Greater Life Foundation and Greater Life Trust Foundation

Registered Charity Nos.1076688 and 1106280

You can also view the full colour PDF version of the Greater Life Foundation and Greater Life Trust Foundation inquiry report.

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 30 July 2008.

The Charity

1. The Greater Life Foundation (GLF) and the Greater Life Trust Foundation (GLTF) are connected charities the latter being a charitable company. GLF was registered as a charity on 22 July 1999. Its objects are to advance Christianity, to relieve poverty, to advance education and to promote such other charitable objects as the trustees shall consider appropriate. GLTF was registered as a charity on 12 October 2004 with the intention that it take over the operation of GLF. There was a phased transfer of operations until October 2006 when GLTF took over. GLF remains in existence to hold certain restricted funds. Restricted funds are funds to be used for specific purposes, set out by, for example, the donor(s) or the terms of a public appeal, within (but often narrower than) the objects of the charity. GLTF’s objects are the same as GLF. In practice the charity administers a local independent church.

2. The charities are based in Chertsey, Surrey. At the time of the inquiry GLTF was not due to submit accounts but the last accounts submitted for GLF for the financial year ending 31 March 2005 shows it’s income was £331,632.

Source of Concern

3. In May 2006 the Commission received allegations that a restricted fund called, “The Rise and Build Fund” (the Fund), held by the trustees of GLF was being applied for general purposes. The Fund was established in 2000 to acquire a suitable property to use as an auditorium and church centre for the congregation.

4. It was alleged that the Pastor, who also founded the charity, was in control of the administration and management rather than the trustees.

5. A number of complaints were received from former members of the church who had also donated to the Fund. They all asserted that the Fund had failed and that they wanted their money back. The trustees disagreed saying that the Fund could still be used for the purposes for which it was established and declined to offer to repay the donations.

6. There were also concerns that payments had been made from the Fund for general purposes without appropriate authority and this had not been adequately accounted for. The trustees also failed to provide the Commission with information relating to the future use of the Fund in a timely manner.

Commission inquiry

7. The Commission opened two separate inquiries, one for GLF on 9 March 2007 and one for GLTF on 26 March 2007.

Issues

8. The use of a restricted fund for general purposes.

9. The long delay by the trustees either to acknowledge that the Fund had failed or alternatively provide information to support their view that it has not. If the Fund has failed, the trustees should properly offer to refund donations.

10. The trustees alleged lack of control of the administration and management of the charity.

Timescale of inquiry

11. The inquiries were closed on the 21 December 2007.

Findings

12. The appeal for the Fund was launched in late July 2000 with a second stage in July 2001. The trustees wanted to purchase a 500 seat auditorium with adjoining facilities such as a bookshop, café, Bible College and media centre and asked the congregation for donations towards the purchase. There was appeal literature but it did not clearly set out what would happen if the appeal failed to raise enough money or raised too much or the timescales involved. There had been an opportunity to purchase a building almost immediately after the first stage of the appeal was completed but this did not happen, through no fault of the trustees.

13. By 31 March 2005 the balance of the Fund was £264,411, which also included interest.

14. There was disagreement between some of the donors and the trustees about whether or not there was a timescale placed on the appeal and the proposed purchase of a suitable property. There was also disagreement on what type of building the appeal was established to purchase. The appeal literature stated that the goal was to purchase a building described in paragraph 12 above. The trustees had also estimated in 2000 that a suitable building in their designated catchment area would cost between £500,000 and £1 million. The appeal communications stated the aim to be as debt free as possible but that the likely scenario would be that monies raised would end up being a deposit on a property. The trustees’ calculations had concluded that the total amount of rent currently being paid would cover mortgage repayments given a healthy deposit.

15. The trustees provided the Commission with a business plan for the Fund but this did not give any timescales of when a suitable property would be acquired. The trustees explained that it was difficult to say exactly when they will be able to acquire a suitable property because of where they want to purchase, the type of building required and the zoning required. They did though believe that it was possible and hoped to be able to acquire one within the next three years although they would not lock themselves into any strict timescale.

16. An examination of the Fund’s account in January 2007 showed that a total of £51,803 had been withdrawn. Of this sum £48,803 (claimed to be interest earned) was wrongly applied for the general purposes of the charity. There was also a charitable payment of £3,000 which was mistakenly taken from the Fund when it should have been taken from the general account of GLTF.  It was also found that a donation of US$10,150 was wrongly credited to the Fund when it should have been credited to the general account.

17. The actual amount of interest earned was £46,962.65, not £48,803, which meant that £1,840.35 was also wrongly taken from the Fund. As the donation of US$10,150 dollars converts to £5,725.61 then taking into account the mistaken use of £3,000 and £1,840.35 the general funds are owed £885.26 from the Fund therefore £885.26 must be repaid from the Fund to the general account.

