CABINET Co-operative Oldham Fund - Bringing Dormant and Under Used Charitable Funds into Use Report of: The Borough Treasurer and the Deputy Chief Executive Portfolio Responsibility: Cllr Abdul Jabbar - Finance, Human Resources and Strategic Partnerships Cllr Barbara Brownridge – Co-operatives and Community Development 28 January 2013 Officer Contacts: Anne Ryans and Jackie Wilson Ext. 4902/5755 Purpose of report To present issues and options to Cabinet in respect of the potential forward use of dormant or under-used charitable trust funds and the establishment, management and operation of a sustainable Co-operative Oldham Fund. The report sets out detailed work and consultations undertaken in respect of identifying such funds and makes detailed recommendations on their future use. Executive Summary This report sets out the issues and options regarding the use of dormant or under used funds for which the Council is a sole Trustee or Custodian Trustee. Total resources within these funds are £1,575,769. The report also sets out proposals for the development of a sustainable Co-operative Oldham Fund and how this could be established and sustained by the use of dormant trust funds, Council funds initially allocated for a Community Dividend Fund, income from fundraising by Voluntary Action Oldham and other income. Appended to the report is detailed information on the current position of some of the funds held by the Council and suggests options for the future use of the funds. The recommended approach for the funds is set out in the following table: Recommended Use of Dormant/Under Used Funds £ £ Transfer to the Oldham Fund - proceeds of 41 charities with objectives that can no longer be 587,282 fulfilled - proceeds of 11 funds with no known Trustees 59,204 - proceeds of 3 other charities for which OMBC is the Trustee 10,535 Total Funds to be Transferred to the Co -operative Oldham 657,021 Fund Other Funds to be Wound up or Transferred away from the Administration of the Council - transfer 35 funds or Trusteeship to relevant school or college 73,686 - transfer to Hathershaw School to address the requirements of 3,000 the John Armitage Fund - wind up and transfer to other organisations reflecting the 53,295 fund’s intended usage - merger of one fund with an existing charity and transfer the 718,270 administration of the remaining three funds to Trustees Total Other Funds to be Transferred from the 848,251 administration of the Council Charitable funds for which no Change is Currently Proposed - Clayton Playing Field Charity 54,500 - Hopwood Trust 733 - Oldham Mayor’s International Disaster Fund 15,264 Total Charitable funds for which no Change is Proposed 70,497 TOTAL FUNDS 1,575,769 There is also a recommended way forward for the operation of the Co-operative Oldham Fund using £657,021 of the released dormant funds and £250,000 of Council resources set aside as a commitment to the Co-operative agenda. It is proposed that a new Fund with resources of £907,021 is created and managed by an external, existing organisation with Charitable Trust status and that this should be Voluntary Action Oldham (VAO). This recommendation is on the basis that VAO is uniquely placed to deliver the Councils requirements. It is planned that, subject to approval of the principles establishing the Fund and its governance arrangements, the new Fund is launched on 14 th February 2013 and that work to finalise its governance arrangements will take place to ensure that all the resources allocated to the Fund are utilised appropriately. Page 2 of 30 [Charities Report] January 2013 Recommendations That Cabinet considers the paper and approves: a) The approach recommended for each of the funds as set out in detail at sections 3.3 to 3.16 of the report and the table in the Executive Summary above. b) The approach to the creation of the Co-operative Oldham Fund and the utilisation of £657,021 of charitable resources and £250,000 of Council resources in the initial start-up of the Fund. c) The management of the Co-operative Oldham Fund by Voluntary Action Oldham. d) Delegated authority for Cllr Brownridge, Cllr Jabbar and Cllr Stretton to approve the finalisation of the governance agreement, including financial arrangements and safeguards, of the Co-operative Oldham Fund in accordance with the principles established in the report. Page 3 of 30 [Charities Report] January 2013 Cabinet 28 th January 2013 Co-operative Oldham Fund - Bringing Dormant and Under Used Charitable Funds into Use Report of: The Borough Treasurer and the Deputy Chief Executive Portfolio Responsibility: Cllr Abdul Jabbar - Finance, Human Resources and Strategic Partnerships Cllr Barbara Brownridge – Co-operatives and Community Development 1 Purpose of report 1.1 The report outlines options as to how dormant and under used charitable Trust Funds totalling £1,575,769 for which the Council is the sole Trustee or Custodian Trustee could be brought into use and/or distributed within the borough. 