How to handle misuse of charity funds by a trustee? (Anonymous post 🤫)
Ocean King
Leadership & Governance
What’s the right way for us to handle third-party R&D funding? (Anonymous post 🤫)
Ocean King Staff Senior Community Executive at CharityConnect Posted 7 months ago
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This question is from a member of our community that wishes to remain anonymous:
I am the treasurer of a small scientific charity (structured as a charitable company). Our CEO has organised a tranche of funding that he intends to disperse to scientists in our field.
The funding is coming from a commercial entity, and is not a donation. Nor is the funding dispersed a grant. Instead, it is R&D funding with commercial terms attached (first right to commercialisation etc). We began by soliciting proposals from members of the field, and several members of our board of directors have submitted proposals for the funding.
Essentially, our CEO envisions a scheme where we select the proposals, receive and then disburse the funds. He wants to route the funds through the charity accounts.
Here are my concerns:
I have not been consulted on the structure of this arrangement. We have retained no legal advice as a charity. There has been no contract drafting between the commercial entity and the counterparties receiving funds. There has been no contract drafting between the commercial entity and ourselves.
Our charity is essentially intermediating a commercial transaction with an exchange of contracts (presumably) occurring bilaterally (between the commercial funder and the scientists) outside the flow of funds through us. We open ourselves to legal jeopardy if the relationships go sideways, as we retained and disbursed the funds.
There is a conflict of interest, as the BOD is deciding on funding with commercial terms for other members of the BOD. We are potentially violating our regulatory obligations. The CEO is not listening to feedback on this arrangement, and I am under resourced to respond comprehensively.
Any and all advice on how to understand the appropriateness of this arrangement, and how best to respond moving forward, is appreciated.
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