A £24,000 Earl of Chester’s Fund grant paid out to one of its trustees’ businesses has been repaid.
The Giant Manufacturing Company Ltd received the money in January 2015 after a trustee made a personal donation to the charity.
The company is known for producing spectacular figures including giant models of Queen Elizabeth II.
The Chronicle reported the grant would be used to help with the business’s setup and development.
The fund's trustees have now repaid the £24,000 after an investigation by the Charity Commission.
A Charity Commission report said: “The trustees in this case accepted the grant was made in error and made restitution of £24,000 to the charity as an act of good faith.
“It is important that trustees are aware of their responsibilities as trustees and maintain proper oversight of grants made by the charity.
“The trustees have implemented a decision making document for all future grants to ensure due diligence.”
The Earl of Chester’s Fund was established in 2007 as a charity to benefit the people of Cheshire.
A trustee made a donation to the charity and then proposed a grant be awarded to his non-charitable company.
Guidelines state trustees must ‘only fund activities that further their charitable purposes’.
The Giant Manufacturing Company made the figures of the Queen for celebrations to mark her milestone of becoming Britain’s longest-reigning monarch in September 2015.
Many of the 12ft-high models were offered up for sale the following year.
Others have been reused at other events including the Queen’s 90th birthday parade in June 2016.
The awarding of the grant was found to be a breach of trust as it provided a private benefit which was restricted by its governing guidelines.
Trustees, who fully co-operated with the commission’s investigation, were accused of ‘failing to identify and manage conflicts of interest’.
Grants were discussed on an ‘ad hoc basis’ by email and charitable requests dealt with at impromptu meetings.
The Charity Commission has since laid out six ‘lessons’ for the fund’s board including to ‘act in the charity’s best interests’ and to ‘make sure that your charity is carrying out the purposes for which it is set up, and no other purpose’.
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