Can a trust's obligations change if it becomes a CIO?
Discussion
Years ago, at the time it was founded, I paid to become a life member of a heritage trust. It was registered as a charity. The trust got itself into a bit of a pickle - it was new and this was understandable up to a point - and when it sorted itself out it became a CIO (Charitable Incorporated Organisation). After years of receiving occasional correspondence and the odd annual magazine, the ramshackle communication stopped. When I enquired about the lack of communication and about my Life Membership, I was told I wasn't a Life Member, I had simply made a donation. When I sent a copy of the original application form, the trust said something along the lines of, "Ah, yes, but, we're now a CIO and aren't bound by arrangements made when we were a Registered Charity."
The name of the trust is the same as it has always been. It still walks like a duck and it still sounds like a duck but as it has a new hat it is no longer a duck.
Is that right? Can they do that?
It's not the money, it's the principal. It all seems so arbitrary.
The name of the trust is the same as it has always been. It still walks like a duck and it still sounds like a duck but as it has a new hat it is no longer a duck.
Is that right? Can they do that?
It's not the money, it's the principal. It all seems so arbitrary.
DickyC said:
Years ago, at the time it was founded, I paid to become a life member of a heritage trust. It was registered as a charity. The trust got itself into a bit of a pickle - it was new and this was understandable up to a point - and when it sorted itself out it became a CIO (Charitable Incorporated Organisation). After years of receiving occasional correspondence and the odd annual magazine, the ramshackle communication stopped. When I enquired about the lack of communication and about my Life Membership, I was told I wasn't a Life Member, I had simply made a donation. When I sent a copy of the original application form, the trust said something along the lines of, "Ah, yes, but, we're now a CIO and aren't bound by arrangements made when we were a Registered Charity."
The name of the trust is the same as it has always been. It still walks like a duck and it still sounds like a duck but as it has a new hat it is no longer a duck.
Is that right? Can they do that?
It's not the money, it's the principal. It all seems so arbitrary.
Possibly a tricky one to unpick.The name of the trust is the same as it has always been. It still walks like a duck and it still sounds like a duck but as it has a new hat it is no longer a duck.
Is that right? Can they do that?
It's not the money, it's the principal. It all seems so arbitrary.
How did the one organisation turn into the second, how did it transfer assets and obligations etc. - that is probably at the heart of answering this...
However, there are other questions to ask:
- what if anything can you do about it - and it is not that easy - the Charity Commission is basically not interested in issues unless there is a breach of charity law / some issue with the objectives / money is being fraudulently misused - and rightly so, the charity world is a vast seething pot of amateurism with lots of good intentions tied in with emotions / incompetence / etc. If they started to enforce every bit of law / charity articles / etc. they would be swamped - most issues involve bored retired volunteers arguing with each other!
- could you go legal - possibly yes, there is at the least an implied contract which can be argued to not be fulfilled - but realistically how will that play out - and the answer is probably not easy, quickly or cheaply.
- do you really want anything more to do with them? Would it be easier to just walk away?
- could you get involved / get onto the trustees / reverse that decision?!
- could you simply pay membership again - and see that previous payment as a donation (is it worth it for you / affordable / etc.) yes it means swallowing the fact that you are right - but in the light of the above, is that easier and ultimately one assumes the money to be going to an organisation / purpose that must mean something to you or you wouldn't have bought life membership...
akirk said:
the Charity Commission is basically not interested in issues unless there is a breach of charity law / some issue with the objectives / money is being fraudulently misused - and rightly so, the charity world is a vast seething pot of amateurism with lots of good intentions tied in with emotions / incompetence / etc. If they started to enforce every bit of law / charity articles / etc. they would be swamped - most issues involve bored retired volunteers arguing with each other!
Very very good summary. In my view there should be a higher bar to setting up a charity but that is probably a deeply unpopular view.vaud said:
akirk said:
the Charity Commission is basically not interested in issues unless there is a breach of charity law / some issue with the objectives / money is being fraudulently misused - and rightly so, the charity world is a vast seething pot of amateurism with lots of good intentions tied in with emotions / incompetence / etc. If they started to enforce every bit of law / charity articles / etc. they would be swamped - most issues involve bored retired volunteers arguing with each other!
