Charity Commission issues governance alert to large service-providing charities

On 25 June, the Charity Commission issued a regulatory alert to the leaders of large service-providing charities.  The Commission has sent the alert to charities which have the following profile:

• income over £9 million;
• governed by a board of trustees and run by a separate group of executives; and
• a service-providing charity either with front-line staff directly serving and interacting with beneficiaries or which provides amenities or facilities to the public.

The alert follows a series of Charity Commission investigations into household name charities which found governance and safeguarding failings.

If your charity meets this profile

The alert warns you need to be aware of the risks that can result from governance and management failings and that identifying and mitigating these risks is even more important for charities facing economic difficulties as a result of the Coronavirus pandemic.

Trustees are advised that while it is normal for the executive of large charities to have significant decision making authority, the trustees must still be willing to hold the executive to account. The trustees should:

• ensure that there is a strategy for regular and effective communication with the executive about the charity’s purposes, values and work;
• regularly review the charity’s processes for identifying, prioritising and managing risk;
• review whether the charity’s governance and management committees have suitable terms of reference, suitably skilled members and effective oversight/ lines of responsibility and reporting; and
• ensure that there is a transparent, effective and well-publicised process for making and handling complaints.

Executive staff should feel confident that they can identify failures to protect people from harm, learn lessons from these incidents, and fully and frankly disclose them to trustees, regulators, and/or agencies. The alert recommends that the executive:

• regularly report significant incidents to the board;
• consider how it provides assurance to the board about the charity’s activities, including whether the information provided is adequate; and
• ensure that it is confident about how any third party suppliers may carry out services on the charity’s behalf, and regularly review those arrangements.

The alert also advises of the need to allocate sufficient resources for safeguarding and the protection of people ­– the Commission warns that this should not be an optional overhead, even if the organisation has faced financial difficulties due to Covid-19. This includes establishing effective safeguarding policies, procedures and training for trustees, staff and volunteers; where relevant, appointing a safeguarding lead to help co-ordinate and drive safeguarding strategy; creating a plan for responding to concerns overseas where applicable; embedding a “speak-up” culture within the organisation which enables staff to raise concerns; and ensuring that there are clear lines of responsibility for safeguarding when working with other organisations.  

Later this year, the Commission will be contacting a sample of recipients of the alert to check what measures they have in place to manage the risks identified. It is therefore important for your trustees and executive staff to consider the contents and recommendations within the alert, and ensure that your governance structures, reporting and risk management procedures are sufficiently robust. Specifically the alert advises “If you have not done so within the last 12 months or if you are planning significant changes to your charity in the near future, you should check that your general governance arrangements are appropriate, in particular your risk management measures, assurance mechanisms relating to the charity’s activities and people protection arrangements.”

Relevance to other charities

The risks identified in the alert and the recommendations are also a useful framework for other charities to check that their governance arrangements are robust and address key risks.  These issues will be particularly relevant to charities that are considering a merger, restructuring or significant expansion in response to the COVID-19 pandemic.   

Next steps

If you would like help reviewing your current governance arrangements or putting in place the steps recommended by the Commission, please contact Philip Kirkpatrick or Hannah Lyons.