The Charity Commission has criticised a charity for misleading its supporters by suggesting that the “financially resilient” orphanage it funds needed money.

Since it was set up in 1992 the principle aim of UK charity Children Care Centre has been to provide grants to Bacho Ka Ghar Amod, an orphanage in Gujarat in India.

But two years ago, the charity decided against directing funding to the orphanage as it was at the time “financially resilient due to other streams of income and therefore did not require money from the charity as it had adequate funds”.

The regulator’s investigation found that despite this the charity “had undertaken fundraising with misleading materials suggesting that the orphanage was in need of funding and that funds raised would be directed to the orphanage”.

Instead, the charity spent the money on investing in property, with trustees telling the regulator that it wanted to invest in “revenue-making streams such as properties. Bricks and mortar”.

Properties it bought were then rented out at a below market rate to support those in need of housing, but the regulator found that the trustees had not “properly considered” whether this was supporting its primary aim to fund the Gujarat orphanage.

“The trustees did not have an investment policy and had not taken investment advice or followed the other legal requirements as to charity investments,” found the regulator.

“They had also not appreciated that if this was not an investment, and instead they were attempting to further the charity’s purposes directly, this was not authorised because the provision of social housing is not within the charity’s objects.”

The regulator is concerned that the trustees failed to recognise that funds raised for the orphanage had to be spent on this facility in India and could not be used elsewhere.

It also found evidence that some of the funds meant for the orphanage were being redirected to build a new mosque and support a different orphanage “both of which fell outside” of its purpose.

“This constituted a failure by the trustees of their duty to ensure the charity is carrying out its purposes and is misconduct and/or mismanagement,” said the regulator.

It added that it is “satisfied that the trustees have now taken positive steps” to improve its governance and comply with their legal duties.

This includes appointing accountancy and law firms to advise them as well as reviewing its trustee board and filing outstanding accounts.

The charity was late in submitting financial information for the years ending March 2018 through to 2021.

The regulator said: “Trustees must act within the specific charitable objects in their charity’s governing document. When purchasing property, trustees must be clear what power they are using to do this.”

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