1.2 The report also sets out proposals for the establishment, management and operation of a sustainable Co-operative Oldham Fund and how this could use dormant trust funds, Council funds initially allocated for a Community Dividend Fund, income from fundraising by Voluntary Action Oldham and other income. 2 Background The Review of Charitable Funds 2.1 This report sets out proposals for the future management of a number of charitable funds for which the Council is responsible but which have become dormant or are under used and for the development of a Co-operative Oldham Fund. It is informed by a review of the funds, the aim of which was to examine options for the effective utilisation of charitable funds administered by the Council. 2.2 A steering group was established to look at the options to best utilise the charitable funds and to take this process forward within the Council. The recommendations in this report are based on the findings of the review and after discussions with the Charity Commission (see paragraphs 3.17 to 3.19 for detail). The Council does have to have regard to its responsibilities for the administration of the funds in considering proposals. The Responsibilities of the Council for the administration of Charitable Funds 2.3 The Council has a responsibility as either sole trustee or custodian trustee of charitable funds to manage them effectively and efficiently. A Charity exists in law, by virtue of its’ charitable purposes, even if it is not registered with the Page 4 of 30 [Charities Report] January 2013 Charity Commission so Charity Law applies to all the 85 Oldham charities and 13 funds included within the scope of this report, whether registered or not. Discussions have taken place with the Charity Commission about proposals contained in this report and it will support any initiative that results in unused charitable funds being used lawfully. 2.4 The charities have a governing document of some form which lays out the constitution or rules of the charity. This includes the objects and purposes of the charity. The majority of the charities hold permanent endowment funds. The Trustees cannot normally spend permanent endowments unless the governing document specifically states otherwise. 2.5 The Charities Act 1993 (as amended by the Charities Act 2006) lays out the statutory powers trustees have to transfer and/or spend that permanent endowment and the circumstances under which this would be appropriate even if the governing document does not give these powers. It also gives trustees the power to change the objectives of the charity. This is the legislation that will be utilised if the recommended approach set out in this report is agreed. The Development of a Co-operative Oldham Fund 2.6 This review of charitable funds was one of a number of strands of work being undertaken, which taken together; presented the opportunity to establish a sustainable fund to support the delivery of the Co-operative Oldham ambition through the giving of grants and loans to individuals and groups. The other strands are: • Consideration of the best use of the £250,000 which the Council has allocated on a one off basis as part of its commitment to the Co- operative agenda. This will actively support the development and delivery of initiatives that will help increase engagement and help deliver action and projects that make a real difference to people and communities. • Voluntary Action Oldham, through its Transforming Local Infrastructure funding and activities, is developing ideas to establish a fund for Oldham to which it can fund-raise and support ideas, projects and activities that will help improve lives and communities across Oldham. 2.7 This report is therefore set out in two parts: Part 1 – addresses the general issue of dormant or under used charitable funds for which the Council is responsible, describes options for the funds and makes recommendations on their future use. Part 2 – sets out the proposed way forward for creating the Co-operative Oldham Fund. Page 5 of 30 [Charities Report] January 2013 3 Current Position PART 1 – SUGGESTED WAY FORWARD FOR CHARITABLE FUNDS 3.1 A comprehensive review of the status of the Council’s charities was undertaken and reflects the most up to date valuations of the funds. There are proposals for the future usage/operation of each of the funds. The proposals are set out below: Proposal 1 - Transfer Trusteeship to relevant school or college – where applicable Proposal 2 - Merge with an existing charity – where applicable Proposal 3 - Transfer of the administration of active charities to the trustees Proposal 4 - Wind up the charities and donate funds to another organisation Proposal 5 - Transfer to the Co-operative Oldham Fund Proposal 6 - Do nothing pending further developments 3.2 Using the legislative framework available, the detailed recommendations arising from the review are set out below.