Archived decisions

HAMPSHIRE COUNTY COUNCIL

Decision Report :

EXECUTIVE SUMMARY

1) Summary of Decision Area:

1.1. Under the Charities Act 1993, every charity must produce an annual report on its activities and produce statements of account. These must be filed with the Charity Commission within ten months of the end of the charity's financial year. Charities with income under £10,000 a year need only file summary reports and accounts with the Commission by completing standard forms. Larger charities must file a fuller annual report and accounts. The accounts are presented here for approval.

1.2. It is also proposed to utilise powers introduced in March 2008, under the Charities Act 2006, to wind up two of the smaller charities and apply remaining funds towards modified charitable purposes.

2) Issues Covered in Report:

2.1 There are seven charities registered with the Charity Commission for which the County Council acts as sole trustee, and which are under the remit of the Executive Member (Policy and Resources). There are certain other charities, for which the Council acts as trustee, which have different reporting lines for approval of the accounts. The trusts the subject of this report are:

· The Michael Austin Harlick Trust Fund

· The Dayas Music Scholarship Trust Fund

· The Hampshire Mentally Handicapped Persons' Holiday Organisation

· The T Houghton Trust

· The Mace Educational Trust

· The Portal Prize Fund

· The Spitfire Mitchell Memorial Fund.

3) Recommendations:

It is recommended:

3.1. That the charitable accounts for 2007 -08 be approved.


3.2. With regard to the T Houghton Trust:

a) Being satisfied that (i) it is expedient in the interests of the Trust for its purposes to be modified, and that (ii) so far as reasonably practicable, the new purposes consist of or include purposes similar in character to those being replaced, that the Trust's purposes be replaced with revised purposes as follows: "the provision of books, equipment or other resources, for the benefit of pupils attending Perin's School, which would not normally be provided by the local education authority", further to Section 74C Charities Act 1993; and

b) Being satisfied that the Trust's purposes could be carried out more effectively if both the capital and income in the Trust fund could be expended on Trust purposes, rather than merely income, that the Trust is freed of any restriction with respect to the expenditure of capital, further to Section 75 Charities Act 1993; and


c) That one payment representing the entire funds of the Trust (capital and income) be made to the governing body of Perin's School, to be applied towards the modified purposes as stated in paragraph (a) above, and


d) That the Trust then be dissolved.

3.3. With regard to the Portal Prize Fund:


a) Being satisfied that (i) it is expedient in the interests of the Trust for its purposes to be modified, and that (ii) so far as reasonably practicable, the new purposes consist of or include purposes similar in character to those being replaced, that the Trust's purposes be replaced with revised purposes as follows: "the promotion of an understanding of other nationalities, faiths and ethnic origins amongst young persons resident in or attending secondary schools in Hampshire", further to Section 74C Charities Act 1993; and

b) Being satisfied that the Trust's purposes could be carried out more effectively if both the capital and income in the Trust fund could be expended on Trust purposes, rather than merely income, that the Trust is freed of any restriction with respect to the expenditure of capital, further to Section 75 Charities Act 1993; and


c) That one payment representing the entire funds of the Trust (capital and income) be made towards a programme identified by the Director of Children's Services which meets the modified purposes as stated in paragraph (a) above, and


d) That the Trust then be dissolved

MAIN REPORT

1) Contextual Information:

1.1. This proposal does not link to the Corporate Strategy but, nevertheless, requires, under the Charities Act 1993, a decision to approve the accounts and reports appended to this report because the County Council acts as sole trustee to the charities mentioned in the report.

1.2. The report also explains action proposed in respect of those smaller charities where, currently, very little use is being made of the funds available. This would be through the exercise of new powers under the Charities Act 2006 that have been brought into force during 2008.

2) Michael Austin Harlick Trust Fund - annual report

2.1. Only the Michael Austin Harlick Trust Fund receives annual income in excess of £10,000. A draft annual report for approval is attached at Appendix 1. The accounts and balance sheet are attached at Appendix 2A.

2.2. Michael Austin Harlick was an ex-prisoner of war from Gosport who established a trust in his will to be used for the provision of medals, challenge cups and trophies for the children of Hampshire schools, and for the encouragement of pupils in all forms of sporting activity..

2.3. The trust is invested in a mix of managed unit trusts established for charities in line with the County Council's investment policy for trust funds agreed by the former Charities Panel in July 1998. The Charibond and Charinco funds are both invested in a range of fixed-interest and index-linked bonds, which produce a relatively high income yield. The investment in Charifund gives the trust exposure to equities, which produce a lower yield but provide scope for growth in the trust's capital. This should produce a rising level of income over the long term.

2.4. The accounts show the trust to be in a healthy position, with expenditure contained well within its income, and the value of its investments well in excess of their book cost.

