TRUSTEES of a charity set up by a late Bury industrialist have rejected calls for them to resign in the wake of a National Audit Office investigation,

The inquiry involved a total of £1.3 million of donations given to three Community Foundations by the WO Street Charitable Foundation.

The investigation was launched after David Nuttall expressed concern that the donations from the WO Street Charitable Foundation may have been ineligible for matching with public funds from the Cabinet Office’s Grassroots Endowment Challenge Fund, run by the Community Development Foundation (CDF).

Now, the National Audit Office (NAO) findings have upheld the Bury North MP’s concerns which he had initially raised with the chairman of the Committee of Public Accounts in 2013.

Two years previously, the WO Street Charitable Foundation had made donations of £778,842 to the Community Foundation for Greater Manchester, £390,617 to the Community Foundation for Lancashire and £129,859 to the Community Foundation for Merseyside.

The NAO, in its key findings, stated: “When local funders applied for match funding they described the WO Street Charitable Foundation’s donations as eligible on the grounds that the Foundation was ‘ineffective.’

“The NAO cannot see a justification for the decision by local funders to classify the Foundation as ‘ineffective’ in a way that complies with the guidance, which was the basis on which they claimed the donations were eligible for matching under the terms of the Challenge Fund. We have not been able to determine the exact amount of public funding received by the local funders in relation to the donations, but we estimate it to be around £753,000 of public funds across the three local funders.

“Local funders may have mistakenly believed that if they could potentially use the Foundation’s resource in a more effective way, this equated to the Foundation being ‘ineffective’, a view CDF did not challenge at the time.

“In both 2012 and 2015, the Cabinet Office reviewed the eligibility of the Foundation’s donations and concluded each time that the donations were eligible for matching. It accepts, however, that there were weaknesses in the Challenge Fund’s design.”

The NAO also said the local funders combined the Foundation’s donations with the match funding to create a WO Street Transformation Fund and by the end of March this year has made £107,600 in donations to local good causes.

In 1973, the Foundation was formed by Bury businessman William (Bill) Openshaw Street. When he died in 1981, he left a substantial estate. Five years ago, Mr Colin Snape spearheaded a campaign to remove the Foundation’s trustees, drawn from Barclays and Withers LLP, claiming they had failed to fulfil Mr Street’s wishes in giving causes in Lancashire - and particularly Bury - preference. He was subsequently instrumental in Mr Nuttall raising the match funding issue.

Mr Snape said: “The NAO stated that WO Street Charitable Fundation (WOS) was an active charity with assets of £16 million and a declared policy to distribute £500,000 per year. Under the rules, a charity had to be proved to be dormant or ineffective as being unable to comply with the wishes of the settlor and neither applied to WOS.

“It has taken almost four years to establish a pattern of events relating to claims for match funding on the WOS donations. In all the circumstances, the WOS trustees should resign and make way for new unpaid trustees drawn from Bury and wider pre-1974 Lancashire tasked with achieving recovery of the £1.3 million wrongly distributed from the funds of the charity.”

Mr Nuttall commented: “I am pleased the National Audit Office have found in favour of the case put forward by Mr Snape that these funds should not have been transferred from the Street Trust to the Community Foundations. It was clear to me that the Street Trust was not dormant or ineffective and, therefore, it was not a suitable case for the Grassroots Challenge."

A spokesman for the trustees of WOS said: “The findings of the report provide no grounds for the trustees to stand down. Applications for match funding from the Challenge Fund were made by the local funders, and not by the trustees of WOS.

“Whilst the report identifies changes that might be made to the procedures operated by the Cabinet Office, CDF and local funders, its findings do not require any change to procedures in the management and administration of the Foundation. However, as responsible trustees, the trustees of the Foundation keep their own procedures under continuous review in any event.”

Nick Massey chief executive officer on behalf of the Community Foundation for Greater Manchester, said: “The Community Foundation complied at all times with the requirements placed upon it in the fund matching process and its applications were confirmed by the Community Development Foundation (CDF) as the national agent to be eligible for match funding, resulting in funds being allocated from the Government’s Grassroots Endowment Match Challenge Fund in 2011.

“The Community Foundation welcomes external scrutiny of all such practice and is pleased that the report has found absolutely no evidence of wrong-doing on its part.”