I have recently been advising charity clients on the need for the separation of a charity from its trading subsidiary. The highlighted case exemplifies several of the issues. These include the need for the boards of the two entities to be different, the separation of the website, and the need for contracts in relation to the use of the charity's assets by the trading subsidiary.
Poor separation between charity and National Shooting Centre The Commission is critical of how the charity was managing its relationship with its wholly owned trading subsidiary, the National Shooting Centre (NSC). A charity can generate funds through a trading subsidiary, however, this must be managed carefully so that the charity remains focused on furthering its charitable objectives. The Commission examined this arrangement and found that it was not clear to members of the charity or the public how the two organisations were separate and independent, due to the overlapping activities. It was unclear how conflicts of interest and loyalty were managed as the charity’s CEO was the NSC’s only director and decision-maker.