3) Smaller trusts

3.1. Accounts for the six smaller trusts are attached at Appendices 2B-2G. Brief comments on the affairs of each trust are set out below.

Dayas Music Scholarship Trust Fund

3.2. Although the County Council is sole trustee, this trust is administered by the Hampshire Music Service in consultation with the Director of Children's Services, County Treasurer, Chief Executive and County Music Adviser.

3.3. It was established in 1978 under the will of Mary Gwendolyn Sayer Hayton (nee Dayas). It provides music scholarships, preferably, but not necessarily, for pianoforte, for applicants living in Hampshire.

3.4. Accounts for the trust are shown at Appendix 2B. It is invested in a mix of investments in line with the County Council's policy. The accounts show the trust to be in a healthy position, with expenditure contained well within its income, and the value of its investments well in excess of their book cost.

Hampshire Mentally Handicapped Persons' Holidays Organisation

3.5. This trust is administered by the Adults' Services and County Treasurer's Departments. It is used when required to improve the holiday accommodation facilities for adults with mental disabilities at Orchard Close in Hayling Island.

3.6. The accounts are attached at Appendix 2C. The funds are held entirely on deposit with the County Council, as the demands on the trust have proved to be unpredictable.

The T. Houghton Trust

3.7. This trust is available for use by Perins School, New Alresford, for the provision of prizes to pupils.

3.8. Accounts for the trust are attached at Appendix 2D. It has been relatively little used, so is partly invested in Charinco, a bond-based unit trust. The remainder is held on deposit with the County Council. This is in line with the County Council's policy for funds which are used irregularly, where the prime objective is to maintain their real capital value and income. Section 5 of this report contains proposals for the winding up of this trust.

The Mace Educational Trust

3.9. This Trust was established in 2000 under the will of Evelyn Mace. Income to the Trust is used for the provision of scholarships for higher education for students under 25 who are, or have been, in the care of Hampshire County Council, and for drama scholarships for students due to start a drama or poetry course of higher education.

3.10. Accounts for the Trust are shown at Appendix 2E. It is administered in the County Treasurer's Department, although all grants made have been subject to the specific approval of the Executive Member - Policy and Resources.

3.11. It is invested in line with the County Council's policy for the investment of trust funds, with 25% invested in a share-based unit trust (Charifund) and the remainder in a bond-based trust (Charibond).

The Portal Prize Fund

3.12. The Portal Prize Fund was established in 1944. A revised scheme was agreed by the Charity Commission in 1970, and its primary objective is the promotion of a wider knowledge of Commonwealth countries amongst secondary school pupils in Hampshire.

3.13. Accounts for the Fund are shown at Appendix 2F. During the 1990s, considerable use was made of this trust following concerted action by the Chief Executive and County Treasurer to make schools aware of its availability. However, in the last six or so years it has fallen back into disuse. Its income is very small at only £450 in 2007/08. It is mainly invested in bond-based charitable unit trusts, with the balance held on deposit with the County Council. Section 6 of this report contains proposals for the winding up of this trust.

The Spitfire Mitchell Memorial Fund

3.14. This Fund was established by the designer of the Spitfire aircraft, who had connections with Southampton. Income to the Fund can be used for the provision of scholarships in aeronautics and engineering for students at Southampton University.

3.15. The accounts are attached at Appendix 2G. The last payments were made to the University from the Fund in 2000/01. Since then, the University has not made any nominations for the awards.

3.16. In accordance with earlier decisions and discussions with the Charity Commission, trusteeship was transferred to Southampton University with effect from August 2008. It is necessary nevertheless to approve the accounts for the year 2007-08.

4) Proposals for Winding Up of Smaller Trusts

4.1. It will be noted that no expenditure has been made from several of the trust funds over the financial year in question. This has continued a pattern in these cases in recent years, whereby very little use is being made of the funds available. There are several reasons for this. In some cases, the governing instrument of the trust is several decades old, and the specific objects of the trust are less relevant in the modern era than when originally established. Further, in some cases the level of income is very small, and the sums of money potentially available for distribution have not justified the professional time that would be required to promote and administer the trust. For similar reasons this has also deterred efforts to update the governing instrument as this has, to date, required application to the Charity Commission in accordance with a formal statutory process.

4.2. However, the Charities Act 2006 gives trustees much more flexibility in this respect. New powers, which came into force in March 2008, enable trustees to resolve to modify the purposes of a trust, to include purposes that are similar in character to the old ones, but which are more modern and fit for purpose. Trustees are also given greater freedom to spend capital as income.

4.3. It is now proposed to exercise these powers in respect of the T Houghton Trust and the Portal Prize Fund. This requires the making of resolutions in particular terms, to meet statutory requirements.

