The purposes of Combined Funds Ltd are to advance religion in accordance with the Jewish Orthodox faith and to relieve poverty, and they do this by making donations to other charitable organisations. In the financial year ending 2016, the charity had an income of over £700,000 with net assets over £6.5m. The charity also has nine trading subsidiaries.

The Commission initially opened a compliance case in 2017 following concerns that the charity had been operating for a prolonged amount of time without having registered with the Commission.

The trustees then submitted an application to register, and when the Commission assessed the financial accounts and bank records it identified a number of serious regulatory concerns over the governance and administration of the charity.

In particular, the Commission highlighted potential conflicts of interest and connected party transactions, given that the three trustees of the charity are all related and in eight of the trading subsidiaries the sole director is also a trustee of the charity.

Despite the charity’s main activity being making grants to other charitable organisations, there is no formally agreed grant-making policy in place. The Commission said it is unclear how beneficiaries are selected, whether any due diligence is carried out or whether there are appropriate processes in place to monitor the end use of the funds.

The inquiry will look at whether the trustees have ensured that any trading carried out by the charity or its trading subsidiaries is compliant with current legislation.

It will consider whether the charity has adequate control systems in place and that the trustees are responsibly and prudently managing the charity’s resources and financial affairs, and whether any loans or investments by the charity have been properly protected and authorised and have been made in the charity’s best interests.

The Commission will also examine whether conflicts of interest and transactions with connected parties have been adequately managed; whether the receipt of any payments and benefits to trustees and connected parties have been validly authorised; and look at how the charity has managed its relationship with its trading subsidiaries.

As a result of its concerns the Commission has made an order under Section 76 of the Charities Act to the charity’s bank, restricting any application of the charity’s funds without the prior written approval of the Commission. The charity’s registration application is currently on hold pending the outcome of the inquiry.

Once the inquiry has concluded, the Commission will publish a report detailing what issues the inquiry looked at, what actions were undertaken as part of the inquiry and what the outcomes were.

Report by Pat Sweet