The charity regulator for England and Wales has launched a statutory class inquiry into a group of charities where there is evidence that they are issuing or have issued cheques, which are then exchanged for cash.
Following an unannounced visit by HMRC to a company in Hackney, 105 charities were found to have cashed cheques with it to a value of £22 million between December 2021 and March 2023.
The 10 charities initially under inquiry are Inspirations (1109974), Beis Aharon Charitable Trust Limited (1010420), Mifal Hachesed Vehatzedokoh (1139320), Friend of Beis Soroh Schneirer (1153647), One Heart – Lev Echod (1167227), Yad Vochessed Association Limited (1112797), Friends of Beis Chinuch Lebonos Trust (1153187), Chasdei Dov Trust (1181900), Friends of Mercaz Hatorah Belz Macnivka (1126075), The Rehabilitation Trust (288622).
These 10 charities have been prioritised following an assessment of a range of factors, including the number of cheques issued, and total value of cheques cashed. The Commission expects to extend the number of charities under investigation over time.
Using powers available to the Commission during an inquiry, the regulator will determine the facts around how these charities have transferred funds. It will also investigate how trustees had oversight of what happened to funds exchanged for the cheques, and if this cash has been used properly to support what the charities were set up to do. The Commission will seek to establish how trustees determined that these financial transactions were in their charity’s best interests.
The regulator has issued an immediate order to temporarily stop any of the charities under inquiry from issuing cheques without its prior consent.
The scope of the inquiry may also be extended if additional regulatory issues emerge during the Commission’s investigation.
Notes to editors
- The Charity Commission is the independent, non-ministerial government department that registers and regulates charities in England and Wales. Its ambition is to be an expert regulator that is fair, balanced, and independent so that charity can thrive. This ambition will help to create and sustain an environment where charities further build public trust and ultimately fulfil their essential role in enhancing lives and strengthening society. Find out more About us – The Charity Commission – GOV.UK
- A statutory inquiry is a legal power enabling the Commission to formally investigate matters of regulatory concern within a charity, or class of charities and to use protective powers for the benefit of the charity and its beneficiaries, assets, or reputation. An inquiry will investigate and establish the facts of the case so that the Commission can determine the extent of any misconduct and/or mismanagement; the extent of the risk to the charity, its work, property, beneficiaries, employees or volunteers; and decide what action is needed to resolve the concerns.
- Under section 76(3)(f) of the Charities Act 2011, the regulator has issued a restricted transactions order which will prohibit the issuing of cheques without the Commission’s written consent.
- The Commission’s guidance on internal financial controls can be found via this link Internal financial controls for charities protect your charity from fraud and loss (CC8) – GOV.UK. It makes clear that pre-signed blank cheques should be prohibited under charities’ financial control policies.
