The failure of the Garden Bridge Trust has led to the writing off of more than £50 million in grants and donations, and a recent Charity Commission report has identified the collapse of the plan as having jeopardised public trust in the sector as a whole.

It seems clear that scrutiny of what went wrong, why, and the role of the trustees will continue for some time.

Whilst there is probably a legitimate question as to whether a charity was the right delivery vehicle for a major infrastructure project such as this (and whilst it is clear from HS2 and Crossrail that project overruns appear to be inherent in major infrastructure projects regardless of the legal status of the entities providing them), there are lessons of general applicability to all charities planning to unlock value from their land by carrying out a development.

It seems clear from the reporting that if there was one decision that the charity took which may have been imprudent it was the timing of signing the construction contract.

This committed the charity to paying c.£21 million to a building contractor before the land rights on the southern bank of the Thames had been secured and before all necessary planning consents were in place.

There is an element of risk in all development projects and sometimes trustees have to take a view and find a creative solution, such as a letter of intent to allow a contractor to start works or a conditional/phased contract. 

However entering into the main construction contract for a development, which will commit the charity to paying the contractor significant sums and entitle the contractor to compensation for delay, without having secured the necessary consents and ownership/rights over land to deliver the project is not consistent with trustees' duties of care and prudence.

We will be exploring the issues that charities seeking to unlock value from their land through development need to address at our seminar on 1 May - click here for further details.