The regulator has opened a statutory inquiry into SPAC Nation to examine financial, governance and safeguarding matters at the charity, which carries out much of its charitable work in London, working particularly with young people.

It has been subject to a regulatory compliance case since April 2018, which was opened to examine safeguarding and financial concerns.

In June 2019, as part of the compliance case, the Commission issued the charity with an action plan, receiving as expected a response from the trustees in November 2019. Now the regulator says some of this information raised further concerns about the charity’s financial controls, policy and procedures.

Of immediate concern is that substantial amounts of charity money are held in cash. As a protective measure, the Commission has issued an order, requiring the charity to bank its money.

For the three financial years December 2014 to December 2016, SPAC Nation recorded income of around £200,000.  For the year ending December 2017, that increased to around £600,000, while the latest accounts show an income of £1.2m.

The Commission is also concerned about the apparent lack of clarity between the personal, business and charity roles of leaders within the charity.

The national media reported on the charity over the autumn of 2019, when several individuals alleged they had been encouraged to give money to the charity and/or individuals connected to the charity by taking on personal debt. 

The Commission has opened the latest inquiry to examine matters further. It will consider whether the charity’s safeguarding practices are adequate and the extent to which the charity’s beneficiaries are being placed at risk.

The inquiry will look at the extent to which the financial assets of the charity have been placed at risk by the charity operating largely outside of its current bank account and previously without a bank account.

It will also consider the extent to which the trustees are managing the risks, including reputational risks, to the charity caused by recent and ongoing negative publicity in relation to the charity.

The Commission said it may extend the scope of the inquiry if additional regulatory issues emerge.

A Charity Commission spokesperson said: ‘The issues that have been raised related to SPAC Nation in recent weeks are highly concerning, even more so as the allegations are entirely at odds with the expectations about the way that charities will operate.

‘The opening of this inquiry is an important step that will allow us to examine these concerns further and establish the facts. We will seek to provide assurance to the public and the community that these matters will be considered fully and, where necessary, resolved.’

It is the Commission’s policy, after it has concluded an inquiry, to publish a report detailing what issues the inquiry looked at, what actions were undertaken as part of the inquiry and what the outcomes were.

In a statement from its board of trustees, SPAC Nation said the inquiry was ‘needful to lay to rest some unverified allegations’. The charity said: ‘Inquiry is what we have always asked for. If anything is found wrong we will adjust it, and if not we will keep going strong.’