The Charity Commission has recently emphasised the importance of improved reporting of serious incidents, which it feels have historically been significantly underreported. Partner and Head of Charity Law team, Mark Lewis, offers further insight into what qualifies as a serious incident and best practice on the reporting of these events.
A serious incident is any event that may have an adverse effect on a charity. Common types of serious incidents are those that relate to a loss of funds or criminal breaches, however, over half of the serious incidents that were reported to the Commission in 2017 related to safeguarding issues. The Charity Commission advises that any actual or alleged serious incidents should be reported immediately.
The guidance provided by the Charity Commission provides examples of what to report, including significant financial loss, such as losing a key contract which the charity is unable to replace, thus threatening the finances of the charity. Reporting of these events should occur where there has been an alleged or actual serious incident and should take place at an early stage. The Commission believes that ‘too many incidents in charities go unreported’ and urges trustees to report all serious incidents to demonstrate that they are taking appropriate action to try and mitigate any loss to the charity. As part of a trustee’s responsibilities, protecting its charities assets, reputation and beneficiaries should be paramount to its day to day operations. It is, therefore, important that trustees do act to report any serious incident to RSI@charitycommission.gsi.gov.uk. Any report should be submitted as soon as reasonably possible – in other words ‘the sooner the better’. Trustees must, also, bear in mind that a serious incident can also affect other charities and through reporting issues earlier, rather than later, they mitigate the potential for loss in the wider charitable community.
Once a serious incident has been reported, the Commission advises that it is able to allocate resources to identify core problems. Thereafter, it will act to provide any relevant advice and guidance to trustees in order to ensure that they continue to comply with their legal duties. In the most extreme cases, the Commission may intervene in the affairs of a charity, using temporary or protective powers, to ensure that there is no direct threat to any of the charity’s assets and to help secure the charity’s future.
The Commission has also introduced guidance for whistleblowing, relating to serious incident reporting, which is relevant to employers. Trustees should be aware that their failure to report issues may result in those who have knowledge of any incident informing the Commission of an alleged or actual serious incident. Trustees must remember that an auditor of the charity’s accounts will have a duty to report any serious incident if it becomes so aware.
Serious incident reporting is now a priority of the Charity Commission, due to its belief that it helps to protect the charitable sector as a whole. The burden of reporting is firmly with the trustees of the charity, and every effort should be made to report any such incidents as soon as possible. If a serious incident does occur, the Commission may subsequently, and with the benefit of hindsight, take a dim view of any failure report.
For more information on serious incident reporting, or on Lodders’ Charity Law services, please contact Mark Lewis on 01789 206135 or via email.