According to the Charity Commission, there is significant under-reporting of problems by charities, which is putting charities at potential risk of further harm, including reputational damage. The regulator has therefore recently improved its guidance on reporting serious incidents, to help charities report appropriate matters as soon as possible after they occur.

How to report a serious incident in your charity replaces previous guidance and includes the following:

  • new tools, such as examples and checklists to make it clearer to trustees what they should, and should not, report to the regulator
  • provides greater clarity on incidents resulting in “significant financial loss”, making clear that losing significant funding or contracts that the charity can’t replace should be reported to the regulator
  • no longer requires trustees to report if their charity doesn’t have a safeguarding policy in place, as that information is now captured through the annual return.

Sarah Atkinson, Director of Policy and Communication at the Charity Commission, commented:

“We remain concerned about significant under-reporting of serious incidents to the Commission. Too often, our casework shows that an incident could and should have been reported to us at a much earlier stage. I urge trustees to act quickly and responsibly in reporting serious incidents as soon as they occur, using the dedicated reporting facility at rsi@charitycommission.gsi.gov.uk.”

The Commission says that reporting a serious incident to the regulator helps trustees demonstrate that they are taking appropriate action to deal with it. It reminds trustees that by reporting a serious incident, they can limit reputational and actual harm to the charity, and allows the Commission, if asked, to state that the trustees handled the situation responsibly.

Serious incident reporting also helps the Commission to gauge the volume and impact of incidents within charities and to understand the risks facing the sector as a whole, and to respond, for example with guidance or alerts to the wider sector.

A serious incident in a charity is described as an “adverse event, actual or alleged, which results in harm to a charity’s work, beneficiaries or reputation; the loss of a charity’s money or assets, or damage to a charity’s property”. Last year, charities reported 2,181 incidents to the Commission, over half of which (55%) related to safeguarding; around one in seven (14%) related to fraud or money laundering, with a third of reported frauds being internal (‘insider’) fraud.

Serious incident reporting has been increasing steadily since 2011-12, when 1,027 incidents were reported, but the Commission continues to find events and problems in its case work that should have been reported to the regulator at an earlier date. The most common type of incidents are frauds, thefts, significant financial losses, criminal breaches, terrorism or extremism allegations, and safeguarding issues.

Who should report?

The responsibility for reporting serious incidents rests with the charity’s trustees. However, this may be delegated to someone else within the charity, such as an employee or the charity’s professional advisers.

If you’re reporting the incident as a trustee, you need to confirm that you have authority to report on behalf of the trustee body. If it’s someone other than a trustee, they should declare who they are, their relationship with the charity and confirm that they have the authority of trustees to report it.

This guidance helps trustees identify serious incidents and ensure that they are reported to the Charity Commission. It also explains how to report them.

If a serious incident takes place, you need to report what happened and explain how you are dealing with it, even if you have reported it to the police, donors or another regulator.

Whistleblowing

If you are an employee of a charity and you suspect serious wrongdoing within the organisation, for example criminal offences or health and safety breaches, or you discover that the charity has deliberately hidden serious incidents, you can report this to the Commission. To find out more, go to whistleblowing: guidance for charity employees.

The Commission’s Risk Framework explains how it assess risk and when it may become involved in charities.

How to report

Reports should be made using the dedicated reporting facility at rsi@charitycommission.gsi.gov.uk . Further information on what to include in the report can be found here. You may also find it helpful to refer to the reporting checklists.

The guidance issued also includes important information on how to report fraud and theft, including a Fraud and theft information checklist.

Declaration in the Annual Return

As a matter of good practice, all charities, regardless of size or income, should report serious incidents to the Commission promptly.

If your charity’s income is over £25,000, you must, as part of the Annual Return, sign a declaration confirming there were no serious incidents during the previous financial year that should have been reported to the Commission but were not. If incidents did occur, but weren’t reported at the time, you should submit these before you file your charity’s Annual Return, so you can make the declaration.

Until all serious incidents have been reported, you will not be able to make this declaration, or complete the Annual Return, which is a statutory requirement under section 169 of the Charities Act 2011. Be aware also that it’s an offence under section 60 of the Charities Act 2011 to provide false or misleading information to the Commission.

What to report

The main categories of reportable incidents are:

1. Financial Crime: Fraud, theft and money laundering

2. Unverified or suspicious donations

3. Other significant financial loss

4. Safeguarding beneficiaries

5. Links to terrorism and extremism

6. Other significant incidents, including; disqualified trustees, insolvency, forced withdrawal of banking services, or actual/suspected criminal activity

 

Should you have any questions please contact your usual Bishop Fleming representative.

 
 
 
 
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