Very very good summary. In my view there should be a higher bar to setting up a charity but that is probably a deeply unpopular view.arguably platforms such as just giving allow this - they let the 140 people have personalised fund-raising but with the funds going back to a common charity - and that is a good concept... to set up a charity now either needs to be a CIO or needs a minimum of £5k p/a income which might act as a barrier for smaller fundraising events...
back to OP - there is the ability for a Charity to convert to a CIO - however a quick reading suggests that:
- if it was previously a charitable company then it can convert to a CIO but retain name / charity number etc.
- otherwise effectively a new charity is set up and any assets etc. need to be transferred
If the latter then there is a valid line of enquiry as to how they transferred assets / debts / liabilities - and that Life Membership would come under that...
DickyC said:
Years ago, at the time it was founded, I paid to become a life member of a heritage trust. It was registered as a charity. The trust got itself into a bit of a pickle - it was new and this was understandable up to a point - and when it sorted itself out it became a CIO (Charitable Incorporated Organisation). After years of receiving occasional correspondence and the odd annual magazine, the ramshackle communication stopped. When I enquired about the lack of communication and about my Life Membership, I was told I wasn't a Life Member, I had simply made a donation. When I sent a copy of the original application form, the trust said something along the lines of, "Ah, yes, but, we're now a CIO and aren't bound by arrangements made when we were a Registered Charity."
The name of the trust is the same as it has always been. It still walks like a duck and it still sounds like a duck but as it has a new hat it is no longer a duck.
Is that right? Can they do that?
It's not the money, it's the principal. It all seems so arbitrary.
Yes, they can certainly convert - https://www.gov.uk/guidance/change-your-charity-st...The name of the trust is the same as it has always been. It still walks like a duck and it still sounds like a duck but as it has a new hat it is no longer a duck.
Is that right? Can they do that?
It's not the money, it's the principal. It all seems so arbitrary.
The Trustees sound like a bunch of incompetents. If acceptance of the application conferred Life Membership they are blowing smoke trying to suggest otherwise.
That said, unfortunately for you, when the old charity ceased to exist your Life Membership died with it.
Whether the trustees could or should have granted Life Members of the old charity an equivalent status in the new organisation f.o.c. is something else.
Have you put that question to them?
Red Devil said:
DickyC said:
Years ago, at the time it was founded, I paid to become a life member of a heritage trust. It was registered as a charity. The trust got itself into a bit of a pickle - it was new and this was understandable up to a point - and when it sorted itself out it became a CIO (Charitable Incorporated Organisation). After years of receiving occasional correspondence and the odd annual magazine, the ramshackle communication stopped. When I enquired about the lack of communication and about my Life Membership, I was told I wasn't a Life Member, I had simply made a donation. When I sent a copy of the original application form, the trust said something along the lines of, "Ah, yes, but, we're now a CIO and aren't bound by arrangements made when we were a Registered Charity."
The name of the trust is the same as it has always been. It still walks like a duck and it still sounds like a duck but as it has a new hat it is no longer a duck.
Is that right? Can they do that?
It's not the money, it's the principal. It all seems so arbitrary.
Yes, they can certainly convert - https://www.gov.uk/guidance/change-your-charity-st...The name of the trust is the same as it has always been. It still walks like a duck and it still sounds like a duck but as it has a new hat it is no longer a duck.
Is that right? Can they do that?
It's not the money, it's the principal. It all seems so arbitrary.
The Trustees sound like a bunch of incompetents. If acceptance of the application conferred Life Membership they are blowing smoke trying to suggest otherwise.
That said, unfortunately for you, when the old charity ceased to exist your Life Membership died with it.
Whether the trustees could or should have granted Life Members of the old charity an equivalent status in the new organisation f.o.c. is something else.
Have you put that question to them?
could be complicated - but sadly while it is an interesting intellectual puzzle, I suspect there is no simple outcome
Agreed. A charity's Life Membership fees are treated as a capital receipt. As it's not possible to be a member of an organisation which has ceased to exist the Trustees thereof are faced with how to deal with the problem prior to it closing. There should be a governing document that states what will happen in respect of the charity's assets and liabilities should that occur. What does it say?
Sorry for the delay - events have conspired against me today. Thank you for all the replies.
