Charity conflict of interest

[NumBMW]

Hi, posting in employment here as this is likely to have persons with experience.
I’ve identified a possible conflict of interest between a charity trust donation and trustees and require some clarity.

Small charity trust has suggested bidding on a charity auction, prizes include holidays, dinner parties, meals out, hampers etc
If the charity trust were to bid on and win the auction, (which is a sealed bid type) trustees would be seen to benefit by attending the prize, is this correct?

[StevieBee]

If I understand correctly, the Charity has received donated 'prizes' that will be bid for via an auction and your question relates to trustees participating in that auction. Is that correct?

If so, this may fall under the Gabling Act which includes provisions for things such as social lotteries which the regulators might consider to encompass auctions - although of course there's no monetary risk to participants. This would exclude anyone connected with the charity (including family members) from participating.

Regardless of the technicalities, I think they need to consider the optics; what would it 'look like' if a trustee or anyone else involved in the management of the charity won one of the auctions? Personally, if any of them thought this would be OK, I would be looking for some new trustees.

[Countdown]

NumBMW said:

Hi, posting in employment here as this is likely to have persons with experience.
I’ve identified a possible conflict of interest between a charity trust donation and trustees and require some clarity.

Small charity trust has suggested bidding on a charity auction, prizes include holidays, dinner parties, meals out, hampers etc
If the charity trust were to bid on and win the auction, (which is a sealed bid type) trustees would be seen to benefit by attending the prize, is this correct?

Why is a Charity Trust bidding on stuff from an auction using (I presume) Charity funds?

or are the Trustees using their own money to bid on stuff?

[NumBMW]

Countdown said:

Why is a Charity Trust bidding on stuff from an auction using (I presume) Charity funds?

or are the Trustees using their own money to bid on stuff?

Yes this one is closer I think

Charity A holds a fundraising auction with donated prizes. Therefore winning bidders money is a donation to Charity A
Charitable foundation B (basically a bunch of trustees who administer a monetary pot to give to charity) bids on said auction, possibly wins, pays from the pot, proceeds go to charity A.
Trustees of Charitable foundation B benefit by winning the hamper full of wine and cheese, meal at a restaurant,, weekend spa break etc

Trying to cover bases for an upcoming auction, and have been asked this in meetings

Edited by NumBMW on Sunday 5th February 18:47

[QJumper]

NumBMW said:

Yes this one is closer I think

Charity A holds a fundraising auction with donated prizes. Therefore winning bidders money is a donation to Charity A
Charitable foundation B (basically a bunch of trustees who administer a monetary pot to give to charity) bids on said auction, possibly wins, pays from the pot, proceeds go to charity A.
Trustees of Charitable foundation B benefit by winning the hamper full of wine and cheese, meal at a restaurant,, weekend spa break etc

Trying to cover bases for an upcoming auction, and have been asked this in meetings

Edited by NumBMW on Sunday 5th February 18:47

Depends what they do if they win..

If they donate the prize then fine. If the trustees use it for their benefit then it sounds dodgy.

[ben5575]

So making up examples...

RSPCA is having a charity auction.

Air Ambulance buy some tickets? Or Trustees of Air Ambulance?

Why would Air Ambulance gamble charitable donations bidding on hampers/spa weekends rather than buying helicopters?

If I was a trustee of the Air Ambulance then yes I would buy tickets in the same way anybody else would

If I was a trustee of the RSPCA or any connected charity, obviously I wouldn't buy tickets

[NumBMW]

QJumper said:

Depends what they do if they win..

If they donate the prize then fine. If the trustees use it for their benefit then it sounds dodgy.

Risk of being seen like that I think.
One for the charity commission for clarity most likely.

[NumBMW]

ben5575 said:

So making up examples...

RSPCA is having a charity auction.

Air Ambulance buy some tickets? Or Trustees of Air Ambulance?

Why would Air Ambulance gamble charitable donations bidding on hampers/spa weekends rather than buying helicopters?

If I was a trustee of the Air Ambulance then yes I would buy tickets in the same way anybody else would

If I was a trustee of the RSPCA or any connected charity, obviously I wouldn't buy tickets

Sealed bid auction, so a bid is entered, it’s won or it’s not.
So not “gambling” as such

[Truckosaurus]

Seems dubious. It sounds like the Charitable Trust exists to allocate funds to other good causes, so why does that have to be via the auction?

Is it some cunning plan to bid up other doners?

[Countdown]

NumBMW said:

Yes this one is closer I think

Charity A holds a fundraising auction with donated prizes. Therefore winning bidders money is a donation to Charity A
Charitable foundation B (basically a bunch of trustees who administer a monetary pot to give to charity) bids on said auction, possibly wins, pays from the pot, proceeds go to charity A.
Trustees of Charitable foundation B benefit by winning the hamper full of wine and cheese, meal at a restaurant,, weekend spa break etc

Trying to cover bases for an upcoming auction, and have been asked this in meetings

Edited by NumBMW on Sunday 5th February 18:47

That’s super dodgy if the Trustees benefit personally from money donated to the Charity. There are very strict rules on Trustees getting paid or receiving benefits in kind as a result of being Trustees.

