Carmarthen Mind Association

Registered Charity No. 517267

This is a statement of results of an inquiry under section 8 of the Charities Act 1993 as amended by the Charities Act 2006 (“the Act”) and published on 27 March 2008.

The Charity

1. Carmarthen Mind Association (“the charity”) was established in 1977 and registered in 1986. The objects of the charity are to promote the preservation and the safeguarding of mental health and the relief of persons suffering from mental disorder in accordance with the aims and objects of the National Association for Mental Health.

2. The charity is one of 185 independent local charities across England and Wales that are affiliated to Mind (National Association for Mental Health). It is based in Carmarthen, South Wales, and is governed by a constitution adopted in 1977. It also has a set of working rules. It operates locally by providing care through daily out of hour’s services and activities. The charity operates a day centre which provides self help groups, recreational and educational trips, therapies and other educational projects. The income for the year to 31 March 2006 was £86,709. Most of the charity’s income came from grants from Carmarthenshire County Council and Wales Council for Voluntary Action (WCVA).

Source of Concern

3. The Commission received complaints from former members of staff and indications of serious concern from Mind’s national officer for Wales responsible for affiliation compliance of the affiliated independent local Mind associations in Wales, alleging that there had been a breakdown in the governance of the charity because the majority of the trustees were not capable of carrying out their duties and responsibilities. Although the charity had not previously been the subject of an inquiry, the Commission had provided guidance and advice to the trustees in 2006 in response to similar concerns expressed. Some former members of staff had contacted their local Member of Parliament who subsequently wrote to the Commission to enquire about the management of the charity.

Commission inquiry

4. Further complaints continued to be received and on 19 February 2007, due to the risk to charity assets and vulnerable beneficiaries the Commission decided to open a formal inquiry in order to examine the issues more closely.

Issues

• Whether the trustees had abdicated their duties and responsibilities in favour of a dominant employee.
• The Commission was concerned as to whether the governing body as constituted had sufficient expertise and experience to ensure it was competent to act in the best interests of the charity. In addition, the Commission was concerned about the lack of balance on the trustee body given that the majority of the trustees were service user beneficiaries of the charity.  
• Whether the trustees had complied with section 36 of the Charities Act 1993 in disposing of the charity’s property.
• As a result of their concerns about the management of the charity, two of the principal funding bodies had suspended payments to the charity, and Mind was considering whether to disaffiliate the charity from its network of autonomous affiliated local associations.

Timescale of inquiry

5. The inquiry took eight months to complete and was closed on 22 October 2007.

Findings

6. An internal investigation initiated by Mind and agreed by the trustees had reported that the charity’s members and its staff believed that the trustees were unable to manage the charity effectively. There was also dissatisfaction over the behaviour of the allegedly dominant employee, and concerns about the trustees’ failure to obtain Criminal Records Bureau (CRB) clearance when recruiting staff who were in contact with vulnerable people. The alleged dominant employee had been suspended by the trustees, but subsequently reinstated by them but prior to the outcome of the internal investigation.

7. A number of staff changes had taken place prior to the Commission’s inquiry and some former members of staff were pursuing their concerns through employment tribunals. These left the charity exposed to various liabilities which it potentially did not have the funds to cover.

8. An analysis of the bank accounts revealed that £120,000 had been received from the sale of one of the charity’s properties. After the funding bodies suspended payments, the trustees had used around £28,000 from the proceeds of sale towards the general running costs of the charity. This was within their powers as there was no restriction on the use of these proceeds and there was no suggestion or evidence that they had been misappropriated. Evidence was received from the former solicitors who acted for the charity in the sale to confirm that section 36 of the Charities Act 1993 was followed.

9. The trustees informed the Commission on 6 and 21 March 2007 that they wished to be discharged from trusteeship because they did not possess the skills to manage the charity effectively.

Conduct of inquiry

10. Throughout the inquiry the Commission worked closely with Carmarthenshire County Council and Wales Council for Voluntary Action to clarify their concerns and assess the needs of the charity and its beneficiaries.

11. The Commission, working closely with Mind negotiated with the trustees of a neighbouring independent local Mind association and secured agreement to appoint them as trustees of the charity.

12. The Commission discussed with the new trustees the causes for concern and the steps necessary to put the management and administration of the charity back on a proper footing. The Commission also provided specific guidance and advice to the trustees and nominated a contact officer from its Newport office to guide the trustees through their initial period of trusteeship.

13. The Member of Parliament was kept informed of the Commission’s concerns and proposed action.

Conclusions

14. The Commission closed its inquiry having been satisfied that the newly appointed trustees had made appropriate changes to the charity’s internal policies and procedures, thereby securing its effective management.

