Culture trustees lacked financial oversight - report

Trustees of the charity behind Coventry's year as UK City of Culture had such a lack of financial oversight it amounted to misconduct, a report has said.

The Coventry City of Culture Trust (CCoCT) collapsed in 2023, owing more than £1.5m in public money, and Charity Commission (CC) inquiry has also concluded a £1m loan was requested when it was probably already insolvent.

Tracey Rollock, of the CC, said trustees did not "effectively oversee the charity's finances", with the report also describing their conduct as mismanagement.

But investigators found no misuse of funds and no legal action was being taken, the CC added. The city council welcomed the report for its scrutiny of the trustees.

Coventry was UK City of Culture in 2021, with events starting while the country was in lockdown because of the Covid-19 pandemic, which led to low attendance figures.

The CC report accepts the pandemic adversely affected footfall and was a contributing factor, but did not fully explain what happened.

Investigators were able to examine bank accounts the charity used and found trustees "failed to demonstrate they had appropriate oversight of the charity's finances".

It also discovered:

• Inadequate budgeting and financial planning during Covid‑19
• Over-reliance on the executive team for financial decision-making
• Failure to properly scrutinise the charity's financial sustainability
• Failure to report material financial risks and loss of key funding to the Commission in a timely manner.

"Many will rightly feel frustration and disappointment about the way in which the legacy of Coventry's time as City of Culture was managed by the charity," Rollock, the CC's head of regulatory compliance, said.

"We accept that the Covid-19 pandemic had a detrimental impact on the charity, and it is important to be clear that we found no evidence of misuse of charitable funds for personal gain.

"But our findings in this case are serious, and should serve as a reminder to other trustees of the vital importance of financial diligence and care".

CC investigators found no evidence the funds given to the trust were misused.

Administrators have also confirmed that no legal action against CC's directors would be pursued, because of the associated costs and risks involved.

A city council spokesperson said: "This is a report that focuses on the former trustees of the trust, and rightly so - it is not critical of the council's own conduct.

"We welcome the Charity Commission's findings and the confirmation of no evidence of misuse of charitable funds.

"As part of our due diligence, the loan was assessed against the financial information provided to us by the trust at the time, which did not indicate it was trading insolvently.

"The trust was operating in extremely difficult circumstances - the Covid-19 pandemic had delayed and severely affected its income and delivery throughout the City of Culture year.

"Without the benefit of hindsight, its business case anticipated further funding that it was ultimately unable to secure."

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