Charity trustees must ensure governance

Liz Brownsell, Partner and Head of Charities at Birketts LLP, has shared insights on the implications of a recent tribunal appeal involving Naomi Campbell. This case has brought to light the often misunderstood responsibilities that trustees bear regardless of their level of engagement. Brownsell states that “even if Naomi Campbell’s criticisms of others involved in the charity’s operations are substantiated, that does not relieve her of legal responsibility as a trustee.” She emphasises the importance of active involvement in charity operations, noting that a failure to do so can constitute misconduct or mismanagement. Reports suggest that Campbell has acknowledged her lack of involvement in the day-to-day operations, which places her in a precarious position. Brownsell warns, “trustees cannot step back from governance and later seek to attribute blame elsewhere.”

The legal framework surrounding trustee disqualification may also be narrower than many assume. As Brownsell explains, “the Charity Commission does not need to prove dishonesty; it is sufficient to show serious misconduct or mismanagement in the administration of a charity.” This indicates that the focus is on past conduct and whether the individual is deemed unfit to act as a trustee. Moreover, she clarifies that the evaluation is protective, rather than punitive, highlighting that “trustee disqualification is about standards, not just wrongdoing.” Aspects under scrutiny include governance failings, financial controls, and the handling of charitable funds, rather than allegations of fraud.

An interesting dimension of this case is the concept of regulatory hindsight. It raises questions about whether the charity's business model met the legal requirements for charitable status from the outset. While this consideration may not directly influence the disqualification, it does prompt a broader discussion about the distinctions between philanthropy and charitable activities. “Charity law requires that an organisation’s activities directly advance its charitable purposes, with only limited scope for non-charitable trading,” notes Brownsell, indicating that significant fundraising events not aligned with charitable goals challenge compliance with legal standards.

Additionally, the situation serves as a lesson for founders and high-profile philanthropists. Brownsell points out that the Commission’s inquiry uncovered serious governance and financial management issues, including the distribution of funds to beneficiaries and concerns regarding trustee expenses. “Responsibility cannot be delegated away," she asserts, reminding potential trustees that “if you lend your name to a charity and act as a trustee, you remain legally accountable - being a figurehead is not a defence.” This case serves as a pertinent reminder of the obligations that come with charity trusteeship and the necessity for active engagement in governance.