The reporting of serious incidents within charities and how to avoid them

A serious incident is defined by the Charity Commission as “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”.

The duty to report serious incidents to the Charity Commission rest with the trustees. It is the trustees that bare this responsibility of reporting. The duty to report also encompasses the following entities:

• All registered charities
• Excepted charities
• Small unregulated charities

There is no reporting requirement for exempt charities. In the context of this, Schedule 3 of the Charities Act 2011 outlines such organisations – these include academies and further education corporations.

Why report?

In reporting a serious incident to the charity it maintains that the Charity Commission is kept informed, and is in a position to protect the charity using statutory powers if necessary or issue regulatory guidance. This can include appointing an interim manager and disqualification of trustees.  The Charity Commission will also monitor trends and themes within that charity or charity group.

What to report?

 A report should be made to the Charity Commission if it results in, or risks significant:

• harm to people 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

It is important to consider context when reporting in comparison to the charity. For example a large charity could suffer a financial loss that could be deemed insignificant, but the reputational damage and loss could be significant.

There is a useful table of examples for charities to consider in respect of this which can be found at- RSI_guidance_what_to_do_if_something_goes_wrong_Examples_table_deciding_what_to_report.pdf (publishing.service.gov.uk)

For example minor unusual/aggressive behaviour by a beneficiary towards a member of staff or a minor accidental injury to a charity service user e.g. slipping on a wet floor is not required to be reported. On the contrary, if a charity’s Chief Executive and Treasurer produced false invoices for charity services or there is significant loss of charity funds in a poor investment scheme, commissioned by trustees, without professional advice, these require reporting. Further possible serious incidents include the failure to manage conflicts of interest, paying trustees unauthorised benefits and financial loss as a result of theft or fraud.

When to report

When a serious event happens, the role of the Charity Commission is to ensure that the legal duties of the trustees are complied with, and that they are managing of incident proportionately and responsibly. If an event happens, it should be reported to the charity Commission as soon as reasonably possible. It is best practice to report what you think may be a serious incident than not report one you deem to not meet the test. The Charity Commission has discretion on investigations put to it, it does not have discretion to incidents it has not been made aware about.

It is a breach of duty by the trustees not to report a serious incident, and non-compliance can lead to the disqualification of trustees. It is also within the remit of the Charity Commission to issue a formal warning, something which the charity would have to declare in its annual report.

Making the report

Prior to making a report to the charity Commission, the trustees must have met and approved any intention to report. There is a need for personal feelings and emotion to be separated from the report, whilst this can be difficult as trustees it ensures that the facts are presented to the Charity Commission, not opinions.

How the charity commission responds

Upon receiving a report the Charity Commission will assess the level of risk to the charity and its users, the nature of the report and how the charity is dealing or has dealt with the incident. It may be that the Charity Commission returns to the reporting charity with a need for more information, to issue regulatory advice and guidance or wishes to monitor the charity’s progress in dealing with the incident. The Charity Commission may feel that is needs to use its regulatory powers to protect your charity and/or the users of the charity.

Regulatory powers of the Charity Commission are wide ranging and can vary from issuing guidance, opening a statutory inquiry, appointing an interim manager of the charity or opening a compliance case which is required to be published publicly.

The following actions may also been taken in respect of a serious incident report. The Charity Commission may produce new or updated guidance  to provide trustees the opportunity to run the charity successfully, exercise its powers to disqualify trustees or monitor charities with risk factors having been identified.

The duties of trustees

It is the duty of the trustees to identify any possible serious incidents, report such incidents promptly, ensure steps are being taken to mitigate the impact of a serious incident, review policies and procedures where necessary and document the history of the incident.