Charitable Trusts - Council sole trustee

Question

The Council is the sole trustee of a Charitable Trust.  However there is no separate bank account for the Charitable Trust as highlighted by internal and external auditors.  Profits made by the Charitable Trust are currently being added to the Council's general reserves.  This can't be right - can it?

Answer 1

The Charitable Trust's governing document will specify how it is to be managed.  Any significant variation from this is likely to be a breach of charity law.  If the charity does not have the power to give money to local councils, its profits must be ringfenced.

Comments

Ah! there's the rub - find the governing documents - last updated in the 1960s.

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If it's registered with the Charity Commission, they can provide a copy. You shouldn't be operating a charitable trust without a copy of the governing document.

Answer 2

Hi there,

This is not best practice in any shape or form but sadly fits into a very grey area. The governing document most definitely needs to be reviewed and almost not charitable funds can be used for statutory obligations either legally or morally. That said there's no reason why the monies can't go into the council bank account so long as they are ring-fenced for a specific set of purposes i.e. grants, village hall (If not ran by the council).

The Charity Commission would be very interested to have an opinion on this i'm sure.

Comments

I have been going through the pains of dealing with a  PC trust and know the complications. If you have the charity number go on the CC and establish what the objects are . That should give you  a clear indication as to how the money should be spent. And yes they should the governing document. Try and sort it out locally as if there are any issues you will find that the CC don't have the resource to rule on disputes