Public non-profit event, committee member trying to do a runner with the money, sexual Harrasment huge mess!

[PrincessTeacake]

Could anyone point me in the right direction?

About five years ago, I got involved with a start-up community event. It was 100% non-profit, any personal money donated in the early days to get it off the ground was refunded as soon as a profit was made and any money in the coffers afterwards was kept for running expenses and put towards the next year's event. The running of the event depends heavily upon good-natured volunteers, it runs over three days and it's a lot of work. The only reward for volunteering is free entry and food provided at the end of the weekend.

I quit three years back after being run ragged just two weeks after a major health emergency that nearly killed me. I was so overworked I had to go back to hospital and put on a drip. The main problem was three committee members who had just joined that year (three men, this will be important) who either didn't do their jobs properly, actively sabotaged things I was trying to run or treated the volunteers so badly they went on strike, leaving me to handle upwards of 600 people on my own. When I left so did two of the other committee members, both women. Since then they've had a running problem with committee members joining for one year and then leaving, especially female committee members. This year they had no-one to fill the committee slot I'd previously held so I was asked to return, which I did as a favour to friends of mine still involved with the event.

The three male committee members have seemingly incorporated the event behind the original director's back. Said director is a great guy, heart of gold, but his problem has always been that he's far too trusting and doesn't come down hard enough on the people that need it. The money that the event has earned is now tied up in this corporation, which has no reason to be other than to run this event. The original director has been very badly treated over the last few years and he's very beaten down about it all, he really wants to just dissolve the event altogether and give the proceeds to charity, but the thrust of the problem is that it seems like the three conspirators are trying to set it up so they can divide up the money themselves. Two of them are listed as the main company directors and the address listed is the home address of one of them.

It galls me that they could get away with this, and I want to know what can be done about it. There has been an ongoing problem of sexual harrassment by these three, one of whom is notorious for coming on very strong to every girl who joins the committee. Only one actual complaint has been made so far but if pushed I could get written accounts of more, including my best friend's account of being propositioned for sex in a pub bathroom and my own account of being grabbed and held by one of them when he was drunk and I was vulnerable. Several of these girls have been very young, and all of them have been in lower ranked positions. To add to this is accounts I could get of ill-treatment of the volunteers by these committee members, including offensive language and being overworked to the point of illness.

There could be a tax issue as well, but I am clueless about taxes. So far I've advised the director to consult the citizen's advice bureau but I'm not sure what else can be done.

If you can help, please do!

[MairyHinge]

Is this a charity? Registered at the charity commission?

[PrincessTeacake]

No, although it raises money for charity every year the bulk of the money goes back into planning for the next event.

[NorthWards]

So this isn't actually a charity? It is a business that directs some profits into other philanthropic ventures.

It is however hard to give you advice without knowing what kind of company it has been made into, as well as the corporate make-up.

[PrincessTeacake]

I appreciate that. It's a bit of a conundrum for me too, I have no idea how it happened or how it was even turned into a corporation. As far as I can tell the only thing the business does is exist so that the handling of the money is put directly into the hands of the three conspirators. Its primary function is described as Operation of Arts Facilities, according to a check website. There are five directors listed, one of which is the old director, but the main two listed are the ones who have caused the most trouble. I think the old director was just added because he had his name to the bank accounts and was put under duress, because much of the event's equipment is being stored by the three.

[FesterAddams]

Your best friend should consider going to the police. Being "grabbed and held by one of them" sounds like assault or sexual assault - have you considered going to the police yourself?

Companies exist for one of two purposes - either charitable works (in which case they get a significant tax advantage, but are subject to scrutiny by the charity commission) or to enrich their owners/shareholders. The fact that this company isn't a registered charity tells you all you need to know about the intentions of the directors.

"Heart of Gold" guy sounds naive at best. He can chose to step down as a director, but he can't wrap the whole thing up and give away the assets on his say-so.

Your further options are either to continue to work unpaid for the enrichment of the owners, or to walk away.

[Chiana]

I'm with Fester. I'd walk away. And don't be shy about telling your fellow volunteers exactly why.