The charitable trust closed with the words '...funds transferred to...' and the CIO with the same name commenced with '...funds transferred from...' No mention of liabilities or, oddly, all the artifacts the trust was set up to preserve. As a trust in whichever form, because it is a heritage trust, it raises money for itself to help in the safeguarding of the bits and pieces of heritage.
Irrespective of whether it is correct or not, when I was told I was not a Life Member, I started to pay an annual subscription. This, I felt, would assist in my efforts to have my Life Membership restored. Better to be inside the tent. When I started my enquiry and was first told of the change to the trust's circumstances, which the trustees believe relieves the trust of its old responsibilities, the Chairman did say he knew it wasn't a good look and they should do something about it. But they haven't. The problem is one of sketchy records. I don't think the trustees were incompetent. Professional people, competent in areas unrelated to trusts, might be a way of explaining it. I think the early trustees may have been floundering but the current board seem to be getting better organised. They're just not very diplomatic.
The Governing Document, what you can see of it, is identical for both the defunct charitable trust and the current CIO; word for word identical. This is on the Charity Commission's website. The website goes on to say it is not the full text and that trustees are entitled to apply for it in full.
The charitable trust closed with the words '...funds transferred to...' and the CIO with the same name commenced with '...funds transferred from...' No mention of liabilities or, oddly, all the artifacts the trust was set up to preserve. As a trust in whichever form, because it is a heritage trust, it raises money for itself to help in the safeguarding of the bits and pieces of heritage.
Irrespective of whether it is correct or not, when I was told I was not a Life Member, I started to pay an annual subscription. This, I felt, would assist in my efforts to have my Life Membership restored. Better to be inside the tent. When I started my enquiry and was first told of the change to the trust's circumstances, which the trustees believe relieves the trust of its old responsibilities, the Chairman did say he knew it wasn't a good look and they should do something about it. But they haven't. The problem is one of sketchy records. I don't think the trustees were incompetent. Professional people, competent in areas unrelated to trusts, might be a way of explaining it. I think the early trustees may have been floundering but the current board seem to be getting better organised. They're just not very diplomatic.
The Governing Document, what you can see of it, is identical for both the defunct charitable trust and the current CIO; word for word identical. This is on the Charity Commission's website. The website goes on to say it is not the full text and that trustees are entitled to apply for it in full.
If it was a trust before and is now a CIO then they need to have dealt with liabilities / etc. at the time of the move.
As it wasn't a transfer, your Life Membership won't move automatically - most easily confirmed by the fact that the charity number will have changed even if name etc. remains the same.
I suspect that there was not a due process and technically the trustees of the original trust will hold some liability - however we are back to reality and I am not sure there is much gain in pursuing it - the Charity Commission will really not be interested - they would if it was the National Trust and 1,000s of members at Life Membership ea. of £1,600 but for a small trust affecting a few people - unlikely - esp. as the trust effectively gains, so the charity has not lost out and their job is to care for the charities / funds / purposes - not you as a Life Member.
So I think you can feel justified in being right - but possibly I would park it as one of those frustrations / quirks of life, esp. if you support the charity's purposes. One thing you might do is talk to the current chairman, explain that there is an unresolved issue relating to how the process took place which means that some funds (and maybe artifacts / other assets) might not belong to the current charity - rather than opening a can of worms, would it be worth considering how the new charity treats any who held Life Membership from the old charity (discounted rate etc.)
As it wasn't a transfer, your Life Membership won't move automatically - most easily confirmed by the fact that the charity number will have changed even if name etc. remains the same.
I suspect that there was not a due process and technically the trustees of the original trust will hold some liability - however we are back to reality and I am not sure there is much gain in pursuing it - the Charity Commission will really not be interested - they would if it was the National Trust and 1,000s of members at Life Membership ea. of £1,600 but for a small trust affecting a few people - unlikely - esp. as the trust effectively gains, so the charity has not lost out and their job is to care for the charities / funds / purposes - not you as a Life Member.
So I think you can feel justified in being right - but possibly I would park it as one of those frustrations / quirks of life, esp. if you support the charity's purposes. One thing you might do is talk to the current chairman, explain that there is an unresolved issue relating to how the process took place which means that some funds (and maybe artifacts / other assets) might not belong to the current charity - rather than opening a can of worms, would it be worth considering how the new charity treats any who held Life Membership from the old charity (discounted rate etc.)
