The Charity Commission has concluded that there were serious governance failings at the Air Ambulance Charity after it ran a fundraising event that lost £111,000 and made a loan of £27,000 to its deputy chief executive.
A case report published by the commission today into charity, which runs air ambulance services covering Warwickshire, Northamptonshire, Derbyshire, Leicestershire and Rutland and the Children’s Air Ambulance, says that received complaints about the 2012 fundraising event, the loan - which the board was only told about after it was made - and a lack of oversight by the charity’s trustees.
The failed fundraising event in 2012 involved the charity buying up seats for the London premiere of The Bodyguard theatre production, which it hoped to sell to raise funds.
The commission said it found the event lost about £111,000 and concluded that it was "poorly planned and failed to apply proper project management methodology". The regulator also said the charity had failed to make adequate risk or due diligence assessments.
The trustees contended that while the event was unsuccessful in raising funds, it had helped to raise the charity’s profile and identify future donors.
"Nevertheless, we concluded that the processes in place for managing the event were significantly inadequate and that this amounted to a serious failure on the part of trustees," the commission said.
The regulator said that the legal basis for the £27,000 loan to a senior employee at the charity, who is not named in the commission’s report, was unclear. It said that the trustee board, which found out about the loan after it had been made by the charity’s chief executive and chair, were unable to provide evidence of any advice they had received on the loan.
The charity’s most recent accounts on the Charity Commission’s website, which cover 2013, say that Alexandra Pope, director of people and organisational management and deputy chief executive at the charity, received the loan to "secure her continuing employment".
The accounts say the loan, which is guaranteed by Andy Williamson, chief executive of the charity, accrues interest of 0.6 per cent per annum and is repayable over five years from June 2013.
The charity said it had phoned the regulator’s helpline to discuss the loan, but the commission said that the helpline only provides generic advice and if a charity required a formal view on an important decision it should put the request in writing.
"Charities may only apply funds in a way that helps them further their purposes for the public benefit and in the best interests of their beneficiaries," the regulator’s report said.
The commission also said that the trustees "did not exercise sufficient controls over the chief executive in relation to the two incidents" and that they appeared over-reliant on the chief executive and the chair, John Williams, who was not named in the report.
"This led to the serious incidents, including the failed fundraising event," the commission’s report said.
"We also established that the relationship between the chief executive and chair was such that they did not sufficiently involve the trustee board as a whole, instead making a strategic decision – namely concerning the loan to a staff member – that should have been for the board to make, between themselves. This amounted to a serious governance failure."
The regulator said it met the charity’s trustees and subsequently issued an action plan with which trustees were making good progress.
A spokesman for The Air Ambulance Service said of the failed fundraising event: "2012 was a record year for fundraising for TAAS and this was the only event not to make a profit in its own right, but it did serve as a useful profile-raising exercise and an opportunity to attract new supporters and volunteers on a long-term basis.
"TAAS now has in place an experienced fundraising team and a robust strategy to ensure each event is profitable in its own right."
He said the loan was a one-off and had been made to a "valuable employee facing unforeseen personal circumstances". It earned interest and came with a guarantor, so there was no financial risk to the charity, he said; it was made by the chair, chief executive and finance director with the approval of the charity’s finance committee.