[AggressiveBunting]

To be fair, incorporation of the event, if it's large and annual, was probably quite a good idea as it makes it easier to administer through changes of management, ring fences the fixed assets and equipment, and facilitates good governance. As an accountant I would have been itching to do that myself. However it should have been set up as a company limited by guarantee ( i.e. no shareholders) even if it didn't officially register as a charity, as this puts an asset lock on the company so that the profits can only be reinvested as you describe was the intention. If it's been set up as limited by shares, then who are the shareholders? This is key because If the new directors have put assets they didn't personally own into a company they now do own, then that would presumably be theft or fraud. However, if the company is limited by guarantee then arguably they haven't done anything horrifically wrong, unless they are syphoning off funds by non- dividend means. I think the problem you have is that the event, prior to incorporation, didn't exist in any legal sense, so no-one or nothing actually owned the equipment etc prior to incorporation. I'm not sure how that would work. Hopefully someone more knowledgable can advise.

[Tablefor4]

Hello

I think that there are a number of issues bound up here. As a PP said, incorporating a company could have been a good move. Crucially you need to find out who are the shareholders as they have the power to control the company and also will receive the dividends (profits) if it is not put back into the company. This will also be a clue as to their intentions - namely if they are also the shareholders then clearly the event has moved away from its original not-for-profit basis.

If you think the the directors are misbehaving, and using assets for personal reasons you can report them to the Insolvency service ( the company doesn't need to be insolvent) to investigate. The IS will not be interested in their sleazy behaviour, only the stuff which relates to the company and its assets.

www.gov.uk/complain-about-a-limited-company

For the harassment and behaviour that is a police matter.

[Tablefor4]

Also, for ownership of the assets, again, they are owned either by the company (because it bought it or they were gifted by someone) or an individual. That is a factual question. Any asset owned by an individual can just be taken back by them.


I fear that your friend has been taken advantage of and/or been naive. That, sadly, is not illegal. If the IS investigation does not go anywhere, I suggest you and your friends just walk away and let the others run the event (if they can be bothered).

[PrincessTeacake]

I'm sorry I haven't returned to the thread before now, my computer freaked out and is now in repairs. I was talking to the director and telling him mumsnet gives amazing, down to earth, no nonsense advice and he gave me more details. I'm going to copy/paste these details here. Thank you for the advice so far, it's been very helpful.

.....

Further details on this case:
I was set up originally as an unincorporated entity by opening a club/soc bank account. That account is still open though not in use and has been intended to be closed. The mandate/business plan submitted with that does state that it is "a non-profit organisation with all profits being either reimbursed back into events or donated to charity."

Original director was told that it needed to be registered as a business and that it wasn't legal in it's current state when he returned from a 3 week trip abroad. (I would call skeptic on this, several other similar events exist in the same manner but as arts events) He had approached revenue before about registering for tax purposes but they didn't quite know how to class it and just took the director's pps number instead which is a bit inconvenient as committee will change from year to year.

Event costs about €23,000 to run and if run well can make up to €5,000 annual profit but usually less than that. Assets include about 7k in the bank, and several thousand euro's worth of equipment. Unfortunately the 3 troublesome guys took over completely the previous year and did a very poor job on the event to the point that it made a loss for the first time.

4 people from the committee put themselves forward as shareholders/directors of the company and when the original guy complained they added him assuring it was what was advised to them by the accountant. Each shareholder was to invest €20 in.

Now the problem is the original director wants to leave as it feels very dodgy. He has no access to the bank account as one of the others who is treasurer has complete control and keeps dodging questions on it. He had to resort to doing his own book keeping to make sure the figures in the account matched up.

Several of the other directors aren't even involved in the event but keep appearing to boss things about and the guy in charge of the bank account has pretty much set himself up as Treasurer for life despite being a terrible accountant. Even if someone else was elected as treasurer they'd still have to go through him and they have talked in the past about using the funds to set up their own business and then paying dividends to the shareholders (which hasn't happened yet)

The original director would like it so nobody owns the money or equipment and that complete control of the event is given to whoever is elected as committee from year to year. ie no permanent directors/shareholders
Can they change the company from shareholder to limited by guarantee somehow? Or can the funds be transferred back into the original bank account and then those guys can do whatever they want with the incorporate entity? Also how does an unincorporated club/assoc register for tax?
Thank you for your advice and help!