Fear that Diana fund could run out of control

Where will all the money go? Paul Mungo investigates

Fundraisers working for Britain's charities are growing increasingly concerned about the impact of the trust set up to commemorate Diana, Princess of Wales, and the time it is taking to appoint trustees.

The worry within the voluntary sector is that the Diana, Princess of Wales, Memorial Fund is becoming a behemoth, soaking up a substantial - though still undetermined - slice of all charitable contributions. Six to eight new trustees are due to be appointed by the end of the year to join Anthony Julius, solicitor with the firm Mischon de Reya, Michael Gibbons, the Princess's former private secretary, and Lady Sarah McCorquodale, Diana's sister, in running the fund.

It was revealed on Friday that Maggie Baxter, deputy chief executive and grants director of Comic Relief, had started an eight-week secondment to the fund "to advise on the options available to the trustees".

The fund will soon become one of the largest in the country - worth perhaps as much as pounds 200m. Currently, it stands at about pounds 12.3m, much of it from donations made through banks, building societies and an international credit-card line. But the real money is still to come.

The trustees will be instrumental in organising the infrastructure of the fund, appointing senior staff to oversee investments and approving a "plan of action" to redistribute the income from those investments. "It happened slightly the wrong way around," said Vicki Pulman of the Charities Aid Foundation. "Ordinarily you would set up the trust first and endow it once that had been done. But the memorial fund suddenly found itself with a large sum of money. Now decisions about the mechanism for distributing it, and who will have the responsibility for doing so, have to be taken."

Worries about just how long it will take to set up that mechanism were voiced at an annual conference and exhibition for charities held at London's Queen Elizabeth II Conference Centre in Westminster on Thursday, organised by Charities Aid. "If they need to acquire additional trustees, they should identify who these trustees are as quickly as possible," says Stephen Lee of the Institute of Fundraising Managers. The selection of the trustees may well have been delayed by concerns that what have been described as "the usual great and good" will be appointed, rather than the late princess's "real friends - those who know what she wanted". Those who were not her real friends, it is suggested, could channel the fund's largesse toward their own pet charities.

The first royalty cheque from "Candle in the Wind '97", Elton John's tribute to the princess, is expected later this month. It is the largest- selling single in history, with 5.6 million sold in the UK alone. The eventual revenue from the song has been conservatively estimated at pounds 50m.

Another musical tribute to the princess, a 36-track double CD called Diana, Princess of Wales - Tribute will go on sale worldwide on 1 December and is expected to top the Christmas charts. With tracks by Michael Jackson, the Spice Girls, Sir Paul McCartney, Eric Clapton, Barbra Streisand, U2 and Luciano Pavarotti, REM and Aretha Franklin, the CD will be "a phenomenon", a fund spokeswoman predicted.

There have already been a multitude of fund-raising events since the princess's death, with more scheduled. On 7 December, a four-hour Concert of Hope, with former Take That members Gary Barlow and Robbie Williams, and Boyzone, will take place at south London's Battersea Power Station. It is expected to raise pounds 100,000 for the fund. It was also announced this week that the fund had become an official charity for the 1998 Flora London Marathon. Runners could raise as much as pounds 5m for the fund.

"We are disappointed that a charity which had hoped to be selected, Quids for Kids, has been dropped in favour of the memorial fund," said Eoin Redahan, head of communications at Action Research, a medical research charity. "This does seem unfair. Action Research recognises that people may want to remember the princess, but we are sure that she would have preferred them to continue to raise money for their favourite charity and to have given a little more in her memory."

This week, the fund is also expected to announce the first "approved" Diana merchandise - memorial souvenirs. Amounts already raised or pledged for the fund are unprecedented in charity fundraising. "It is quite possible that within the year the fund could have grown to pounds 200m," a spokeswoman said.

Such a sum would rank the fund among the top 20 richest in the country, according to Baring Asset Management. It would be much larger than the RSPCA or the British Red Cross Society. The fund's revenue will not necessarily be donated to the six charities - Great Ormond Street, the English National Ballet, the National Aids Trust, Centre Point, the Leprosy Mission and the Royal Marsden - the Princess was associated with at her death. The income will probably be distributed among a range of charities, though no one can be certain yet which will be eligible.