15. The Commission is satisfied that the charity’s assets are no longer at risk and that appropriate checks are now being made in respect of those working with vulnerable beneficiaries.

Regulatory action taken

16. On 22 March 2007 the Commission used its powers under section 18(iv) of the Act to prevent the trustees from parting with any further property of the charity.

17. On 6 June 2007 the Commission used powers under sections 16(1)(b) and 18(1)(ii) of the Act to discharge the former trustees and appoint new, experienced trustees in their place.

Impact of Commission intervention

18. The charity’s governance has been restored to a proper standard by the appointment of the new trustees.

19. The charity’s assets and the welfare of its beneficiaries, as well as the provision of a full range of services have been protected through regulatory action and through advice and guidance given to the new trustees.

20. As a result of our intervention the charity’s main funders are now happy that the charity is on a proper footing and funding has been reinstated. The services provided by the charity can continue for the benefit of vulnerable beneficiaries in the Carmarthen area. The new trustees have informed the Commission and Mind that there is a very high level of satisfaction within the local area in terms of the achievements of the charity.

21. The trustees are ensuring that CRB checks will, in future, be carried out for the protection of the vulnerable beneficiaries of the charity.

Resources applied

22. The Commission adopted a multi-disciplinary team working approach on this case which involved both accountancy and legal advice and casework management. Throughout the inquiry the Commission worked closely with other agencies and with local and regional umbrella bodies, including Carmarthenshire County Council, Mind Cymru and Wales Council for Voluntary Action. The Commission also provided specific guidance and advice to the trustees and nominated a contact officer from its Newport office to guide the trustees through their initial period of trusteeship

Actions required of the trustees

23. The newly appointed trustees will review the charity’s structure and ensure that policies and procedures are fit for purpose. This includes making appropriate CRB checks to protect the safety of the charity’s beneficiaries.

24. The new trustees have amended the authorised bank account signatories and have ensured that financial controls are adequate. They have vested the charity’s property in the name of the Official Custodian for Charities.

Lessons for other charities

25. The Commission welcomes user involvement as a way of helping a charity achieve its aims more effectively. Users can contribute their direct experience to the development of services and help other trustees develop a greater knowledge of the user perspective. They can broaden a charity's contacts and influence and, sometimes, open up avenues of funding that were previously closed. Many forms of user involvement are straightforward and present no problems. However, the inclusion of users as trustees is a decision that each charity should consider based on its own circumstances and needs, including the proportion of user trustees on the trustee body who are also beneficiaries of the charity. User trusteeship will be appropriate for some charities but not for others. First and foremost, each charity should consider whether user trusteeship would enhance the effective management of the charity and have a positive impact on the delivery of its services. Those involved in the management of a charity should work collaboratively giving consideration at all times to whether their actions are in the best interests of the charity.

26. Charity trustees must not allow themselves to be influenced or manipulated. If a charity trustee is unable to make independent decisions in the best interests of the charity they must consider stepping down from their position. Trustees must consider the future position of any individual trustee who is not acting exclusively in the best interests of the charity or who has allowed him or herself to be influenced. A charity is entitled to the independent and objective judgement of each of its trustees, acting solely in the interests of the charity.  Trustees who simply defer to the opinions of a dominant employee are not carrying out their duty to the charity.  A case in which a dominant employee effectively deprives a charity of the benefit of the considered judgement of the trustees is an example of poor governance amounting to mismanagement.

27. In charities where the trustees (and others, including volunteers) have direct contact with users who are vulnerable (for example, by reason of their age or mental health), more vigorous background checks to ensure their suitability may be necessary. All charity trustees have a duty of care and a duty to act solely in the interests of their charity. The Commission considers charity trustees risk being in breach of these duties if they fail without good reason to carry out appropriate Criminal Records Bureau (CRB) checks when they are entitled to do so. In some circumstances such failures may be viewed as evidence of misconduct and / or mismanagement in the administration of the charity.  It is also a criminal offence in some circumstances for someone to offer certain positions working with children to someone who is disqualified from doing so.
     

Para	Issue	Charity Commission guidance and relevant legal obligation
24	User trustees	Users on Board: Beneficiaries who become trustees (CC24)
8	Disposing of charity land	Disposing of Charity Land (CC28) Section 36 of the Charities Act 1993
6	Trustees duties and responsibilities	The Essential Trustee: What You Need to Know (CC3)
5	Checks when in contact with vulnerable beneficiaries	The Hallmarks of an Effective Charity (CC60) Safeguarding the Vulnerable (Charity Commission News 24)

Date of Publication: 27/03/2008