Charity Commission operational case report: The BeatBullying Group
The Charity Commission has recently published its operational case report into The BeatBullying Group.
The charity found itself in serious financial difficulties after failing to secure two substantial grants, and went into liquidation on 6 November 2014. It notified the Commission of its financial situation in September 2014 and shortly afterwards the Commission started a review of the Charity's financial records.
The Commission found that the Trustees "made decisions to the best of their ability and in the charity's best interests", and that it was the charity's "reliance on grant funding and its lack of reserves" that were the cause of its financial difficulties. The Commission also found that the charity was "not in compliance with its own reserves policy and had no reserves". However, the Commission recognised that it "may be very difficult for a grant-funded charity to put aside money and build it up into reasonable reserves".
This report highlights the need for Trustees to be aware of the risks facing their charity and to address those risks in the charity's business plan. Charities that have no reserves and rely on grant funding are "always going to face a serious risk to their viability". Further, Trustees should keep detailed records of any decisions regarding the finances of the charity, along with the reasoning behind those decisions. This can provide vital evidence that the Trustees have acted as a reasonable body of Trustees would have acted, even if the end result is the charity going into liquidation.
The Charity Commission's guidance on internal financial controls can be found here.
The Charity Commission's operational case report can be found here.