That suggests to me that the Trustees of the old charity breached this obligation.
• ensure appropriate accountability to members, if your charity has a membership separate from the trustees.
See page 6 - https://assets.publishing.service.gov.uk/governmen...
It does not follow that being a professional makes one per se a brilliant Trustee of a charity. It can often be quite the reverse. An inflated sense of their own importance
• ensure appropriate accountability to members, if your charity has a membership separate from the trustees.
See page 6 - https://assets.publishing.service.gov.uk/governmen...
akirk said:
...would it be worth considering how the new charity treats any who held Life Membership from the old charity (discounted rate etc.)
Indeed. The old culture may still be alive and thriving under the new umbrella. The more so if some of the same influential people are running the CIO.DickyC said:
I don't think the trustees were incompetent. Professional people, competent in areas unrelated to trusts, might be a way of explaining it.
I worked in the Third Sector for many years. The OP might be surprised how frequently prima donnas crop up especially in smaller local organisations.It does not follow that being a professional makes one per se a brilliant Trustee of a charity. It can often be quite the reverse. An inflated sense of their own importance
Red Devil said:
I worked in the Third Sector for many years. The OP might be surprised how frequently prima donnas crop up especially in smaller local organisations.
It does not follow that being a professional makes one per se a brilliant Trustee of a charity. It can often be quite the reverse. An inflated sense of their own importance
It was like you had a live feed into the trustees' meetings.It does not follow that being a professional makes one per se a brilliant Trustee of a charity. It can often be quite the reverse. An inflated sense of their own importance
Thanks very much for the link. There's quite a bit of reading there but I skimmed through to Conflict of Interest. One of the trustees is the auditor and his company charges the trust for their services.
Fascinating.
akirk said:
If it was a trust before and is now a CIO then they need to have dealt with liabilities / etc. at the time of the move.
As it wasn't a transfer, your Life Membership won't move automatically - most easily confirmed by the fact that the charity number will have changed even if name etc. remains the same.
I suspect that there was not a due process and technically the trustees of the original trust will hold some liability - however we are back to reality and I am not sure there is much gain in pursuing it - the Charity Commission will really not be interested - they would if it was the National Trust and 1,000s of members at Life Membership ea. of £1,600 but for a small trust affecting a few people - unlikely - esp. as the trust effectively gains, so the charity has not lost out and their job is to care for the charities / funds / purposes - not you as a Life Member.
So I think you can feel justified in being right - but possibly I would park it as one of those frustrations / quirks of life, esp. if you support the charity's purposes. One thing you might do is talk to the current chairman, explain that there is an unresolved issue relating to how the process took place which means that some funds (and maybe artifacts / other assets) might not belong to the current charity - rather than opening a can of worms, would it be worth considering how the new charity treats any who held Life Membership from the old charity (discounted rate etc.)
Yes, I would imagine there was a lot of nodding and winking. The current chairman said he doesn't know how to find out about, let alone contact, the early benefactors, founder members and life members This is a shambles not of his making but one that could be rectified. It was the work of the early members, benefactors and trustees that made the organisation the current trustees amuse themselves with.As it wasn't a transfer, your Life Membership won't move automatically - most easily confirmed by the fact that the charity number will have changed even if name etc. remains the same.
I suspect that there was not a due process and technically the trustees of the original trust will hold some liability - however we are back to reality and I am not sure there is much gain in pursuing it - the Charity Commission will really not be interested - they would if it was the National Trust and 1,000s of members at Life Membership ea. of £1,600 but for a small trust affecting a few people - unlikely - esp. as the trust effectively gains, so the charity has not lost out and their job is to care for the charities / funds / purposes - not you as a Life Member.
So I think you can feel justified in being right - but possibly I would park it as one of those frustrations / quirks of life, esp. if you support the charity's purposes. One thing you might do is talk to the current chairman, explain that there is an unresolved issue relating to how the process took place which means that some funds (and maybe artifacts / other assets) might not belong to the current charity - rather than opening a can of worms, would it be worth considering how the new charity treats any who held Life Membership from the old charity (discounted rate etc.)
