Before the coronavirus pandemic hit, Roman and I discussed the updated guidance for trustees when reporting a serious incident to the Charity Commission.
Given the current climate, which has impacted every aspect of everyday life, the Charity Commission has again issued further guidance. The Charity Commission has been clear that the new guidance simply supplements the existing guidance and the two should be read in conjunction.
Departing from the existing guidance, only during the current pandemic, the Charity Commission would only expect financial losses or difficulties to be reported where the charity would result in being unable to:
- deliver vital services to at risk beneficiaries; and/or
- insolvent and/or forced to close permanently; or
- highly likely to be insolvent and/or forced to close permanently within the next 12 months.
The last two factors are, sadly, especially pertinent, given that a fifth of small charities (those with turnover of less than £500,000) expect a drop of over 50% of their income, and one in ten expect to face bankruptcy by the end of the year, according to recent surveys published by the independent charity, Pro Bono Economics.
On a practical note, the guidance is supported by revised example tables to give trustees a steer on the types of pandemic-related incidents that should and should not be reported. For example, where an outbreak of coronavirus amongst the charity staff, trustees, volunteers or beneficiaries, will mean the charity is unable to:
- deliver vital services to at risk beneficiaries (i.e. a residential care home does not have enough staff to safely care for residents), or
- continue its normal operations (i.e. where a large number of beneficiaries are seriously ill)
then this should be reported. However, if a single staff member, volunteer, trustee or beneficiary has contracted, or is suspected to have contracted, the virus, this does not need to be reported.
Further, the ordinary threshold of whether a non-criminal financial loss of £25,000 or 20% of income should be reported, will not apply to losses during the pandemic.
Trustees can still delegate the task of reporting to other staff members, but ultimately the decisions of the staff members should still be reported back to the trustees, who have ultimate responsibility.
The use of the online form to submit reports is paramount during the current climate, and the Charity Law Association has been in dialogue with the Charity Commission to make it more user friendly, for example, to allow a report to be saved half way through, rather than it having to be completed in one go, as well as report multiple incidents in one report. These small proposed tweaks are likely to make it much easier for charities to make such reports during these challenging times.
Finally, if trustees consider reporting an incident, but decide not to, a brief record of the decision, along with reasoning, should be kept.
The new guidance is likely to come as some relief to trustees at a very difficult time for the sector.