Q.

Why do we appoint Interim Managers?

A.

The appointment of an Interim Manager is a temporary and protective step to help resolve problems in the management and administration of a charity. We therefore appoint an Interim Manager only:

• after very careful consideration of other possible measures that are open to us and the charity in question
• where there is significant potential risk to charity assets, services and/or beneficiaries

The appointment may limit the Interim Manager to specific tasks or require him or her to administer the charity to the exclusion of the charity trustees. Charities and their problems can vary significantly in complexity and duration and so any appointment of an Interim Manager will be dependent upon the specific situation and the needs of the charity in question. The appointment of an Interim Manager does not mean that a charity is insolvent or in receivership.

Q.

Are Interim Managers also trustees under charity law?

A.

No. The appointment of an Interim Manager is a unique appointment made by order of the Commission under powers created by statute. Our powers in this regard are quasi-judicial.

It is a unique appointment. However, the Charities Act 1993 provides for Interim Managers to have such powers and duties of the charity trustees or as specified in our order of appointment.

Arrangements for appointing Interim Managers are case specific and can be for a particular task working alongside other trustees in the management and administration of the charity or taking control of the charity to the exclusion of all other trustees.

We will record details of the appointed Interim Manager on the Register of Charities.

Q.

Are Interim Managers also company directors where the charity is a limited company?

A.

Directors of charitable companies are the trustees under charity law so see the above answer. On appointment, Interim Managers are not recorded as directors by Companies House. However, we are required to inform Companies House on both the appointment and discharge of Interim Managers.

Q.

Can a corporate entity be appointed as an Interim Manager?

A.

No. It is a personal appointment. The Charities (Receiver and Manager) Regulations 1992 state that the ‘appointed person’ means a person appointed to be receiver and manager in respect of the property and affairs of a charity. [The name Interim Manager was introduced by the Charities Act 2006 to replace the name ‘Receiver and Manager’.] Therefore only an individual or individuals can be appointed as an Interim Manager.

Q.

Are Interim Managers personally liable for the liabilities of an unincorporated charity?

A.

The appointment of an Interim manager is a personal appointment.

If Interim Managers act prudently, lawfully and in accordance with the governing document, then any liabilities (i.e. debts or financial obligations) that they incur on behalf of the charity can normally be met out of the charity’s resources.

However, if Interim Managers act imprudently, or are otherwise in breach of the law or the charity’s governing document, they may be personally responsible for liabilities incurred by the charity, or for making good any loss to the charity.

Q.

Why does the Commission require security before appointment as an Interim Manager? Isn’t this covered by professional indemnity insurance?

A.

The Charities (Receiver and Manager) Regulations 1992 state that we are authorised to require the appointed person to give security to us for the due discharge of his/her functions within such time and in such form as we may specify. Specifically, we require that there must be in place sufficient insurance to cover the activities and consequences of such activities of any person or persons acting as Interim Manager for a charity, rather than their normal professional role as, say, solicitor and/or accountant. This is required as it is a personal appointment and because of the potential liability issues (see previous question).

Experience has shown that traditional professional indemnity insurance covers partners and employees within firms in respect of their normal legal and/or accountancy functions but not necessarily in their role as Interim Managers for charities. It would be for the relevant person(s) to provide to us at the time of any appointment with clear evidence of appropriate security for the due discharge of their functions as Interim Manager. This could either be by production of an unambiguous policy document or by written confirmation from the insurer that the scope of extant policies goes so far as to cover the activities of individuals acting as Interim Managers.

The absence of appropriate security is unlikely in itself to prevent appointment of an Interim Manager; however, the appointed person(s) should as a matter of urgency take such steps as may be necessary to remedy the position. Ordinarily, any additional costs incurred to secure appropriate security may be met out of the charity’s funds, but our authority must be obtained before doing so.

Q.

What is the Commission’s role in relation to supervision and monitoring of the Interim Manager?

A.

The Interim Manager does not have a contractual relationship with either the charity or with us. The Interim Manger is not an agent of the Commission. Interim Managers are responsible for the decisions they make during the course of their appointment.

Our supervisory role is to secure an effective framework in which the Interim Manager can carry out his or her work whilst keeping us regularly informed of progress and ensuring ongoing effective communication. We also ensure the Interim Manager fulfils the functions detailed in the appointing order in a timely manner. This is done through regular reporting by the Interim Manager and by an agreed written report which is normally submitted on a monthly basis. A report may, for example, contain:

• management and administrative issues - trustees/employees/assets/contracts
• financial issues - employees/creditors/debtors/statutory accounts
• legal issues - claims/restitution/litigation
• costs - fees/hours/fees items/disbursements/professional fees/ additional costs anticipated
• exit strategy

Q.

What are the costs incurred by an Interim Manager?

A.

Interim Manager fees are the charges for the services provided by the Interim Manager during the appointment.

Disbursements are sums of money spent by the Interim Manager on behalf of the charity in the course of carrying out their functions (eg travel expenses).

Professional fees are additional costs that would have been incurred by charity trustees as if they were in office (eg estate agent's fees on sale of properties or legal fees pertaining to administration of the charity’s legal matters).

Routine office administrative costs incurred by the Interim Manager (eg telecommunications) whilst acting for the charity will be considered a normal part of the Interim Manager’s overheads, and will not be chargeable to the charity.

Q.

What expenditure does the Commission need to approve and authorise?

A.

All Interim Manager fees must be approved in advance and authorised by us. Regular reports to us should contain details of all expenditure incurred by the charity and Interim Manager during the period of the report. We must be notified and approve any exceptional expenditure not foreseen at the time of the tender as soon as possible. Any such expenditure incurred without our prior approval will be at the Interim Manager’s own risk.

Q.

What happens if matters are uncovered post appointment that have significant time implications where a capped or fixed fee has been agreed?

A.

These must be notified to and approved by us before any expenditure is incurred. Any expenditure incurred without our prior approval will be at the Interim Manager’s own risk.

Q.

What happens if an Interim Manager is in dispute with the Commission with regard to fees payable or work carried out?

A.

Interim Managers will regularly report to us so this should not happen. However, if an Interim Manager is in dispute over fees or work carried out, we will expect to receive full details including relevant documents and invoices for those issues in dispute without delay.

Q.

Can an Interim Manager resign?

A.

Once appointed, an Interim Manager cannot choose to retire from the appointment. An Interim Manager can only be discharged by an order of the Commission. Ordinarily Interim Managers are discharged when the functions for which they have been appointed have been completed. However, where we are not satisfied with the Interim Manager's discharge of their functions (both in what is achieved and the way it is done), then we may (after giving due notice to, and considering representation from, the Interim Manager) either:

• disallow remuneration; and/or
• discharge the Interim Manager.

Q.

Should Interim Managers be coming to the Commission for advice?

A.

Whilst we supervise the appointment and encourage discussion with Interim Managers, we do not impose our judgement on them or seek to impose solutions to issues. We may discuss possible options in neutral terms with the Interim Manager but we cannot insist on any particular outcome. We might, however, make general points such as the difficulty encountered in practical terms with certain actions.

Q.

What advice is the Commission able to provide?

A.

Under section 19 of the Charities Act 1993, the Interim Manager has the same power as charity trustees to seek formal advice from us under section 29 of the Act that they are acting within the trusts of their charity. We may also apply to the High Court for directions on any matter arising from the Interim Manager functions.

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