Official warning over trustees’ mismanagement of founder’s legacy

The three-year investigation found serious failings in the trustees’ governance of the charity, including in the financial management of a £5.7m legacy from its founder and the management of conflicts of interest and related-party transactions. 

The Schwarzschild Foundation was established for the education and the relief of poverty for women and girls in the orthodox Jewish faith and was registered as a charitable trust in 2014.  

Following the death of the founder, Helga Schwarzschild, the charity became entitled to her estate, which included proceeds from the sale of her property and a property portfolio, the value of which was approximately £5.7 million.  

The inquiry was opened into the charitable trust in 2023 after the National Crime Agency identified £250,000 of the charity’s funds in a personal bank account under a trustee’s control. The charity’s lack of monitoring and verification of the end use of funds meant it would not have detected or recovered the funds independently. 

The trustees only verified the use of three other £250,000 grants after the Commission became involved. The inquiry found two grants of £250,000 each were awarded to organisations in which at least one trustee had unmanaged conflicts of interest. 

The inquiry also found unmanaged conflicts of interest between the charity and the companies for which it was sole shareholder, and in trustees’ businesses providing professional services to the charity.  

During the inquiry the Commission put in place a temporary, protective order preventing the charity’s trustees from entering into any transactions or making any payments for the charity without the regulator’s prior written approval.