Why does the Charity Commission appoint an Interim Manager and what do they do?
Not for the first time in recent months the Charity Commission have appointed an interim manager to deal with the affairs of a charity who were under investigation. But who can be an interim manager and what is their role?
The Commission gets its power to appoint an interim manager from section 46 of the Charities Act 2011 if it considers that there's been misconduct or mismanagement in the administration of the charity or if it's necessary or desirable to protect the charities property. Usually that interim manager is appointed to the exclusion of the existing trustees and the fees are paid by the charity as in the case of a receiver or a liquidator who is appointed by the court. The appointment of an interim manager is only ever a temporary step and thus the appointment is made only after very careful consideration of alternative solutions to the problems that the charity faces .
Clearly, the interim manager has to have the right skills and experience but also the appointment has to be at a cost that will provide the charity with value for money. Such an appointment is usually made from an approved list of providers and when the Commission needs to appoint a manager it will invite selected providers from that list to tender for the appointment. In some cases, the interim manager can be appointed with the agreement of the charity trustees, but most are actually appointed without the consent of the charity’s trustees because the trustees are either unwilling or unable to put matters right themselves.
So, what are those interim managers there to do for the Commission? They are there to detect, prevent or disrupt any major problems or try and find a new approach for an earlier resolution to those problems. Of course, these appointments need to be proportionate in terms of potential loss to charity funds, any danger to beneficiaries or damage to the reputation of and public trust and confidence in the charity. There has to be a clear outcome, an exit strategy for such appointments and in some cases the reason for the appointment may actually determine the exit strategy but overall, they have to demonstrate value for money through these appointments.
In the situation where the appointment is made to the exclusion of trustees it will be to a minimum extent and duration necessary to achieve the outcome that's desired and of course the Commission would be expecting the earliest possible return to the governance of the charity by competent trustees or if applicable dealing with the transfer or winding up of a charity that can't be rescued, or the problems can't be solved.
There are a number of areas where an interim manager could be used. For instance, where there is a specialist charity or sector experience such as safeguarding issues or the need for specific expertise in the areas of say a care home or animal welfare. In some cases, there is a need for legal, financial and administrative expertise, particularly where there are governance issues or the need to recover charitable funds. If there are issues of financial management, the need to ensure proper internal controls or if there is a need for specific charity law expertise such as public benefit requirements or the compliance with disposal of charity property requirements and the trustees’ own duties and responsibilities. Another example might be the need for specialist experience in trading or fund raising.
These appointments will only be made if something has gone wrong and largely relate to trustees failing in the responsibilities to the beneficiaries and the wider public benefit. So, if the trustees do the right thing, the Charity Commission should have no need to intervene.