Would a resolution be that on all publicity material, and clearly stated on thier website and in all documents, they publish the words.
We are Not charity X formed in 19XX, but a charity with the same name formed in 202Y, pretending to be the same charity unless you took out a life membership, in which case we are definately not the same charity.
Maybe life membership funds should be put into an escrow account paying interest at a fixed rate, such that the interest pays the membership. Unfortunately it gets spent on the here and now and does not get invested for the future in many cases.
Note. My parents bought me and my wife Joint Life time membership of the Narional Trust in 1999.
I still believe that there were better ways to invest that money than give it to that shower of s
ts. I have used my card, but refuse to spend anything in thier overpriced shops and cafes.
We are Not charity X formed in 19XX, but a charity with the same name formed in 202Y, pretending to be the same charity unless you took out a life membership, in which case we are definately not the same charity.
Maybe life membership funds should be put into an escrow account paying interest at a fixed rate, such that the interest pays the membership. Unfortunately it gets spent on the here and now and does not get invested for the future in many cases.
Note. My parents bought me and my wife Joint Life time membership of the Narional Trust in 1999.
I still believe that there were better ways to invest that money than give it to that shower of s
ts. I have used my card, but refuse to spend anything in thier overpriced shops and cafes. Pit Pony said:
Would a resolution be that on all publicity material, and clearly stated on thier website and in all documents, they publish the words.
We are Not charity X formed in 19XX, but a charity with the same name formed in 202Y, pretending to be the same charity unless you took out a life membership, in which case we are definately not the same charity.
Maybe life membership funds should be put into an escrow account paying interest at a fixed rate, such that the interest pays the membership. Unfortunately it gets spent on the here and now and does not get invested for the future in many cases.
Note. My parents bought me and my wife Joint Life time membership of the Narional Trust in 1999.
I still believe that there were better ways to invest that money than give it to that shower of sts. I have used my card, but refuse to spend anything in thier overpriced shops and cafes.
I'm getting Groucho and Chico in the contract scene in A Night at The Opera.We are Not charity X formed in 19XX, but a charity with the same name formed in 202Y, pretending to be the same charity unless you took out a life membership, in which case we are definately not the same charity.
Maybe life membership funds should be put into an escrow account paying interest at a fixed rate, such that the interest pays the membership. Unfortunately it gets spent on the here and now and does not get invested for the future in many cases.
Note. My parents bought me and my wife Joint Life time membership of the Narional Trust in 1999.
I still believe that there were better ways to invest that money than give it to that shower of s
ts. I have used my card, but refuse to spend anything in thier overpriced shops and cafes. DickyC said:
Yes, I would imagine there was a lot of nodding and winking. The current chairman said he doesn't know how to find out about, let alone contact, the early benefactors, founder members and life members This is a shambles not of his making but one that could be rectified. It was the work of the early members, benefactors and trustees that made the organisation the current trustees amuse themselves with.
Well that is easy to fix - just publish something next to membership saying… if you have evidence of life membership of xyz let’s us know and we will convert that to life membership of abcSomething similar happened to a life term my grandfather subscribed to.
He’d became a member in his 20’s or 30’s & about the time he hit 75 they wrote to all the life members & said something pretty much like “you're costing us too much to send out the magazine & joined at a time when life sub was 150 not 1500, would you be willing to pay an annual voluntary subscription (20) to cover the quarterly magazine or perhaps cancel your magazine?”
He opted for the latter as in addition to his life membership, there were several annual members in the family & would get the magazine anyway.
My Dad at the time was really angry with the letter my grandfather got “going back on their lifetime membership”. As were many others.
Duplicate family membership was the case with a lot of their membership base, and would’ve in my opinion been a more sensible thing to target (Our family office switched to receiving 3 copies instead of 4). Had they sent out letters asking “do you want to /can you switch off your magazine to help the society” I think they would’ve had a lot of folk take them up on offer we’d have prob dropped to 2 without any thought or ill feeling.