18. The main activity of the charity is the operation of a church. The spiritual and pastoral work of the church is the responsibility of the Pastor who is not a trustee. In practice the Pastor also manages the charity on a day-to-day basis in a role which is similar to that of a chief executive. He is assisted in his spiritual and pastoral work by a leadership team which he heads. The trustees are members of this team. Ideas and proposals for activities to be carried out by the charity are discussed by the leadership team. The pastor then submits plans to the trustees at the next board meeting for final formal approval by the trustees.

Conduct of inquiry

19. The Commission contacted the charity’s bank and obtained details of the Fund and how it had been utilised.

20.  A Commission officer met the trustees who provided a copy of the business plan for the Fund and also copies of minutes of trustee meetings.

21. Some original donors provided the Commission with their recollections of events of how the Fund had been started.

Conclusions

22. The Commission advised the trustees of problems with the Fund relating to a non-specified length of time for purchase and therefore, suggested the use of the provision of section 14 of the charities act. The trustees chose to use the provisions of section 14 and thus agree that the donors can properly ask for their money back. This part of the Act is concerned with the application of property which has been raised for a specific purpose which fails in circumstances where that failure means the funds are returnable to the donors. Part of this process is to contact the donors and offer to return their donation or get them to sign a disclaimer in a form prescribed by regulations made under the authority of section 14.

23. As the interest referred to in paragraph 16 was used for the general purposes of the charity and as any unclaimed funds maybe re-applied for those purposes it was not considered proportionate to ask for the money to be repaid to the Fund.

24. The Commission accepts that the trustees are now aware of the potential conflict of interest posed by their place on the leadership team and their duties as trustees.

Regulatory action taken

25. The Commission used its powers under section 9 of the Charities Act 1993 to obtain details of amounts paid by cheques issued from the Fund’s account.

26. As the Commission found evidence that the Fund had been used for general purposes and because there was a delay in getting information from the trustees the Fund’s bank account was frozen. An order dated 23 March 2007, made under section 18(1) (iv) of the Charities Act 1993 was served on the charity’s bank. The order was discharged on the 11 December 2007.

27. The Commission provided the trustees with advice and guidance regarding the issues identified.

Impact of Commission intervention

28. The trustees have decided to offer to repay the donations to the original donors. Once this process is complete the trustees will apply to the Commission for a scheme to be made under section 14 of the Charities Act 1993 as amended by the Charities Act 2006.

Resources Applied

29. The Commission adopted a multi disciplinary approach on this case which involved legal advice and casework management.

Actions required of the trustees

30. The trustees must in accordance with s. 14A of the Charities Act 1993 (as amended by the Charities Act 2006) offer to repay the money in the Fund to donors who are entitled to request return of their gifts.

31. If there is any money unclaimed or disclaimed the trustees must apply for a scheme under section 14 to allow them to use any remaining assets for general purposes. The scheme will also set aside a certain amount for donors who cannot be contacted within the prescribed three month period, in the eventuality that they contact the charity within the following prescribed 6 month period and ask for their money to be returned.

32. The trustees must repay £3,000 from GLTF to the Fund and the Fund must repay the US$10,150 to the general account therefore £885.26 must be repaid from the Fund to the general account.

33. The trustees must ensure that they recognise and manage any future potential conflicts of interest.

Lessons for other charities

34. When embarking on a specific appeal for a particular purpose trustees should ensure that they have provisions in place which cover all eventualities. If the fund fails to achieve its targets then the trustees should clearly say what they will do if that happens. If the appeal generates more funds than are needed, and they have said how they will spend the excess for other purposes, the trustees will be able to do so without any further intervention by the Commission, for example, by Scheme or Order. Donors should be able to give knowing that should either of these situations arise they are clear about what will happen to their donation.

35. The Charities Act 2006 offers an alternative. Donors can be told upfront that if the appeal fails then their donation will be used for something similar unless they sign a declaration saying they’d like a refund. This means that if the appeal fails the organisers only have to offer refunds to donors who signed declarations, using our agreed process. We would then make a Scheme on the money left and no further claims would be met after that.

36. Although a charity may be administered on a day-to-day basis by paid employees it must be remembered that it is the trustees who are ultimately liable and responsible for the administration and management of the charity. Trustees can delegate certain duties but they can not abrogate their responsibilities totally. Anyone considering becoming a trustee is advised to read the Commission publication The Essential Trustee: What you need to know (CC3), which is available from the Commission website.

37. The Commission has agreed model governing documents for Independent Churches which are produced by The Evangelical Alliance, a registered charity, number 212325. The registered correspondent of the charity is Miss H Calder, Evangelical Alliance, 186 Kennington Park Road, London, SE11 4BT.

Para	Issue	Charity Commission guidance and relevant legal obligation
36-38	Appealing for funds for a specific project.   Returning appeal money where the fund has failed	CC20 Charities and Fundraising   Section 14 of the Charities Act 1993 as amended by the Charities Act 2006
38	Dealing with potential conflicts of interest	CC3 The Essential Trustee: What you need to know

Date of Publication: 30/07/2008