Unity Conductive Education

Registered Charity Number 1099989 (Charity removed on 31 May 2007)

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 12 March 2008

The Charity

1. Unity Conductive Education (”the Charity”) is based in Leeds and established by a declaration of trust.  It was registered with the Charity Commission on 10 October 2003, and its reported income for the year ending 30 November 2005 was £29,743.

2. The Charity’s objects, in summary, are to relieve the suffering of children and adults with motor disorders by providing them with conductive education , and by providing advice and support to their families.

Source of Concern

3. The Commission had received reports from a number of local authorities about unlicensed house-to-house and street collections being conducted on behalf of the Charity. It was reported that the persons carrying out the collections were working for a fundraising company called Acorn Assist, which was found to be owned by Mr Syd Sykes. The Commission had previously given clear advice and guidance to Mr Sykes in connection with the fundraising regulations and requirements, with his obligations having been fully explained to him. Mr Sykes had acknowledged that he understood these. The Commission was therefore concerned why this Charity was carrying out unlicensed fundraising where Mr Sykes was the fundraiser.

4. During the course of the inquiry the Commission received a further complaint of an unlicensed collection, where two people were collecting for Acorn Assist, on behalf of the Charity, using collecting tins and selling badges.

Commission inquiry

5. The Commission opened an inquiry under Section 8 of the Charities Act 1993 on 23 November 2006 to look into:

• possible unlicensed and unregulated fundraising;
• the relationship between the Charity and the fundraiser;
• whether a formal fundraising agreement was in place which satisfied Part II of the Charities Act 1993 and the Charitable Institutions (Fund-Raising) Regulations 1994; and
• The lack of governance with regard to the administration and management of the charity by its trustees.

Issues

6. The inquiry was opened to look at the following issues:

• The inability or failure of the Charity’s trustees to monitor and control the activities of Acorn Assist.
• Concerns about the degree of involvement between the Charity and Acorn Assist if that company was engaged in non-compliant fundraising.
• Concerns about the management of Acorn Assist when it was known that Mr Sykes had engaged previously in unlawful fundraising activities; and
• Whether any fundraising agreement between the Charity and Acorn Assist complied with Part II of the Charities Act 1992 and the Charitable Institutions (Fund-Raising) Regulations 1994.

Timescale of inquiry

7. The inquiry was opened on 23 November 2006 and closed on 31 May 2007. Publication of this report was delayed by extensive correspondence with the fundraiser Mr Sykes as to the accuracy of comments about his business.

Findings

8. The inquiry found that the only signatories to the charity’s bank account had been the Centre Manager and a former trustee. Since the former trustee’s departure, the Centre Manager has been the sole signatory.

9. The trustees had been recruited by the Centre Manager on the basis that they had disabled relatives who were beneficiaries of the Charity; however they were not aware of their responsibilities as trustees. It also appeared that the charity trustees lacked a full range of experience or skills needed to administer the charity. The Centre Manager exercised almost total control over the running of the Charity, to the exclusion of the trustees, and was one of two signatories to the Charity’s bank account, the other being a former trustee.

10. The former trustees had been able to exercise little or no effective control over the Charity’s management, including its financial management, which appeared to be entirely in the hands of the Centre Manager, and the current trustees had inherited these problems.

11. There were no policies in place to deal with child protection (which you would expect from a charity where the beneficiaries are mainly children), or staff performance issues; and there were no financial control systems in place.

12. In September 2005, acting upon the Centre Manager’s recommendation, the Charity’s former trustees had entered into a fundraising agreement with Acorn Assist. The inquiry found that the trustees had not sought independent legal advice on the agreement; it did not meet the requirements of Part II of the Charities Act 1992 and the Charitable Institutions (Fund-Raising) Regulations 1994, and the current trustees had been unaware of its existence.

13. The inquiry was unable to establish how much money Acorn Assist had raised in the Charity’s name since the agreement had commenced.

14. The Charity’s accounts and annual return for the year ending 30 November 2005 were overdue at the beginning of the inquiry but were submitted in April 2007.

15. The inquiry established that the Centre Manager had been instrumental in setting up the Charity in July 2003. He had initially held the post of Centre Manager but as an unpaid volunteer. His wife was the charity’s paid conductor. In January 2006, the Centre Manager arranged for his position to become paid employment. This was done without the approval of either former or current trustees and without having gone through a fair and open recruitment process. There had been no trustee assessment as to whether the salary package including 70 days annual leave was commensurate with his qualifications and responsibilities. The Centre Manager resigned in April 2007.

Conduct of inquiry

16. Representatives of the Commission held meetings with the Charity’s trustees. We learnt that the Charity provided conductive treatment from a Centre in Leeds, which was under the day-to-day control of a Centre Manager. The conductive treatment was provided by the Centre Manager’s wife, who was properly qualified to administer such treatment.

17. During the course of the inquiry the Commission provided the trustees with advice and guidance regarding their duties and responsibilities, and on best practice, so that they would be better able to take proper control of the management of the Charity.