[ben5575]

NumBMW said:

Sealed bid auction, so a bid is entered, it’s won or it’s not.
So not “gambling” as such

If I donate £50 to the air ambulance, I expect that to go towards buying a helicopter. I don't expect my £50 to be used by an air ambulance trustee to bid on a spar weekend for his wife.

There's a very simple rule with these things; if you have to ask then don't.

[NumBMW]

Truckosaurus said:

Seems dubious. It sounds like the Charitable Trust exists to allocate funds to other good causes, so why does that have to be via the auction?

Is it some cunning plan to bid up other doners?

Sealed bids so nobody knows who’s bid what, like you might have seen for some property, after a protracted bidding process.
Agents request best and final offers.

[NumBMW]

Countdown said:

That’s super dodgy if the Trustees benefit personally from money donated to the Charity. There are very strict rules on Trustees getting paid or receiving benefits in kind as a result of being Trustees.

I think I’ve just found that online, yes.
A situation to advise on avoiding then, to those in doubt.

[NumBMW]

ben5575 said:

If I donate £50 to the air ambulance, I expect that to go towards buying a helicopter. I don't expect my £50 to be used by an air ambulance trustee to bid on a spar weekend for his wife.

There's a very simple rule with these things; if you have to ask then don't.

This seems to be a slightly different situation than that example.

[Electro1980]

No, absolutely not. The ways of using the money should be in the charities own charter, but I can guarantee that this is absolutely not within those.

[drmike37]

My reading of the situation is that the trustees would be using charity money to buy themselves a spa break (etc).

Sounds like stealing to me. I would instantly disown (and publish the reasons) any charity with trustees that did that. The tabloids would lap that up. Same category in my mind as nicking a collection box.

[StevieBee]

NumBMW said:

Countdown said:

Why is a Charity Trust bidding on stuff from an auction using (I presume) Charity funds?

or are the Trustees using their own money to bid on stuff?

Yes this one is closer I think

Charity A holds a fundraising auction with donated prizes. Therefore winning bidders money is a donation to Charity A
Charitable foundation B (basically a bunch of trustees who administer a monetary pot to give to charity) bids on said auction, possibly wins, pays from the pot, proceeds go to charity A.
Trustees of Charitable foundation B benefit by winning the hamper full of wine and cheese, meal at a restaurant,, weekend spa break etc

Trying to cover bases for an upcoming auction, and have been asked this in meetings

Edited by NumBMW on Sunday 5th February 18:47

Right then, this is more straightforward to untangle.

Charity A can be removed from the equation. As far as they are concerned, they've sold donated items via an auction and benefited from that sale.

Charity B, rather than simply giving money to charity A, as they would normally. is bidding in the auction being held by Charity A and distributing anything that they win in that auction amongst its trustees.

Providing everything is transparent, then technically there is nothing wrong with this. The money would have gone to Charity A anyway, the gifts have been donated and the auction is using closed bids so there is no suggestion of favouritism. Trustees normally (though not always) occupy their positions without pay, expenses only or low pay. It's common to find that their time is sometimes compensated via non financial means and this is - or may be - one of those examples.

However, as I mentioned previously, one has to consider what this all 'looks like' over whether it's technically permissible.

[Countdown]

I would suggest that the Trustees of Charity B deriving a personal benefit whilst carrying out their Trustee duties is definitely dodgy.

There is an easier way for them to donate money to Charity A than bidding in an auction. They can simply give Charity A the money. Hopefully somebody else bids for the goods that B was bidding for which means that Charity A gets two lots of income.

[paulrockliffe]

NumBMW said:

QJumper said:

Depends what they do if they win..

If they donate the prize then fine. If the trustees use it for their benefit then it sounds dodgy.

Risk of being seen like that I think.
One for the charity commission for clarity most likely.

If Charity B was going to donate the bid money to Charity A anyway, then bidding on the auction would retain the prize within a charitable structure and allow the prizes to be used for charitable purposes again. There might be an argument that under the premise that the donation was happening anyway, there's a duty to do it this way as it represents best use of funds.

But there's no lawful way for what would be the assets of the Charity B to be used to for the benefit of the Trustees, they would have to be used for the benefit of the Charity. So long as that happens there's no conflict of interest, but the optics are not great bearing in mind most people will simply assume the worst rather than asking a difficult question.

[ben5575]

Countdown said:

I would suggest that the Trustees of Charity B deriving a personal benefit whilst carrying out their Trustee duties is definitely dodgy.

There is an easier way for them to donate money to Charity A than bidding in an auction. They can simply give Charity A the money. Hopefully somebody else bids for the goods that B was bidding for which means that Charity A gets two lots of income.

100%.

The alternative is that Charity B subsequently auctions off any winnings. Double bubble as it were.

I'll be honest; any Trustee who thinks that using charitable money to buy his wife a weekend spa is in anyway acceptable should be removed from the Board as they are clearly not fit for the role.