Charities and serious incident reports

Who willingly puts their head in the lion’s mouth? No one, obviously. It feels like this is what the Charity Commission requires of charity trustees, however, with regard to the reporting of serious incidents. In the confusion, uncertainty and legal anxiety that typically surrounds an incident within a charity, you are expected to remember to think about whether the incident qualifies as “serious” and therefore must be reported to the Charity Commission. A natural reluctance to conclude that a report must be made can prevent trustees fulfilling their duties, but of course this is only likely to lead to negative consequences for the trustees and their charity.

You cannot be serious!

What does the Charity Commission mean by a “serious incident”? The Commission’s guidance advises charities that a serious incident is “an adverse event, whether actual or alleged, which results in or risks significant:

• Harm to your charity’s beneficiaries, staff, volunteers or others who come into contact with your charity through its work
• Loss of your charity’s money or assets
• Damage to your charity’s property
• Harm to your charity’s work or reputation.

“Significant” relates to the context of the particular charity, taking account of its staff, operations, finances and/or reputation. An incident which might be unremarkable in a large charity could have sizeable implications for a small charity, for example.

Guidance from the Commission further informs us that the main categories of reportable incident include incidents relating to the protection and safeguarding of people, financial crimes (such as fraud and theft), suspicious financial activity with the charity’s funds, mysterious large donations, other significant financial loss, links to terrorism or extremism, and other significant incidents including insolvency, major data breaches or losses or incidents involving partners that materially affect the charity (“partners” includes trading subsidiaries and charity grant recipients).

In practice, it can be difficult to determine whether or not an incident is reportable, or, in complex circumstances, which of the many heads of the hydra need to be reported. The scale or extreme nature of an incident, or publicity surrounding it, may render the need to report obvious. Often it’s less clear cut. Where there is doubt, though, the Commission urges charities to report.

It’s complicated. When and how?

The Commission also urges prompt reporting. But what does that mean? It often takes time for trustees to unravel and unpick exactly what has occurred and to determine what actions need to be taken. Ideally your report would present a succinct summary of the details of the incident, plus an equally succinct summary of the steps being taken by trustees to deal with it, and would clearly indicate to the Commission that the trustees have command of the situation and that matters are being fully and appropriately addressed. Some time, and indeed Herculean labour, may elapse before you feel you have reached this position, though, and a report at that point may not qualify as “prompt”. The Commission appreciates the complexities often associated with an incident, but would prefer that you report early and then provide subsequent updates, as applicable. This enables the Commission to step in to provide regulatory advice and guidance if deemed necessary.

Reports are submitted using the Commission’s online form, which poses different questions depending on the type of incident. The Commission reviews and responds usually quite quickly by email, hopefully confirming that it is satisfied with your actions. They may require other actions or request further information. Crucially, if they are contacted by a member of the public or the press about the incident, they will be able to confirm that they are aware of it and that the trustees are handling it: this helps steady the reputational plank your charity may be walking.

Seriously, though…

Trustees are ultimately responsible for reporting serious incidents. Failure to report an incident may be deemed to constitute mismanagement by trustees and could lead to sanctions from the Commission. This is especially true if further harm, damage or abuse occurs after the initial incident. There may also be implications regarding the declaration in the charity’s annual return that no serious incidents during the period of the return have occurred without being reported.  It’s an offence to provide false or misleading information to the Commission: that includes information provided through the annual return.

We live in an imperfect and challenging world and, inevitably, incidents will happen within charities. The Charity Commission is aware of this and is in fact more suspicious of charities which make no reports.  Understand your responsibility to report, therefore, and do so promptly, accurately and confidently…and with the benefit of our advice.

If you have any questions about the topics raised in this article, please get in touch.