Conclusions

18. The former trustees had not sought professional advice as to whether the fundraising agreement between the Charity and Acorn Assist was in the best interests of the Charity; and an examination of the agreement revealed that it did not meet the requirements of Part II of the Charities Act 1992, and the Charitable Institutions (Fund-Raising) Regulations 1994.

19. The trustees did not have in place adequate management or financial controls, and had allowed the Centre Manager to exercise an inappropriate level of control and dominance.

20. The Charity’s founder and subsequent paid Centre Manager had appointed himself to this paid position without the authority of either the former or the present trustees, and without having gone through a fair and open recruitment process.

Regulatory action taken

21. Because the Centre Manager had failed to amend the bank mandate in favour of the trustees when he resigned, he remained the only person with access to funds in the Charity’s bank account. This represented a risk to the Charity’s property. With the agreement of the trustees the Commission made an Order under section 18(1)(iv) of the Charities Act 1993 the effect of which was to ‘freeze’ the bank account. This action protected the funds in the account until the trustees were able to make arrangements to replace the Centre Manager as signatory.

22. The Charity was removed from the Central Register of Charities on 31 May 2007, as it no longer operates.

Impact of Commission intervention

23. The Charity’s original six trustees had all resigned during 2006. Four replacement trustees were appointed, but of those only the current two remained. In February 2007 an additional trustee was appointed, bringing the trustee body up to the required minimum of three

24. The Centre Manager and his wife resigned from the charity on 20 April 2007, forcing the trustees to make decisions about the Charity’s future. They concluded that the only viable option was to dissolve the Charity in accordance with the procedure set out in its governing document. The trustees passed a formal resolution on 4 May 2007 formally dissolving the Charity. Any residual funds are to be transferred to another charity with similar objects.

25. As a result of the advice and guidance provided by the Commission, the trustees terminated the Charity’s arrangements with Acorn Assist. They also agreed to implement a more effective governance structure and improved financial controls until the proposed transfer of the charity’s property is completed.

26. The trustees ended their arrangements under the non-compliant fundraising agreement with Acorn Assist on 11 May 2007.

Resources applied

27. The Inquiry was opened in November 2006, and lasted for 6 months. It was conducted in the Mainstream and Inquiry Unit, of Compliance and Support and was supported throughout by the Commission’s Legal Division.

Actions required of the trustees

28. The Commission will monitor the winding up of the Charity, with the trustees producing final accounting information. The trustees will be given any necessary assistance to identify a suitable charity to receive any residual funds.

Lessons for other charities

29. Trustees must take professional advice as appropriate before entering into any fundraising agreement and should satisfy themselves that the terms of the contract are in the best interests of the charity, particularly in terms of the percentage it is to receive.

30. Trustees have a responsibility to ensure that the reputation of their charity and that of the charitable sector is not brought into disrepute by the activities of the charity or anyone ‘fundraising’ on its behalf. A charity’s reputation is a valuable asset, and its trustees have a duty to protect it. It is important that charity trustees check the performance of collectors, professional fund-raisers and others that use the charity’s name. It can be very difficult to repair damage to a charity’s good name.

31. Trustees and/or fundraisers must, at all times, ensure that appropriate licences are obtained from the relevant authorities before conducting fundraising in a public place.

32. The Fundraising Standards Board has now been set up as an independent body, with representatives from the charity sector, consumer bodies, and independent lay members representing the public interest. For an annual fee, participating charities will be able to display a quality mark, to show that they are committed to best practice in fundraising, so that donors can give with confidence. Charities will sign up to principles set out in a Donors’ Charter, and to the Institute of Fundraising codes of practice. See www.frsb.org.uk for further information.

33. Charity trustees are responsible for protecting the property of their charity and to ensure that it is used to further the charity’s objects. They should ensure that there are financial control systems in place that are fit for purpose and capable of demonstrating that funds are being properly applied.

34. Trustees should familiarise themselves with their charity’s governing document and ensure that at all times the required number of trustees is in place. Trustees are jointly responsible for the running of their charity, but where responsibilities have to be delegated to individuals the scope and limits of delegation should be set out clearly and there should be arrangements in place enabling the trustees to monitor performance effectively.

35. Guidance for trustees can be found in leaflets CC3 - The Essential Trustee: What you need to know; and CC8 - Internal Financial Controls for Charities”. Both of these publications are available on the Commission’s website.
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Legal Obligations	Guidance
Part II of the Charities Act 1992, and the Charitable Institutions (Fund-Raising) Regulations 1994	CC3 – The Essential Trustee: What you need to know CC8 – Internal Financial Controls for Charities CC20 – Charities & Fundraising Home Office Guide – “Charitable Fund-Raising: Professional and Commercial Involvement” Fundraising Standards Board - http://www.frsb.org.uk

1. Conductive Education is a learning system for children and adults with physical disabilities such as cerebral palsy, spina bifida and multiple sclerosis in how to overcome their movement difficulties and lead a more independent life.  It was originally developed in Hungary over 40 years ago as a holistic treatment, but is now widely established in Britain.

Date of Publication: 12/03/2008