Trustee conduct in focus following Fashion for Relief inquiry

On 26 September 2024, the Charity Commission announced the findings of its inquiry into Fashion for Relief, making headlines due to the celebrity status of its founder and trustee, Naomi Campbell. The charity, which was registered in 2015 and removed from the Register of Charities in March this year, was found to have been seriously mismanaged from the time of its establishment. Ms Campbell and co-trustee Bianka Hellmich have been banned from acting as charity trustees for five and nine years respectively, bringing into focus the importance of abiding by trustee duties.

Background

Fashion for Relief raised money by hosting high profile events linked to the fashion industry. The charity would then donate the income from these events to other charities, including The Save the Children Fund and the Mayor's Fund for London, through grants. The Commission first identified concerns in relation to the governance and financial regulation of the charity in September 2020, and opened a statutory inquiry under section 46 of the Charities Act in November 2021. Following the conclusion of the inquiry in March 2024, Fashion for Relief has been removed from the Register of Companies.

Findings of the inquiry

The inquiry found wide-ranging instances of misconduct and mismanagement by the trustees. A summary of the findings is as follows:

Financial mismanagement

Fashion for Relief's finances were at the centre of the inquiry, and the Commission found them to have been mismanaged in various ways, including:

• Low levels of charitable expenditure
  
  During the charity's operation, only approximately 10% of its expenditure comprised charitable grants, in contrast to 72% on events. The Commission held that, while there is no fixed amount that may be spent on fundraising activities, in this case the trustees failed to provide evidence that they had complied with their duty to consider whether the costs of Fashion for Relief's fundraising activities were reasonable and in the best interests of the charity.
   
• Unreasonable expenditure
  
  Similarly, the Commission highlighted several expenses which the trustees failed to justify as being reasonable and in the best interests of the charity. These expenses included €14,800 on a private flight from London to Nice, €9,400 for a hotel suite for Ms Campbell, and a further hotel bill of €7,939.75 for room service, spa treatments and cigarettes incurred during her stay. Although the trustees stated that these expenses had been provided by a donor, there was no evidence in the charity's records that this was the case.
   
• Payments to trustees
  
  The Commission found that payments of £290,572 made to Ms Hellmich were not permitted by the charity's constitution or the Charities Act, and were therefore made in breach of trust.

Other findings

As well as financial mismanagement, the inquiry found various other instances of mismanagement by the trustees, including:

• Failure to file the charity's accounts and annual returns on time (which is also a criminal offence);
• Breaching the charity's constitution in several ways, including by failing to keep minutes of meetings, and failing to manage conflicts of interest; and
• Failing to manage Fashion for Relief's relationship with partner charities, among other things by refusing to pay to them the proceeds of fundraising events as had been agreed.

Comment

The results of the inquiry are damning, and the bans imposed on both Ms Campbell and Ms Hellmich reflect the Commission's lack of tolerance for misconduct by trustees, particularly where the charity and individuals involved enjoyed a high public status. This reflects one of the key aims of the Commission, which is to maintain public trust in the charity sector.

In light of this inquiry, charity trustees should be seeking to confirm that they are abiding by their legal duties in their day-to-day management of the charities.

The failings of Fashion for Relief highlight the importance of having in place proper financial controls, to ensure that trustees use charity funds and assets only for the furtherance of the charity's purposes. This should involve making sure that adequate records of expenditure and expenses are kept – the Charity Commission emphasised that in the case of Fashion for Relief, the lack of evidence of how decisions were made in relation to expenditure contributed to the findings of misconduct.

Furthermore, this case has reaffirmed the importance of understanding trustee duties is paramount. The Commission has confirmed that ignorance of the requirements for a charity trustee cannot excuse a breach of duty – it is vital to be familiar with all the trustee duties contained within the Charities Act as well as a charity's constitution.