The Presidents Club – Case Report

On your head be it, lessons for charity trustees

The Presidents Club Charitable Trust (the “Presidents Club”) is a grant-making charity that raised its income from hosting an annual ticketed dinner at which a number of auctions were held. As has been widely publicised, allegations of harassment of female staff emerged from the male-only event held at the Dorchester Hotel on 18 January 2018.

In its case report, the Charity Commission (the “Commission”) makes it clear what its role as a statutory regulator encompasses, namely, to ensure that charity trustees comply with their legal duties and responsibilities in managing their charity – it is not responsible for dealing with incidents of abuse. “The essential trustee: what you need to know, what you need to do” (“CC3”), sets out the duties of all charity trustees, and the Commission’s case report on the Presidents Club reemphasises the importance of charity trustees being aware of their responsibilities and acting in accordance with them.

The Presidents Club Charitable Trust (the “Presidents Club”) is a grant-making charity that raised its income from hosting an annual ticketed dinner at which a number of auctions were held. As has been widely publicised, allegations of harassment of female staff emerged from the male-only event held at the Dorchester Hotel on 18 January 2018.

In its case report, the Charity Commission (the “Commission”) makes it clear what its role as a statutory regulator encompasses, namely, to ensure that charity trustees comply with their legal duties and responsibilities in managing their charity – it is not responsible for dealing with incidents of abuse. “The essential trustee: what you need to know, what you need to do” (“CC3”), sets out the duties of all charity trustees, and the Commission’s case report on the Presidents Club reemphasises the importance of charity trustees being aware of their responsibilities and acting in accordance with them.

Act with reasonable care and skill

The Charity Governance Code, which sets out the principles and recommended practice for good governance, advocates that charity trustees should ensure its charity has adopted and adheres to a suitable code of conduct and that it “operates responsibly and ethically”. Good governance enables and supports a charity’s compliance with relevant legislation and regulation. Charity trustees are expected to take an active role in all aspects of their charity, and to be aware of relevant guidance. An absence of oversight or ignorance is not acceptable.

It is clear from the Commission’s investigations that the Presidents Club’s trustees (the “Trustees”), did not take a proactive role in relation to the organisation of the annual ticketed dinners it hosted. Charity trustees have overall responsibility and accountability for their charity’s fundraising, they should have systems and processes to allow effective oversight and control. It was a combination of this lack of consultation of regulatory guidance and poor governance that led the Commission to conclude that the Trustees did not act with reasonable care and skill.

Manage charity resources responsibly, specifically avoiding exposing the charity’s assets, beneficiaries or reputation to undue risk

The Trustees informed the Commission that before 2018 it had not been made aware of any complaints about its annual ticketed dinners, and furthermore, had identified the potential risk of inappropriate behaviour in light of substantial recent media coverage surrounding the topic. The Trustees issued a code of conduct to guests, via the event programme, which was drawn to the attendees’ attention.

The Commission accepted that the Trustees had reviewed their previous events, although they did so inadequately, and failed to document such reviews, which was a clear breach of CC3. The Trustees relied upon the success of previous events and assumed there were no issues that required tackling. The Trustees failed to fundamentally address the risk to the reputation of the Presidents Club in relation to it being an all-male event with predominantly female staff who had been provided clothing with instructions about their appearance. The Trustees did not have clear policies and procedures addressing harassment or improper behaviour; they did not sufficiently protect individuals coming into contact with the Presidents Club, which resulted in their failure to protect the reputation of the Presidents Club. The Commission therefore concluded that the Trustees failed to comply with their legal duty to manage charity resources responsibly.

Act in the best interests of the charity

CC3 sets out the duties of charity trustees, which includes the duty to act in its charity’s best interests. The Commission felt that the Trustees made decisions based on what they considered to be in the Presidents Club’s best interests, however, they didn’t ensure their decisions were adequately informed and consequently damaged the Presidents Club’s reputation.

Following the issuing of guidance by the Commission, several charities reviewed their initial decisions to return donations. Charity trustees must make this decision in the best interests of their charity, which will include weighing up issues around how the funds were raised (including reputational concerns), against the financial impact of turning the donation down. The Institute of Fundraising, in its practical guide to dealing with donations, emphasises that donations should only be refused in exceptional circumstances. Depending on the terms of a donation and how the funds were raised, there may be restrictions on whether a donation can be returned, the Commission may need to authorise such returns. Charity trustees have a duty to report any serious incidents which could harm their charity’s reputation to the Commission and if it is unsure, should seek legal advice and/or that of the Commission.

Outcomes

The Equality and Human Rights Commission, which cannot share its findings with the Commission, confirmed that single-sex fundraising events are not a breach of the requirement to be non-discriminatory in the course of providing a service. However, the Fundraising Regulator has confirmed that there had been breaches of the Code of Fundraising Practice.

The Commission updated its Safeguarding Strategy in December 2017 and emphasised the need for safeguarding to be a key governance priority for all charities; such a high profile case shortly after this update was released demonstrates the importance of charities having appropriate safeguarding measures in place. There has been a widening of who charity trustees are responsible for safeguarding, they must not only consider vulnerable beneficiaries, but also their charity’s other beneficiaries, employees, volunteers and others who come into contact with their charity; charities should review, and consider updating, their safeguarding policies.

The Commission concluded that the Trustees had breached a number of their duties. As the Trustees intend to wind up the Presidents Club once it has distributed its funds in accordance with its objects, the Commission felt it appropriate to issue the Trustees with a Regulatory Action Plan to maximise and facilitate the distribution to other registered charities.

Lessons for charity trusteesLessons for charity trustees
  1. Be proactive and involved in the running of your charity.
  2. Ensure high standards of governance for your charity; consider adopting the Charity Governance Code.
  3. Be aware of, and familiar with, relevant legislation and regulatory guidance.
  4. Take reasonable steps to ensure agents who act on your behalf comply with the relevant legislation, your charity’s policies and procedures, and best practice.
  5. Review safeguarding policies and procedures in line with the Commission’s safeguarding strategy and regulatory alert published in December 2017.
  6. Make safeguarding a priority – it is not enough to have up to date policies and procedures in place – it is about creating a safeguarding culture and ensuring effective implementation of those policies.
  7. Ensure proper and thorough records are made when required.
  8. Scrutinise your charity, even when it appears to be running well. Do not define success solely on the level of your charity’s income.
  9. Ensure there is a range of experience and expertise within the board of trustees.
  10. Do not be afraid to seek external advice, it may be in the best interests of your charity despite the potential cost.

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