The findings, reported by the Guardian on 15 June 2026, lay bare a series of structural governance failures at one of the UK's most recognised skills and qualifications bodies. For boards of charities, membership organisations, and mission-driven institutions, the episode offers a pointed case study in how weak remuneration controls can persist even at large, well-established organisations.

What the investigation found

The internal investigation established that Kirstie Donnelly, the former chief executive, and Abid Ismail, the body's finance chief, "directly authorised and paid bonuses to themselves" of nearly £3m combined, according to the report's findings as disclosed by the Guardian. The bonuses were connected to last year's £166m sale of City & Guilds.

Critically, the report found that the payments were made "without authorisation from, or knowledge of" the pair's superiors, according to the Guardian's account. In the context of City & Guilds' governance structure, those superiors are the trustees and council members who sit above the executive team.

City & Guilds operates under a Royal Charter, a governance framework that grants it a degree of constitutional permanence but also imposes fiduciary obligations on those who lead it. As a registered charity, it is subject to oversight by the Charity Commission, which sets clear expectations that trustee bodies must approve executive remuneration. The self-authorisation of seven-figure bonuses by the very executives receiving them represents a direct breach of that principle.

The scale of the payments is notable. Nearly £3m divided between two individuals, in connection with a single transaction, is substantial by any measure. Within the charity sector, where executive pay has long been a sensitive topic, the sums involved are likely to attract intense scrutiny from regulators, parliamentarians, and the public.

How the controls failed

The central question raised by the investigation is not simply whether two executives acted improperly, but how an organisation of City & Guilds' size and standing lacked the controls to prevent or detect self-authorised bonus payments.

Several structural factors may have contributed. Royal Charter bodies often have complex governance arrangements, with councils, committees, and trustee boards whose respective authorities can overlap or, conversely, leave gaps. In many such organisations, the executive team holds significant operational autonomy, and remuneration decisions can fall into a grey zone between board-level oversight and day-to-day management.

The £166m sale itself created an unusual context. Large asset disposals generate transaction-related bonus pools in the corporate world as a matter of routine. But charities are not corporations. The proceeds of a charity's asset sale belong, in effect, to its charitable purposes, not to its executives. Any bonus arrangement linked to such a transaction should, under standard charity governance principles, require explicit trustee approval, with independent advice on quantum and appropriateness.

The investigation's finding that the bonuses were paid without the knowledge of the executives' superiors suggests that either no formal remuneration committee process was in place for transaction-related payments, or that such a process existed but was bypassed. Either scenario points to a failure of governance design, not merely individual misconduct.

Finance functions present a particular risk in this regard. When the finance chief is both a beneficiary of a payment and the person with operational control over the payment process, the conflict of interest is acute. Segregation of duties, a foundational principle of financial control, appears to have been absent or ineffective in this instance.

Wider governance lessons for charity and membership-body boards

The City & Guilds case arrives at a moment of heightened regulatory attention to charity governance. The Charity Commission has, in recent years, taken enforcement action against a number of organisations over executive pay and financial controls. High-profile failures at Kids Company, which collapsed in 2015 amid questions about financial management and trustee oversight, and governance concerns at the Royal British Legion have already prompted calls for stronger standards across the sector.

The Commission's published guidance is clear: trustees must take direct responsibility for setting executive remuneration, should benchmark pay against comparable roles, and must ensure that conflicts of interest are managed. In practice, however, compliance varies widely. Smaller charities may lack the resources for formal remuneration committees. Larger ones may have the structures on paper but fail to enforce them rigorously.

For boards of charities, membership bodies, and similar organisations, several practical lessons emerge from the City & Guilds findings.

Remuneration authority must be unambiguous

Boards should ensure that the authority to approve executive bonuses, particularly those linked to exceptional events such as asset sales, is explicitly reserved to the trustee body or a delegated remuneration committee. This should be documented in the organisation's governing instruments and standing orders, not left to convention.

Segregation of duties around payments to executives

No executive should be in a position to authorise or process their own bonus payment. Finance teams should have clear escalation procedures for any payment to a senior officer, with mandatory sign-off from an independent trustee or committee chair.

Transaction-related bonuses require specific scrutiny

Asset disposals, mergers, and other major transactions can create incentive structures that are at odds with the charitable purpose. Boards should consider whether transaction bonuses are appropriate at all in a charity context, and if they are, should set the terms in advance with independent advice.

Regular assurance and audit

Internal and external auditors should be tasked with reviewing executive remuneration as a standing item, not merely as part of year-end financial statements. Real-time or near-real-time reporting of senior pay to the board chair can act as an early warning mechanism.

What happens next for City & Guilds

The immediate consequences for the organisation remain to be seen. The Guardian's report does not detail whether City & Guilds intends to pursue recovery of the bonus payments, or whether the matter has been referred to the Charity Commission or other authorities.

The Charity Commission has the power to open a statutory inquiry into any charity where there is evidence of misconduct or mismanagement. Given the sums involved and the profile of the organisation, regulatory interest is likely. The Commission has previously used such inquiries to impose interim measures, including the appointment of interim managers and restrictions on trustee powers.

For City & Guilds itself, the reputational damage may prove as significant as any financial loss. The organisation's brand rests on trust, competence, and standards. A governance failure of this nature strikes at the core of that brand, particularly at a time when the UK skills agenda is a political priority and public confidence in institutions is fragile.

The broader sector should take note. Governance failures at well-known organisations tend to trigger regulatory tightening that affects all charities, regardless of size. Boards that have not recently reviewed their remuneration controls, conflict-of-interest policies, and payment authorisation procedures would do well to act before, rather than after, the next enforcement wave arrives.