Music charity Strike A Chord has lost its operating license after regulators found a lack of seperation between its charitable activities and profit making companies supplying services.
The withdrawal of the charitable collections license comes after a detailed investigation by the Commissioner for Consumer Protection and is due to concerns over the charity's governance arrangements.
Strike A Chord aims to share music and musical access with seriously ill and disadvantaged children.
Commissioner Anne Driscoll said the agency’s investigation had concluded that the financial reporting of the charity did not have a satisfactory level of accuracy, transparency and detail.
“While there appeared to be a genuine endeavour to assist disadvantaged children, our main concern was that there was not sufficient independence between Strike A Chord and profit-making companies supplying services to the charity,” Ms Driscoll said.
“Combined costs associated with consultancy fees, staff salaries and staff benefits increased in recent years, reducing the amount of funds available to be directed to the charitable purpose. While the charity employed people with expertise in event management, it lacked expertise in financial management."
Ms Driscoll stressed that the organisation had been cooperative with the investigation.
“I would like to acknowledge that Strike A Chord did offer to relinquish its licence but this was not legally possible because a charity licence can only be relinquished at the end of the licensing period,” she said.
Strike A Chord is the second charity to lose its license in recent months.
In Decemeber the Commissioner revoked the licence of Lighthouse Laboratories, a not-for-profit company which had been raising money for research into childhood cancer.
The Commissioner found that the charity had mismanaged funds, failed to effectively carry out its charitable purpose and did not have independent governance practices in place.
Ms Driscoll said it was important for all charities in WA to be able to establish that the donations received are applied effectively and efficiently as their donors and the community would expect.
“It is important that charities undertake from time to time, a critical self-examination of how they operate. People may have the best of intentions when they form charities and raise funds, but these organisations must be managed appropriately.”
