Charity run care home in breach of governing document?

[1StepBeyond]

Hi folks,
I'm not quite sure where to post this query so I thought I would start here and look for guidance.
My father-on-law was a resident at a residential care home operated by a charity (charitable company since 2018 but the endowment fund goes back hundreds of years). It was an awful experience and has led us (my wife and I) to look into the administration of the charity a little further.

The key query we have at the moment relates to one particular clause/article in the Articles of Association. The clause is as follows:

"7. Residents
7.1 The trustees may make it a condition of appointing or permitting any person to be or remain a resident that he or she shall contribute to resources available to him or her a sum towards the cost of maintaining the accommodation and essential services for it but such contribution shall not cause hardship to him or her or be more than sufficient with other income of the Charity applicable for the benefit of the Residents to meet the said cost."

A bit of a mouthful.

But, we just wondered what other people think in terms of:

1) What can be constituted as the accommodation and essential services for it? Does the above clause allow the Charity to charge fees that include personal care (included in the contract)?
2) What is the meaning of hardship here, can it be legally defined in this context? (The Charity charges third party top up fees).
3) Would the term 'shall not cause hardship or be more than sufficient...' enable the Charity to charge residents fees that result in an operating surplus of approx £250,000 per year?

We appreciate everybody's time and this isn't exactly a personal issue affecting us (like so many needing help here) but we just need a little guidance, as in, you've got something there or it'll never stick because... That sort of thing. We're not legally trained at all so any help anyone can offer will be very much appreciated.

For context:
The charity has an endowment fund of £30m (approx).

I'll leave it there as I don't want to give too much or too little information, so please ask if you need more detail.

Thanks again and all the best for 2026,

David

[HariSeldon]

7.1 The trustees may make it a condition of appointing or permitting any person to be or remain a resident that he or she shall contribute to resources available to him or her a sum towards the cost of maintaining the accommodation and essential services for it but such contribution shall not cause hardship to him or her or be more than sufficient with other income of the Charity applicable for the benefit of the Residents to meet the said cost."

1) What can be constituted as the accommodation and essential services for it? Does the above clause allow the Charity to charge fees that include personal care (included in the contract)?
2) What is the meaning of hardship here, can it be legally defined in this context? (The Charity charges third party top up fees).
3) Would the term 'shall not cause hardship or be more than sufficient...' enable the Charity to charge residents fees that result in an operating surplus of approx £250,000 per year?

1) That clause talks about the charity providing accommodation so unless there is another clause that says the charity will provide free personal care as well then yes it's perfectly acceptable for the charity to charge fees that include personal care.

2) Hardship is "severe difficulty or suffering" so not having enough money left over to flutter £200 on the horses every week would not be hardship but not having enough to cover your weekly basics would be hardship.

3) Firstly, whether £250,000 a year is excessive or not would depend on the size of the operation and for a big operation that may be the figure they need to provide a sinking fund for any future repairs or replacements. However, again, the "not ... be more than sufficient with other income" clause only refers to charging for accommodation so do you know if the £250,000 per year surplus is purely from accommodation fees or does it include any fees/profit they make from, for example, personal care?

[1StepBeyond]

HariSeldon Than you for your reply. The £250,000 is tricky. The care home charge a weekly fee (like all care homes) and a breakdown between accommodation and personal care fees is not provided. The Charity is required to publish its annual trustee report and financial accounts - there is a breakdown of operating costs for the residential care home that would provide a fairly rough breakdown between accommodation (maintenance, utilities, insurance, repairs, cleaning, food(?), etc) versus personal care (staff wages) BUT there is no corresponding breakdown on the division of residents' fees between accommodation and personal care.

We get so confused with all this legal stuff. So on 1), are you saying that because the clause relates to accommodation, and personal care is included in the weekly fees, that the care home is adhering to this clause? Would that mean, all the residents fees would need to be treated as accommodation charges to satisfy this clause. Sorry for the confusion and bumbling response.

Once again, thank you for taking the time to respond. Have a great NYE!!!

[HariSeldon]

HariSeldon We get so confused with all this legal stuff. So on 1), are you saying that because the clause relates to accommodation, and personal care is included in the weekly fees, that the care home is adhering to this clause?

Obviously no-one here knows the context or specifics of the care home/charity you refer to or what other clauses might be in the Articles of Association but unless there's anything contrary to the clause you quoted then, yes, only "the cost of maintaining the accommodation and essential services for it" need to abide by those rules.

So, for example, if the care home was charging £1,400 a week then I suspect they would easily be able to argue that £1,000 of that was for personal care and other non-accommodation costs while £400 was for "maintaining the accommodation and essential services for it". So only £400 a week needs to abide by the terms of that clause and there are no such restrictions on the remaining £1000 a week they're charging.

As an aside I would not expect food to be included in "maintaining the accommodation and essential services for it" and so any part of the weekly fee that was for food would also not be subject to that Articles of Association clause. To take this to extremes but it proves the legal point; you wouldn't/shouldn't expect to have sirloin steak, caviar and champagne every day and then not have to contribute because "the other income of the Charity can meet the said cost".

Ultimately (unless the Articles of Association say otherwise) my view is that food, personal care, travel and any other non-accommodation costs are essentially "optional extras" or "upgrades" and need to be costed and paid for by the resident as they are outside the scope of that particular clause.

[1StepBeyond]

HariSeldon ah okay. I think I understand it a bit more now. I wasn't looking at it like this before. I was thinking that the Articles had to explicitly provide the trustees with the power to do something e.g. raise funds, and therefore this was a clause that enabled them to do that but with very specific restrictions. So thank you, you've helped me a great deal. Not particularly in the direction I was hoping but every day is a school day. Thanks again.