despite the fact that the council regularly does business with the trust, and the trust invests money in council schemes, councillors have denied that there is any inherent conflict of interest, or any risk of charitable money being used to subsidise statutory services.

Instead, they are taking legal advice in a battle to remain in control of the trust.

It’s just the latest example of extraordinary behaviour by councils in relation to charitable resources, which has included selling off charitable land and keeping the money, installing council staff to work rent-free in charitable buildings, and failing to carry out any charitable activity at all for decades at a time.

Councils have been found to be unaware that they were even supposed to be acting as trustees, or that they did not actually own the land they were supposed to hold in trust. They have also shown a stubborn and litigious refusal to give up their authority when their mismanagement is made clear.

Recently, following a case before the charity tribunal, Dartford Council was ordered to recruit independent trustees to sit alongside councillors on the board of a charity it managed. The tribunal said that it hoped a code of conduct drawn up for the council would become a model for others.

It’s a welcome and sensible development, and it would be good to see the Charity Commission backing it and generally taking a stronger line with charities that have councils as sole trustees or trustee bodies dominated by councillors.

This is easier said than done because it involves tangling with entrenched interests with plenty of cash. And if all we get is more guidance from the regulator, councils will just ignore it if they want to.