A military charity has been wound up after an inquiry found that most of its fundraised income was kept by a company linked to a trustee.
Support the Heroes “misled the public”, and much of the money it raised “went to a private company instead of military veterans and serving personnel in need”, the Charity Commission said.
The charity was wound up in January, three-and-a-half years after the commission appointed an interim manager to oversee the process of closing the organisation.
The inquiry found that a company linked to one of the charity’s trustees was paid two-thirds of total funds raised from the public. Although Support the Heroes raised £1.3m between 2015 and 2016, just £223,000 was spent on charitable work, the commission found..
The charity featured on the BBC Scotland programme The Great Military Scandal in October 2016, in which fundraisers appeared to claim that they worked for free. The regulator opened a statutory inquiry a month later.
The organisation was removed from the charity register earlier this year, and its remaining funds of £15,000 were given to Help for Heroes. Its trustees have voluntarily agreed not to sit on the board of any charity for the next five years.
The regulator said that in October 2014 Support the Heroes entered into a five-year fundraising arrangement with the company Targeted Management Ltd.
Its inquiry found that, although the charity was required to have at least three trustees, it had only two people on its board, who were sisters.
The chair of trustees was both the sole director of Support the Heroes (Fundraising) Ltd, a charity subsidiary through which TML operated, and the long-term partner of the father of the person who ran TML.
The commission said that the trustee board could not provide any evidence that it had undertaken due diligence on its arrangements with TML or considered the conflicts of interest involved.
This constituted “mismanagement and/or misconduct” by the board, the regulator said.
It also found that the chair of trustees had unilaterally changed the agreement with TML in a way “which incurred further costs to the charity”.
The agreement with TML entitled the company to keep 67 per cent of the gross amount donated by members of the public, the inquiry found. Once VAT deductions were added, only 17 per cent of gross income raised was spent on charitable objectives between 2015 and 2017.
Details of the arrangement were left out of the charity’s annual accounts. The commission found that the agreement represented “numerous examples of misconduct and/or mismanagement by the trustees”.
The commission said: “The inquiry found that the trustees did not take adequate steps to address the reputational risks and issues arising from the consistently low proportion of funds applied directly for charitable purposes.”
It also criticised the lack of transparency around the arrangement with TML, which was not mentioned on the charity’s website.
Amy Spiller, head of investigations at the Charity Commission, said: “Donors have a reasonable expectation that the money they give reaches the cause they care about.
“Due to a complete lack of transparency about the fundraising arrangements, the charity misled the public and much of the money went to a private company instead of military veterans and serving personnel in need.
“Cases like these have the potential to seriously undermine trust and confidence in charities generally. So it is right that we took robust action to ensure the charity was removed from the register and its trustees cannot lead other charities for a period of five years.”
Support the Heroes’s website has been removed and phone calls are directed to HW Fisher & Company, the accountants that acted as interim managers during the commission’s inquiry. Emails to charity staff bounced back.