Coventry's year as UK City of Culture brought a remarkable programme to the city. On 4th September 2026, the Charity Commission published its conclusions to its investigation of the former trustees of the charity that delivered it, Coventry City of Culture Trust, which is now in administration. We have no wish to criticise an organisation that ran into real difficulty; but we can all learn from the Commission's statement.
The Commission found no misuse of charitable funds and no payments to connected parties. Its criticism was about financial oversight. The former trustees, it concluded, failed to keep effective control of the charity's finances, and that amounted to misconduct and/or mismanagement. The failings it identified were inadequate budgeting and financial planning through the Covid-19 period, an over reliance on the executive team for financial decisions, too little scrutiny of whether the charity was financially sustainable, and a failure to tell the regulator about serious financial risks and the loss of key funding while there was still time to act.
In October 2022 the charity borrowed £1m from Coventry City Council to keep going. The Commission found the charity may already have been insolvent when it took the money, with real doubts about whether it could repay in full. Four months later it went into administration owing the council just over £1.5m. Two trustees had disagreed with the decision to borrow, and resigned.
Because Coventry City of Culture Trust was a charitable company, its trustees were also its directors. While the charity is financially healthy, its directors act in the interests of the charity and its purposes. Once it is insolvent, or heading that way, the law expects that focus to shift towards protecting the people and organisations it owes money to. A 2022 Supreme Court case confirmed that this duty to consider creditors is triggered as insolvency approaches, not only once it has arrived. Continuing to trade, or taking on new borrowing, when there is no realistic prospect of avoiding an insolvent administration can also expose directors personally under the wrongful trading rules. The time to establish the charity's true financial position, and to take advice on it, is before new money is drawn down, not after.
The Commission described trustees as stewards of their charity's money, and in Coventry's case that was substantially public money. That raises the stakes for funders as much as for boards. Where funding is repayable, understanding a recipient's solvency before advancing it, and keeping early sight of the numbers afterwards, is part of good stewardship on both sides.
The Commission dealt with the matter as a regulatory compliance case rather than a statutory inquiry, and it has taken no action against the former trustees beyond publishing its criticism. It noted, pointedly, that it has limited power in law to act against a charity that has wound up, or its former trustees, except in the most serious cases of individual wrongdoing. The administrators had already decided not to pursue the former directors, citing the cost and risk. By the time failings of this kind surface, the charity is often gone and the formal consequences for those responsible may be slight. The accountability that counts is the one a board owes in the moment, not the one a regulator might impose afterwards.
Good working practices, carried out often enough to become habit, mitigate these risks. The first lesson is to ensure the board is given a genuine, timely view of the finances: budgets built on real operating costs, cash-flow forecasts, a reserves policy with clear trigger points, and the charity's ability to continue as a going concern discussed as a standing item rather than a crisis conversation. The board's role is to scrutinise, not to take the executive's word. The second is raising the alarm early rather than late, both to the Charity Commission through a serious incident report and to key funders, and taking advice at the first sign the charity may not be able to meet its debts, well before administration is the only option left.
We wrote recently about the Charity Commission's 2026 sector risk assessment, which recorded insolvency and financial-difficulty casework rising sharply across the sector. A charity's finances are the board's responsibility to hold, and a trustee's duties, and their reputation, outlast the organisation itself.
If you would like us to review your charity's governance and financial oversight, or to talk through the options when money is tight and difficult decisions are looming, do get in touch.
Sources:
Coventry City of Culture Trust, Register of Charities (charity 1165639);
BTI 2014 LLC v Sequana SA [2022] UKSC 25
