The warning cites a number of grounds where the Commission considers that the trustees of the charity have committed a breach of trust or duty or misconduct or mismanagement in the administration of the charity.

These include making unauthorised payments to a connected person; entering into an informal loan agreement with a connected person; improperly delegating the administration and management of the charity; failing to keep proper minutes and other records of decision making, and failing to properly implement and manage financial controls.

The Charity Commission’s involvement began when the National Hereditary Breast Cancer Helpline was randomly selected from the group of 94 charities whose accounts signalled they may be in financial difficulty as they included an ‘emphasis of matter’ about going concern relating to their financial position.

Its investigation found the charity and its assets had been exposed to undue risk through a lack of appropriate financial controls and its financial model was unsustainable. Several of its shops were running at significant loss and the charity was heavily reliant on loans.

The Charity Commission also identified that the charity had made unauthorised payments to the chair of trustees, in breach of the provisions of its governing document and the legal duty that a trustee must not receive any benefit from the charity unless it is properly authorised and clearly in the charity’s interests.

The payments were made for work undertaken running the charity’s operations on a day to day basis. The trustee in receipt of payment was the only authorised signatory on the charity’s bank accounts and so authorising payments to themselves.

There were also concerns about the trustees not meeting regularly to make collective decisions about how the charity should be run.  The chair made decisions following discussions with individual trustees. No records were kept of those discussions. It was also identified that the charity had received interest-free loans from a trustee, for which no formal agreement or repayment schedule was in place.

As a result, the Charity Commission issued an action plan but subsequently found the trustees had failed to comply with all of its terms.

Specifically, although the former chair had resigned as a trustee, she continued to run the charity’s operations without any formal role and continued to receive payments. Whilst the trustees had held and minuted at least one trustee meeting, there was a lack of evidence that the trustees were making collective decisions about the management and administration of the charity. They were continuing to allow the former chair to make key decisions about the operation of the charity, despite having resigned as a trustee.

The trustees had added additional signatories to the charity’s bank account but had not implemented other financial controls required to ensure the charity’s assets were not exposed to undue risk, such as controls over stock held in the charity shops. They had also failed to take the actions required to formalise the loan agreement.

The official warning which the Commission has now given the charity is intended to improve its compliance processes. It requires the trustees to ensure that any payments to individuals are made lawfully and that any appropriate consent from the Commission is obtained beforehand.

They are also required to ensure that any loan agreement provides sufficient protection of the charity’s interests and is both reviewed and documented sufficiently; make sure that all decisions are properly and adequately recorded; and ensure that the trustees alone take trustee decisions regarding the management and administration of the charity, and must delegate only in accordance with their duties. The trustees have to develop and implement sufficient financial controls to ensure the charity’s assets are not exposed to undue risk.

Due to the sums of money involved, and the actual work undertaken for the charity, the Commission concluded it was not proportionate in this case to pursue repayment of the amounts paid without authority to the former chair of trustees.

National Hereditary Breast Cancer Helpline: Charity Commission case report is here.

National Hereditary Breast Cancer Helpline: official warning is here.