God TV used to be known as The Dream Family Network
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* | The Goshen Trust
The Goshen Trust
Registered Charity No. 274910
1. This report is the statement of the results of an Inquiry conducted under Section 8 of the Charities Act 1993.
2. The Goshen Trust (‘the Charity’) is governed by a trust deed dated the 6 December 1977 as amended 15 September 1999 and was registered as a Charity on the 12 December 1977. The Charity is established to apply both capital and income to charitable trusts and for such charitable purposes, as the trustees shall in their discretion from time to time determine.
3. The Charity is based in Stockton on Tees. Its income in the financial year ending 5 April 2002 was £1,026,489.
Background and Issues
4. While providing advice to another registered charity in March 2003 it came to the attention of the Commission that the Charity had made what appeared to be an investment of approximately £5 million in a commercial company called Dream Family Network (‘DFN’). DFN was established by the trustees of a charity called The Angel Foundation (‘AF’) (Registered Charity No. 1079501) to develop a Christian television channel (‘GOD TV’). One of the trustees of the Charity was also a trustee of AF and also on the board of directors of DFN. The Charity’s Accounts for the period ending 5 April 2001 showed the investment in DFN as being valued at nil given DFN’s net liabilities.
5. There was a lack of information on how the decisions had been made with regard to the investment in DFN and who had made them. It was clear that the individual who was a trustee of both charities had discussed matters with the directors of DFN but the Commission had little information on whether they had discussed matters with the Charity’s trustees.
6. Because of the amount of money involved and the lack of explanation for the writing off of the investment in DFN, the Commission considered it necessary to open an Inquiry to look at:
* whether or not all of the trustees had been involved in the decision making process;
* what independent professional advice the trustees had received on the investment; and
* what action were the trustees proposing to take to recover losses incurred to the Charity.
7. Between October 1999 and March 2000 the Charity leant DFN a total of £3 million. These loans were then converted to share capital just prior to the Charity acquiring a further 366 shares in DFN on the 31 March 2000. This amounted to a total investment in DFN of £5,013,000.
8. The trustees had not received any professional advice on the investment in DFN. Although the trustees had received advice on the ability to convert the loans to share capital, this advice did not provide an opinion on whether or not the investment was in the Charity’s best interests. Nor did it consider whether it was a sound investment by reference to rate of return and other comparable investment opportunities.
9. The trustee body had discussed the investment in DFN at a number of trustee meetings and had voted in favour of the proposals. However there was nothing in the minutes that indicated that the trustees had considered asking for any independent professional advice on the investment.
10. The trustees’ original intention to make loans instead of purchasing shares was because of the ownership of DFN and the commonality of trusteeship between the Charity and AF. Two of the trustees of AF also owned shares in DFN personally. The Charity’s trustees did not want to be seen to be assisting in benefiting those individuals so repayable loans were the preferred way to fund DFN.
11. The loans were then converted into share capital and additional shares were purchased to boost the stock of DFN and therefore encourage more investment from other sources. Another reason for this was to protect the original investment made by the Charity because of problems DFN was facing in establishing a customer base. The Charity’s trustees felt that this was in the Charity’s best interests although they received no specific advice on this.
12. DFN no longer operates the television channel but generates income from selling advertising time on GOD TV. AF now operates GOD TV.
Outcome of the Inquiry
13. The shares in DFN have now been gifted to AF as a donation in furtherance of the Charity’s objects. As DFN’s only business is to sell advertising time on GOD TV and as AF have taken over the running of the television channel the trustees of the Charity felt that control of DFN would be better in the hands of the trustees of AF. This would enable all of the operation to run more efficiently and therefore maximise resources. GOD TV itself is continuing to operate and is broadcasting to 170 million people in 212 countries.
14. The trustees accept that certain aspects of the funding arrangements could have been administered better. The lack of advice received in respect of the original loans was because of the need to act quickly to establish the GOD TV. The Commission is satisfied that this was done in good faith.
15. The trustees argue that because the establishment of a television channel solely to advance the Christian religion was so innovative they would have found it difficult to obtain suitably experienced independent professional advice on the proposals. The Commission agrees that it may have been difficult to get such advice but that the trustees should at least have made the attempt. The trustees now accept that in the circumstances they should have at least tried to obtain independent professional advice on the proposals put before them, or contacted the Commission for advice as to the best course of action for them to take.
16. Although DFN no longer carries out the operation of the television channel the transfer of the activities to AF has enabled GOD TV to expand considerably and now helps to advance religion to a significant section of the public throughout the World. This therefore helps to directly fulfil the objects of the Charity.
17. The Inquiry was closed on 26 January 2004.
18. When considering the provision of funding for projects which the trustees feel directly further their own objects consideration needs to be given to the most appropriate method of funding to be used. Although a loan or the purchase of shares can be used to provide funding how this is then expressed within the charity’s Accounts has to be thought about carefully. If these are funding arrangements then the accounts need to state this otherwise they can be seen simply as ‘investments’.
19. If they are to be seen as purely investments then the trustees should obtain independent professional advice on whether or not they are in the charity’s best interests. If the trustees choose to make the decision without obtaining suitable advice and it is clear that the investments were too speculative in nature then they may be personally liable for any losses incurred to the charity if the investments fail.
20. Even if the proposed projects directly further the charity’s objects the trustees still have a duty of care to ensure that a particular project is the most efficient and effective way of doing so. Trustees must therefore assess the projects carefully and obtain independent professional advice when necessary. If in doubt the trustees should contact the Commission for help. Although the Commission will not provide specific advice on a particular project they will inform the trustees of the standard of care expected of them.
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Last updated: 12 Oct 2004