The Charity Commission, which regulates charities in England and Wales, recently published a report following its statutory inquiry into the charity Fashion for Relief.

Fashion for Relief was founded by well-known supermodel Naomi Campbell, with the charitable purposes of preventing or relieving poverty, advancing health and education by making grants to other charities, and by giving resources directly to those affected. The inquiry, which spanned several years, recently published its findings and concluded that the Fashion for Relief was poorly governed and had inadequate financial management procedures in place.

Specifically, the inquiry found that:

• Fashion for Relief inappropriately spent tens of thousands of pounds on luxury hotel rooms, flights and spa treatments;
• just 8.5% of Fashion for Relief’s overall expenditure was spent on charitable grants between April 2016 and July 2022, despite grant giving having been cited as one of the charity’s key activities; and
• a charity trustee had been paid over £200,000 in consultancy fees which were not authorised by the Charity Commission, the Charities Act 2011, the court, or otherwise by the Fashion for Relief’s constitution.

As a result of its findings, the Charity Commission took action to disqualify three of the charity trustees. Alongside disqualifying Naomi Campbell from trusteeship for a period of five years, the Charity Commission has also recovered over £344,000 and protected a further £98,000 of charitable funds.

Naomi Campbell has indicated that she has instructed her own investigation into events at the charity and that she may look to appeal the outcome of the inquiry.

Irrespective of what comes next in terms of this inquiry report, the themes highlighted by the Charity Commission highlighted issues of concern for the wider charity sector. The Charity Commission set out that charity funds must be used in accordance with the charity’s constitution and that charity trustees must spend charity funds in furtherance of the charitable purposes for which it has been set up.

This serves as a timely reminder that charity trustees must act in the interests of the charity at all times and comply with their legislative requirements. While the Charity Commission does not regulate Scottish charities, the broad themes of the report are relevant to charity trustees throughout the United Kingdom. In Scotland, charity trustee duties are set out in the Charities and Trustee Investment (Scotland) Act 2005 (“the 2005 Act”). Under the 2005 Act, a charity trustee must act in the interests of the charity and in particular:

• operate in a manner consistent with the charity’s purpose;
• act with the care and diligence that it is reasonable to expect a person managing the affairs of another person; and
• manage any conflict of interest between the charity and any person or organisation who appoints trustees.

These general duties sit alongside the specific duties of charity trustees to ensure that the Office of the Scottish Charity Regulator (“OSCR”) hold the latest information about their charity on the Scottish Charity Register, that annual monitoring and charity accounting is reported to OSCR and that proper accounting records are kept and reported.

Any breach of these duties will be treated as misconduct in the administration of the charity. All charity trustees must take reasonable steps to ensure that any breach is corrected and not repeated, and that any charity trustee who has been in serious or persistent breach is removed from office.

As for the remuneration of trustees, any personal benefit to a charity trustee has to be treated with caution. OSCR has set out a guide on trustee renumeration, which can be read here.

Notably, under section 67 of the 2005 Act, a charity trustee must not be renumerated from charity assets unless:

• the maximum amount of renumeration is set out in a written agreement;
• it is reasonable in the circumstances;
• the board of trustees is satisfied that it would be in the interests of the charity; and
• the charity’s constitution does not expressly prohibit that service provider receiving renumeration.

Our Burness Paull experts in Scottish charity law, Emma Maxwell and Emma Manson, are able to assist with any matter relating to the duties of a charity trustee and can provide advice on the regulatory landscape and on a wide range of charity governance issues.

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