The Executive Director for Economic Development and Communities submitted a report to to consider the current management and use of dormant charitable trusts held by the Council in its capacity as their trustee, and the potential to transfer them to an external body.
The report outlined that the Council had historically held a range of charitable trusts that have been passed to the local authority to manage for a variety of philanthropic reasons over a period of many years. The Council currently held 17 trusts with a total balance as of March 31st 2015 of £2,417,717.
As the purpose of each trust has been set at the time of its original donation, the portfolio of trusts covers a wide range of activities and intended beneficiaries. Some were established to benefit specific social groups across the town, whilst others were established to benefit people attending particular institutions, or individual schools. The value of each individual trust within the current portfolio varies significantly from £258 through to £475,882 and these are listed in Appendix I. For the purposes of clarity, it should be noted that only the interest achieved from the capital sum held in each trust can be utilised for the designated purpose, and not the capital sum itself.
The report further outlined that the majority of the trusts currently held by the Council are managed through the Councils Executive Sub-Committee for Grants to the Voluntary Sector. Any decision to utilise the interest generated by each fund is taken through these arrangements. Other trusts have more specific trustee arrangements, as set out in Appendix I.
Although the responsibility for these funds sits with Middlesbrough Council as corporate trustee, their overall use is constrained by law through the Charity Commission. The day to day operation of the trusts does not require specific engagement with the Charity Commission, but any fundamental change to their status or usage could only be undertaken only with their prior approval.
The report considered the following, further details of which were detailed in the report:
Alternative Options, and
Aligning Governance Arrangements
With regards to alteranative options, the Trustees were advisd that although the Council could potentially apply to the Charity Commission to merge and repurpose the dormant trusts, undertaking this exercise for eight different (and relatively minor) trusts could potentially be a long and complicated process.
An alternative option would be to transfer the capital sum to an established community foundation, who could then progress the re-purposing of the funds with the Charity Commission. The process of transfer is one that is recognised nationally, with community foundations right across the country entering into similar arrangements with the trustees of dormant trusts, enabling the amalgamation and re-alignment of multiple trusts.
Taking forward such an arrangement with Tees Valley Community Foundation (TVCF) would enable the development of a broader Middlesbrough fund, the level and targeting of which would need to be determined through discussion with TVCF, and the Charity Commission.
The advantages of transferring the funds to TVCF rather than applying to repurpose the funds internally would be as follows:
reduce the administrative burden on the Council with regard to applying to, and negotiating with the Charity Commission over eight different funds;
TVCF have the potential to utilise the funding to lever in additional resources through Government backed initiatives to add value to trusts in their ownership (which the Council is unable to access); and,
increase the potential for the funding to be put to productive use through TVCFs network of community partners, and well established application processes.
It was therefore proposed that the eight dormant trusts currently held by the Council be transferred (subject to satisfactory negotiations) to TVCF to establish a wider Middlesbrough fund.
The following options have been considered as part of the development of the approach:
Apply to re-purpose the dormant trusts in house - rejected as the burden of application/negotiation processes that would need to be undertaken with the Charity Commission for the eight identified funds would be significant. The repurposing of the funds in house would also have no potential to increase the total funds available, unlike the transfer to TVCF.
Seek to transfer all trusts currently held by the Council - Until further work is undertaken to identify the potential for transferring other Council held Trusts to TVCF this option is not possible. This reports recommendations leave the way open for this to happen should it become apparent, following further work, that this is possible in the future. A recommendation is made in relation to this.
During the meeting, the officers advised that the Dormant Trust Value of £146,277 was incorrect as this took into account three Trusts which were not the responsbility of the Executive Sub Committee to the Grants to the Voluntary Sector. The Sub Commitee were therefore advised that they would only transfer funds of Trusts which they controlled governance arrangements, therefore the total transfering to Tees Valley Community Foundation would be £126,016.
That the Executive agrees to transfer dormant trusts to the value of £126,016 to Tees Valley Community Foundation (subject to negotiation), for the creation of a wider Middlesbrough fund;
That the Executive requests a proposal from TVCF regarding the potential for transferring other trusts;
That the Executive agrees to work being undertaken to align the governance arrangements for all active trusts to match those determined by the Executive Committee for Grants to the Voluntary Sector.
That the Commitee receive information relating to the exisiting three dormant Trusts
That the Committee receive a breakdown of expendure from active Trusts
The decisions were supported by the following reason:
Transferring the funds to TVCF provides the opportunity to increase the level of funding potentially available, brings the funds back into active use to support Middlesbrough communities, and reduces the administrative burden on the Council.