Charity Commission CEO issues warning to councils

The head of a major charity regulator has warned Welsh and English councils over the administrative headaches they could face if they fail to look after charities correctly.

Charity Commission CEO David Holdsworth’s letter to local authorities coincides with updated guidance that the regulator has developed with the Local Government Association.

The Charity Commission said it had dealt with several recent cases involving council trusteeship and added that common themes arising in its casework involved council trustees changing the use or status of charitable land or disposing of it in a way that was incompatible with its charitable purpose, sometimes without knowing it was charity property.

Campaigners opposed to Cardiff Council plans to extend Cathays High School using land at Maindy Park raised concerns about the local authority’s handling of Maindy Park Trust – the charity that owns the land and which Cardiff Council is the sole trustee of.

Land swap

The council has provided The Charity Commission with information relating to its management of Maindy Park Trust and information needed to process a land swap application which, if approved, will allow the school expansion to go ahead.

The Charity Commission has requested to meet Cardiff Council to gather more information about its application.

In his letter to English and Welsh councils, Mr Holdsworth noted the “tough times” local authorities were facing and said The Charity Commission had seen a rise in the disposal of charity assets.

He added: “We are, however, also seeing a significant number of cases where local authorities have failed to comply with their legal duties as charity trustees and we have had to take action following receipt of complaints from the public.

“Such cases can be costly and resource intensive for both local authorities and for us as the regulator. Often these changes, if not done correctly, will also result in additional budget pressures on local authorities rather than providing the additional resources initially thought.”

In the last three years, The Charity Commission’s casework teams have dealt with 38 separate cases involving local authorities and charitable land.

Mr Holdsworth has called on local authorities to understand which of the assets they manage or own are charitable and to become familiar with the different legal requirements and restrictions relating to charitable assets.

The new guidance for councils:

Outlines what is expected of councils in the role of trustee
Gives advice on how to handle issues such as managing conflicts of interest
Explains filing accounts requirements
Sets out rules around disposing of charity land
Cardiff Council approved plans to change the way it makes decisions on charities which will involve setting up two separate trust committees.

Separation

The move is intended to create a separation between the council’s role as a trustee and its ordinary functions as a local authority.

A Cardiff Council spokesperson said: “The Council has in recent years been mindful of the need to identify assets it holds as charitable trustee, separate to its local authority assets.

“This has led to the establishment of a working group of officers across a range of departments, to help identify the full extent of trust assets and any terms or restrictions arising from their trust status, and improve record keeping, so that any issues can be more easily identified at an early stage.

“The council has also recently introduced new governance arrangements for trust decisions, so that they are separate to other local authority decisions.

“These steps are intended to reduce the risk in Cardiff of the type of UK-wide issues being highlighted by the Charity Commission.”

An independent advisory committee was created in 2022 to manage the council’s conflict of interest as the education authority and trustee of Maindy Park Trust when it made a decision on whether to pursue a land swap involving Maindy Park.

The land swap, which would see land at Maindy Park exchanged for land at Caedelyn Park in Rhiwbina, would allow the land at Maindy Park to be used for the Cathays High expansion.

However, this would also mean the demolition of Maindy Velodrome – a prospect that campaigners have been fighting for years.