Charity Commission Inquiry: The Knightland Foundation

The Charity Commission has published the results of its inquiry into The Knightland Foundation, a charity registered in 2011 to support the causes of poverty relief and advancing the Orthodox Jewish religion. The Commission criticises the four former trustees of The Knightland Foundation for serious mismanagement stemming over an extended period of time, concluding that there had been a 'substantial' failure by trustees to manage conflicts of interest.

The Commission opened its inquiry into The Knightland Foundation in 2021 following concerns that it had insufficiently documented loan agreements and transactions to a company connected to its founding trustee.

For example, the Knightland Foundation's ledgers showed that a payment of £975,000 had been made towards a developer fee from one of the Trustee's own companies, made several weeks before the meeting to approve the payment was held.  Despite the meeting minutes indicating that the conflicted trustee left while the others made the decision, they were prepared in advance by solicitors instructed by the conflicted trustee, which was held by the Commission to undermine the decision.

The Commission's investigation also uncovered failures by the other trustees in allowing a single trustee to dominate The Knightland Foundation's operations.  This was criticised by the Charity Commission, enabling repeated instances of mismanagement.  This is an area of increasing regulatory interest and demonstrates the need for trustees to be active in their roles, engage properly in discussion and to challenge where necessary.

Following the inquiry, the Charity Commission appointed two interim manages of the Knightland Foundation later in 2021. The Knightland Foundation's trustees subsequently appealed this action; however, their appeal was rejected by the charity tribunal.  Five new trustees were later appointed to the charity on 26 April 2023, and the dominant trustee was suspended and both agreed to resign in November 2023 and not to seek reappointment for two years from the date of his suspension.  Although the dominant trustee believed he had at all times acted in the best interest of the charity, and no funds were found to be misapplied by any of the former trustees, their actions were still deemed to have placed the funds at too great an unnecessary risk by the Charity Commission.

For charity trustees, this inquiry highlights several governance failings which trustees can avoid through complying with their legal duties. Trustees should ensure that their charities maintain adequate conflicts of interest policies, ensuring that all conflicts can be, and are, identified and managed.  

Trustees bear joint responsibility for the decisions of the charity.  No single trustee can disclaim responsibility or claim ignorance or lack of involvement in the charity's affairs.  A breach of a trustee's fiduciary duties may in a worst case render them personally liable for any resulting loss as a consequence of their misconduct.

When decisions are made at trustee meetings, they should be clearly recorded, especially if they involve the movement of substantial sums.  The inquiry showed a lack of transparency in The Knightland Foundation's decision-making progress.  Records of the decision-making process by trustees provides greater security to trustees if their decisions are later challenged, as they can be used to show that decisions made were in with the duties of trustees to consider the best interests of the charity.