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End to the National Fund set to send shock waves through charity sector

31st August 2018

One of the richest UK charities has been wound up and its assets are set to pay off the national debt in a move sending shock waves through the charity sector.

The National Fund was set up in 1928 with £500,000 from an anonymous donor with the intention of paying off the national debt.

It is one of the 25 richest charities in the UK with assets of £475m. In its 90-year history, the national fund has continued to accumulate its assets and has never spent any of it on charitable activity.

The Attorney-General recently decided to close the Fund and to apply to the High Court to use the cash to pay off some of the UK’s £1.6 trillion national debt. Steve Reed, Shadow Minister for Civil Society, commented at the time that the money should go to benefit the charity sector instead.

Kirsty McEwen, Head of the Charity team at Midlands law firm Higgs & Sons, said: “This move is likely to cause huge waves in the charity sector. Questions will be raised as to how The National Fund was able to accumulate income over such a long period of time, and why it never carried out any charitable activity as charities are under an obligation to use their assets within a reasonable period of time.

“In 2009 the Fund’s only corporate trustee admitted that there would never be enough capital to achieve its sole aim of paying off the national debt and sought permission from the Charity Commission to close down. Discussions between the trustees, the Charity Commission and the Attorney-General’s Office were ongoing for some time.

“£475 million would have been a huge windfall for small charities compared to the small dent it would make in the national debt.

“Another issue which may raise some questions is the huge payments the charity made to management companies, whilst not carrying out any charitable activity.”

As specialist advisers, Kirsty and colleague Ellie Williams have developed relationships with a range of organisations, from large national charities and not for profit groups to small local grant-making charities. They advise on all aspects of charity law, from registration through to trustee training and ad-hoc advice on a variety of issues including re-structuring, governance, appointment of trustees and charity property transactions.

Higgs & Sons is one of the Midlands' leading law firms and is headquartered at the Waterfront Business Park in the heart of the Black Country. A modern, forward thinking practice which employs more than 230 people offering a wide range of legal services, Higgs is proud of its heritage and remains true to its client centred values and commitment to quality.

 

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