5) T Houghton Trust

5.1. The current objects of this charity are the provision of prizes for pupils at Perins School, Alresford, to be awarded under rules made by the school governors. It is proposed to replace these with revised purposes as follows: "the provision of books, equipment or other resources, for the benefit of pupils attending Perin's School, which would not normally be provided by the local education authority". It is then further proposed that a resolution be made that the Trust's capital be spent as income. One payment of the entire fund would then be made to the school governing body, to be spent on books or other resources that would not normally be provided through public funds, and the trust then dissolved.

5.2. The Trustee must be satisfied that it is expedient in the interests of the charity for its purposes to be modified in this way. It is submitted that it is so expedient as the current scheme has fallen into disuse, with no awards made since 1999-2000, meaning that pupils are currently deriving no benefit from the current scheme..

5.3. The Trustee must also be satisfied that, so far as reasonably practicable, the new purposes consist of or include purposes similar in character to those being replaced. It is submitted that this requirement is met in this case, as the revised purposes still provide for the educational benefit of pupils at Perin's School.

5.4. It is then necessary to resolve to remove current restrictions on the expenditure of capital. The Trustee must be satisfied that the Trust's purposes could be carried out more effectively if both the capital and income in the Trust fund could be expended on Trust purposes, rather than merely income. This is considered to be the case here, as the income alone (£202 in 2007-08) is relatively minor, but when supplemented by capital (making a total of £4,078), is likely to achieve a more significant benefit for pupils.


5.5. Finally, it is proposed that, with the entire fund applied towards the modified charitable purposes, the Trust be dissolved. This will then mean there is no ongoing commitment to administer a trust, prepare accounts and file annual returns to the Charity Commission, all of which is considered to be a disproportionate call on officer and member time, given the size of the Trust fund.


5.6. A copy of the resolution to modify the Trust's purposes would be filed with the Charity Commission, and would take effect at the end of 60 days, unless the Commission objects. When the resolution has taken effect, the payment would be made and the Trust dissolved.
.

6) Portal Prize Fund

6.1. The current object of this charity is the promotion of a wider knowledge of commonwealth countries amongst young persons resident in or attending secondary schools in Hampshire. This statement of charitable purpose was adopted in 1970, since which time there have been significant demographic changes. There are now more than 100 languages spoken as mother tongue by children and young people in Hampshire, many of which are not from commonwealth countries e.g. eastern Europe. In this modern day context, greater understanding of different nationalities, faiths and ethnic origins is an important factor in community cohesion.


6.2. It is proposed to replace the current purposes with revised purposes as follows: "the promotion of an understanding of other nationalities, faiths and ethnic origins amongst young persons resident in or attending secondary schools in Hampshire". It is then further proposed that a resolution be made that the Trust's capital be spent as income. One payment of the entire fund would then be made towards a suitable purpose. The Director of Children's Services has identified a programme that promotes diversity and tackles racial discrimination amongst children and young people in Hampshire, which would not otherwise be funded from Council sources.

6.3. The Trustee must be satisfied that it is expedient in the interests of the charity for its purposes to be modified in this way. It is submitted that it is so expedient as the current scheme has fallen into disuse, with no awards made since 2001-02, meaning that children and young people are currently deriving no benefit from the current scheme. The Director of Children's Services is of the view that the charitable purposes are no longer relevant to current needs, and that, in particular, the link to "commonwealth countries" is outdated.


6.4. The Trustee must also be satisfied that, so far as reasonably practicable, the new purposes consist of or include purposes similar in character to those being replaced. It is submitted that this requirement is met in this case, as the revised purposes still provide for the promotion of greater understanding of different nationalities and faiths amongst children and young people.

6.5. It is then necessary to resolve to remove current restrictions on the expenditure of capital. The Trustee must be satisfied that the Trust's purposes could be carried out more effectively if both the capital and income in the Trust fund could be expended on Trust purposes, rather than merely income. This is considered to be the case here, as the income alone (£449 in 2007-08) is relatively minor, but when supplemented by capital (making a total of £8,219), is likely to achieve a more significant benefit for children and young people.


6.6. Finally, it is proposed that, with the entire fund applied towards the modified charitable purposes, the Trust be dissolved. This will then mean there is no ongoing commitment to administer a trust, prepare accounts and file annual returns to the Charity Commission, all of which is considered to be a disproportionate call on officer and member time, given the size of the trust fund.

6.7. A copy of the resolution to modify the Trust's purposes would be filed with the Charity Commission, and would take effect at the end of 60 days, unless the Commission objects. When the resolution has taken effect, the payment would be made and the trust dissolved.

7) Legal implications

7.1. The County Council has a statutory obligation to supply to the Charity Commission annual statements of account and reports for the charities for which it acts as Trustee by 31 January of the year following the year of account. These must be approved directly by the Executive Member, Policy and Resources on behalf of the County Council as sole trustee.

