Charities are under pressure.  Whilst overall charity income is at its highest ever, there are daily reports of the financial squeeze especially on the small and medium-sized charities; be it reductions in donations or increases in compliance costs.

Such pressure on an organisation inevitably increases the risk of a serious incident occurring. The Charity Commission requires charities to report serious incidents in a timely fashion.  Indeed, those charities that receive income of over £25,000 are required to confirm in their annual accounts that they did not experience any serious incidents in the previous year. The responsibility to report lies with the trustees.

A serious incident is an event that results in, or risks, loss or damage to the charity’s money, assets or property, reputation, work or beneficiaries. The Commission places them under nine potential headings:

  1. Fraud and theft – a report to the police or Action Fraud should be made
  2. Other significant loss – such as a fire or flood, where there is a loss of over 20% of the charity’s income or £25,000, whichever is the smaller
  3. Donation of significant sums or property from an unknown source – again the guideline threshold is £25,000
  4. The charity, its trustees, staff or volunteers has a link to a proscribed organisation or to terrorism or other unlawful activity – this is part of the Commission’s role to prevent terrorism
  5. A disqualified trustee has acted or is acting for a charity– there are a number of ways a person can be banned from acting as a trustee, such as an unspent criminal offence or entering into an individual arrangement with their creditors
  6. A charity has no process to ensure that a trustee or member of staff is eligible for the post – if you have policy that works it’s much less likely you’ll fall foul of the previous category
  7. The charity does not have a safeguarding policy for any vulnerable beneficiaries – the Commission has a duty of safeguarding to beneficiaries
  8. There are actual or suspected issues of mistreatment of vulnerable beneficiaries – again if you have a safeguarding policy in place it’s much less likely that an incident will arise
  9. The charity has had an investigation or sanction as a result of criminal activity or an investigation from a regulator – a catchall to ensure other regulatory enquiries are reported

The Commission would always prefer that charities take responsibility for the incident and work through it rather than for the Commission to have to take action.  If, however, the Commission becomes aware of an unreported serious incident, it will look upon this dimly and would be inclined to look at this as an act of mismanagement and take its own action on that basis.

The moral is to report as required and look for the Commission’s support rather than its criticism.

If you have any questions about this article please contact Toby Claridge on 01872 265100 or drt@stephens-scown.co.uk