The Charity Commission, the official body responsible for supervising the management and running of the nation’s charities, has today published a report into the trust which runs the Fairfield Halls following an investigation instigated after seeing reports on Inside Croydon and receiving letters of concern from local residents.

The report confirms that the Commissioners have blocked an ill-conceived, and apparently illegal, attempt by Croydon Council, owners of the Halls, from taking over the venue’s charitable trust. The report makes it clear that the council move jeopardised the Fairfield Halls’ charitable status.

The report should stop speculation that the Conservatives who control Croydon Council might flog off the site to developers in an effort to pay-down some of the £1 billion debts their administration has accumulated. “As the report makes clear, any move to surrender the lease agreement would equate to a disposal of charity land,” a spokeswoman for the Charity Commission told Inside Croydon. “The trustees would need our authority before taking such a step.”

Councillor Mead: a favourite at the Fairfield Halls, until now?

Key in the decisions is likely to be the deputy leader of the Croydon Tories at the Town Hall, “Cuddly” Dudley Mead.

Mead, the £46,000 part-time Croydon Council cabinet member and retired accountant, also happens to be the chairman of the Fairfield Halls charitable trust.

In the Charity Commission’s report, they say, “Charities are run by their trustees for the benefit of the charity’s beneficiaries. An organisation cannot be a charity if it is run in the interests of anyone beyond the charity, including private individuals and public bodies such as local authorities.”

We reproduce the report in full, including reference to “news blogs”, below:

Operational Compliance Report
Fairfield (Croydon) Limited (1026483)

About the Charity

The charity’s objects are to provide recreation and leisure facilities for the benefit of the inhabitants of the Borough of Croydon and surrounding boroughs. In practice, it maintains and manages an entertainment venue – Fairfield Halls – which hosts music, theatre, film and dance productions. The property is owned by the local authority but leased to the charity; in practice, the rent is covered by a grant from the local authority to the charity.

Why we got involved

We became concerned about reports in local news blogs which suggested that Croydon Council had asked the charity’s trustees to consider giving the Council greater control within the charity. The proposals were to admit the Council as a member and give it 75 per cent voting rights at member meetings, thereby effectively turning the charity into local authority controlled company. A local resident also raised concerns with us
about these proposals.

Many local authorities are involved in charities as sole corporate trustees. This is not a concern, because trustees have a clear legal duty to make decisions in the charity’s best interest. However, members of charities have no such obligations; they can act in their own interests, rather than the interest of the charity. The proposal was therefore of regulatory concern to us, because it would have effectively meant the take-over of the charity by the local authority in a way that allows the authority to influence decisions
made by the charity in its own, rather than the charity’s interests. This raised questions as to the future charitable status of the organisation.

The action we took

We wrote to the charity, asking the trustees to confirm whether the proposal had been adopted and if so, whether the charity’s Memorandum and Articles of Association had changed, what level of control the Council would have over the charity, whether the trustees had taken any legal advice, especially any specialist charity law advice.

What we found

The charity confirmed that the proposal had not yet been adopted and that therefore no changes had occurred at the charity; the trustees also confirmed that they had sought specialist legal advice. However, they also confirmed that they had agreed to fully consider the Council’s proposal, explaining that it was linked to Croydon Council’s plans to invest significant funds in refurbishing Fairfield Halls; the Council was keen to ensure their funding was being used to best effect. This raised further questions for us.

We needed to understand why the issue around the control of grant funds was being dealt with by the council effectively taking control of the charity, rather than through the terms of the grant agreement. We also needed to understand how the trustees satisfied themselves that the Council’s majority membership would not prevent them from complying with their statutory duties.

We asked to see any relevant legal advice, as well as copies of the minutes of trustee meetings at which these issues were discussed, in order to properly understand how trustees had decided to enter into negotiations with the Council about the proposals.

Impact of our involvement

The charity eventually confirmed with us that the Council had decided to withdraw the membership proposals. The trustees confirmed that the relationship between the charity and the local authority would be dealt with by lease and grant agreements. We advised the trustees that surrendering the lease agreement – even if it is replaced by another – would equate to a disposal of charity land and it would be likely we would need to grant the trustees authority to agree to such a proposal.

Lessons for other charities

Charities are run by their trustees for the benefit of the charity’s beneficiaries. An organisation cannot be a charity if it is run in the interests of anyone beyond the charity, including private individuals and public bodies such as local authorities.

This case demonstrates that trustees must be mindful of charity law, including by seeking specialist advice where necessary, when negotiating relationships with third parties. Being aware of charity law requirements helps charities during negotiations with other organisations and prevents trustees from signing up to an agreement which they may not have the authority to commit to.

The case also demonstrates that the Commission’s proactive involvement can often help prevent mismanagement or abuses of charitable status before they occur.

• To read the report on the Charity Commission’s website, click here

Inside Croydon’s archive of our coverage of Fairfield Halls:

• Council announces plans for takeover of Fairfield Halls
• Local AmDram groups “in exile” over Fairfield’s charges
• Charity Commission forces council to drop Fairfield takeover

Coming to Croydon

• Fairtrade Film night, Antenna Cafe, Haynes Lane, Feb 27
• Fairtrade event, Upper Norwood Library, Mar 1
• St David’s Day quiz night, Ruskin House, Mar 1
• Coulsdon and Purley Debating Society, Mar 3
• Patchwork and quilting workshop, Upper Norwood Library, Mar 3
• Fairtrade stall at Food Market, Haynes Lane, Mar 8
• Upper Norwood Library Book Club, Mar 15
• Norwood Society talk, Upper Norwood Library, Mar 20
• South Norwood Lakes Playground group workshop, Mar 25
• David Lean Cinema: Basically Johnny Moped, Mar 27-28
• Croydon Half-marathon, Mar 30
• David Lean Cinema: 12 Years a Slave, Apr 3
• David Lean Cinema: The Great Beauty, Apr 10
• David Lean Cinema: Inside Llewyn Davis, Apr 17
• David Lean Cinema: Short Term, Apr 24
• Crystal Palace Overground Festival, June 26-29

Inside Croydon: Croydon’s only independent news source, based in the heart of the borough: 516,649 page views (Jan-Dec 2013)

If you have a news story about life in or around Croydon, a residents’ or business association or local event, please email us with full details at inside.croydon@btinternet.com