I’d be suggesting to try them with a reduced sub, to cover the admin, for former life members as a gesture of goodwill. (Maybe try offering that suggestion as a question at an AGM, so it’s discussed, minuted & circulated to all what’s happened to the lifers)
He’d became a member in his 20’s or 30’s & about the time he hit 75 they wrote to all the life members & said something pretty much like “you're costing us too much to send out the magazine & joined at a time when life sub was 150 not 1500, would you be willing to pay an annual voluntary subscription (20) to cover the quarterly magazine or perhaps cancel your magazine?”
He opted for the latter as in addition to his life membership, there were several annual members in the family & would get the magazine anyway.
My Dad at the time was really angry with the letter my grandfather got “going back on their lifetime membership”. As were many others.
Duplicate family membership was the case with a lot of their membership base, and would’ve in my opinion been a more sensible thing to target (Our family office switched to receiving 3 copies instead of 4). Had they sent out letters asking “do you want to /can you switch off your magazine to help the society” I think they would’ve had a lot of folk take them up on offer we’d have prob dropped to 2 without any thought or ill feeling.
I’d be suggesting to try them with a reduced sub, to cover the admin, for former life members as a gesture of goodwill. (Maybe try offering that suggestion as a question at an AGM, so it’s discussed, minuted & circulated to all what’s happened to the lifers)
akirk said:
DickyC said:
Yes, I would imagine there was a lot of nodding and winking. The current chairman said he doesn't know how to find out about, let alone contact, the early benefactors, founder members and life members This is a shambles not of his making but one that could be rectified. It was the work of the early members, benefactors and trustees that made the organisation the current trustees amuse themselves with.
Well that is easy to fix - just publish something next to membership saying… if you have evidence of life membership of xyz let’s us know and we will convert that to life membership of abcAndyAudi said:
Something similar happened to a life term my grandfather subscribed to.
He’d became a member in his 20’s or 30’s & about the time he hit 75 they wrote to all the life members & said something pretty much like “you're costing us too much to send out the magazine & joined at a time when life sub was 150 not 1500, would you be willing to pay an annual voluntary subscription (20) to cover the quarterly magazine or perhaps cancel your magazine?”
He opted for the latter as in addition to his life membership, there were several annual members in the family & would get the magazine anyway.
My Dad at the time was really angry with the letter my grandfather got “going back on their lifetime membership”. As were many others.
Duplicate family membership was the case with a lot of their membership base, and would’ve in my opinion been a more sensible thing to target (Our family office switched to receiving 3 copies instead of 4). Had they sent out letters asking “do you want to /can you switch off your magazine to help the society” I think they would’ve had a lot of folk take them up on offer we’d have prob dropped to 2 without any thought or ill feeling.
I’d be suggesting to try them with a reduced sub, to cover the admin, for former life members as a gesture of goodwill. (Maybe try offering that suggestion as a question at an AGM, so it’s discussed, minuted & circulated to all what’s happened to the lifers)
That's pretty blunt but I would have preferred that to being swept under the carpet in the hope I didn't crawl out again. As I said earlier, communication from them just stopped. If it was done deliberately as a filter - Cut them all off, see who gets in touch - it was pretty brutal. Or maybe the old boys just fell off the end of the list. Whatever it was, they're certainly not keen to discuss it. The chairman's comment, 'It's not a good look,' is as close as I've come to anything being done. Nothing has happened, but that was as close as I've got. He’d became a member in his 20’s or 30’s & about the time he hit 75 they wrote to all the life members & said something pretty much like “you're costing us too much to send out the magazine & joined at a time when life sub was 150 not 1500, would you be willing to pay an annual voluntary subscription (20) to cover the quarterly magazine or perhaps cancel your magazine?”
He opted for the latter as in addition to his life membership, there were several annual members in the family & would get the magazine anyway.
My Dad at the time was really angry with the letter my grandfather got “going back on their lifetime membership”. As were many others.
Duplicate family membership was the case with a lot of their membership base, and would’ve in my opinion been a more sensible thing to target (Our family office switched to receiving 3 copies instead of 4). Had they sent out letters asking “do you want to /can you switch off your magazine to help the society” I think they would’ve had a lot of folk take them up on offer we’d have prob dropped to 2 without any thought or ill feeling.
I’d be suggesting to try them with a reduced sub, to cover the admin, for former life members as a gesture of goodwill. (Maybe try offering that suggestion as a question at an AGM, so it’s discussed, minuted & circulated to all what’s happened to the lifers)
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