8) Financial Implications

8.1. There are no direct financial implications for the County Council, although any failure to submit the necessary reports and accounts by the deadline could result in legal action by the Charity Commission, which could be potentially costly to the County Council.

9) Options

9.1. It is a legal requirement that the accounts are approved and the annual returns made to the Charity Commission.


9.2. Whether or not to take the steps identified in sections 4 - 6 of the report is a matter for the Council. However, the proposals are made on the basis that the objects of the trusts are no longer fit for modern day purposes, and that action is required if the funds are to be applied towards the interests of the intended beneficiaries.

10) Conclusions:

10.1. The proposals set out in the report will enable the Council to fulfil its obligations under charities law, to complete statutory returns to the Charity Commission, and to modernise two smaller trusts which have fallen into disuse.

11) Recommendations:

Please see Executive Summary for recommendations.

CORPORATE OR LEGAL INFORMATION:

IMPACT ASSESSMENTS:

1. Equalities Impact Assessment:

a) The proposals to modernise the objects of the Portal Prize Fund would support the promotion amongst young people of an understanding of other nationalities, faiths and ethnic origins.

2. Impact on Crime and Disorder:

a) No direct impact

3. Climate Change:

a) How does what is being proposed impact on our carbon footprint / energy consumption?

· No direct impact

b) How does what is being proposed consider the need to adapt to climate change, and be resilient to its longer term impacts?

· No direct impact

Appendix 1

Annual Report of the Michael Austin Harlick Memorial Fund for year 1 April 2007 to

31 March 2008

1. Charity Name

The Michael Austin Harlick Memorial Fund

2. Any other name the Charity is known by

None

3. Charity Commission Registered Number

900351

4. Financial Year

This report is the for Financial Year beginning on 1 April 2007 and ending on 31 March 2008.

5. Charity's Principal Address

The Chief Executive, Hampshire County Council, The Castle, Winchester, Hampshire, SO23 8UJ.

6. Governing Document

The Charity was constituted by the will dated 12 May 1971 of the late Michael Austin Harlick, proved at Winchester on 24 November 1988, as amended by a scheme of the Charity Commission dated 11 January 1990.

7. Objects of the Charity

Under the terms of the late Mr. Harlick's will, his estate was given to Hampshire County Council as trustee to establish the `Michael Austin Harlick Memorial Fund'. The income from the fund was to be used for the provision of medals, challenge cups and trophies for the children of Hampshire schools for the encouragement of pupils in all forms of sporting activity. By virtue of the Charity Commission's scheme dated 11 January 1990, the objects of the Charity were widened to include the revision that, if in any year the income shall not be required for the provision of medals, challenge cups and trophies, the Trustee shall apply the unused income in otherwise promoting the physical and recreational education of children attending schools in the county of Hampshire.

8. Specific Investment Powers

The Trustee has full power for the investment of funds for a period not exceeding 21 years from 1 January 1992, including the investment of any balance not needed for working purposes.

9. Solicitor

Mr A. Smith, Chief Executive, Hampshire County Council, The Castle, Winchester, SO23 8UJ.

10. Bankers

National Westminster Bank plc, 105 High Street, Winchester, Hampshire, SO23 9BU.

11. Treasurer/Financial Adviser

Mr. J. C. Pittam, County Treasurer, Hampshire County Council, The Castle, Winchester, Hampshire, SO23 8UJ.

12. Name of Trustee

Hampshire County Council.

13. Trustee Selection Method

Hampshire County Council has been appointed sole Trustee under the terms of the will of the late Michael Austin Harlick dated 12 May 1971.

14. Custodian Trustees

None

15. Activities and Achievements

Awards totalling £13,019 have been made to individuals and sporting organisations in support of the Charity's objects. Efforts have been made to spread the awards across a broad range of sports, in support of the development of young sportsmen and sportswomen.

16. Reserves Policy

The reserves are retained and invested in managed pooled charitable investment funds, with a cash float held on deposit with Hampshire County Council. The income is used to fund grants set against the criteria of the Trust.

17. Grant Making Policy

Grants are made on terms that satisfy the terms of the trust.

18. Investments Selection Policy

The majority of investments are placed in managed fixed interest-based pooled funds to generate a secure income and preserve the Trust's capital value. A much smaller portion is invested in equity-based pooled funds to provide capital growth over the longer term.

19. Review of Major Risks

The Trustee has assessed the major risks to which the Trust is exposed, in particular those relating to the finances of the Trust, and is satisfied that systems are in place to mitigate exposure to major risk.

20. Declaration

I declare, in my capacity as Charity Trustee, that the Trustee has approved the report above, and has authorised me to sign it on the Trustee's behalf.

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Full Name : ......................................................

Position: ......................................................

Date: ......................................................

Appendix 2A

Appendix 2B

Appendix 2C

Appendix 2D

Appendix 2E

Appendix 2G