Could this mean that charities are not always reporting serious incidents to the Charity Commission when they should?

By way of reminder for charity trustees of their obligations in this regard, in this briefing we recap on what the serious incident reporting requirements are and how to comply with them.

Recap on serious incident reporting

Responsibility for ensuring that serious incidents are reported rests with a charity’s trustees.  They are required to report any serious incident to the Charity Commission (‘the Commission’), including details about what happened, how the incident is being dealt with and what steps are being taken to limit the immediate impact and, where possible, prevent it happening again. This obligation applies even if the incident has also been reported to another regulator and/or the police.

The Commission recognises that, in practice, making a report will often be delegated to senior executives or professional advisers. 

The obligation is to report the incident promptly, which means as soon as reasonably practicable after it happens, or immediately after a charity becomes aware of it.

Failing to report a serious incident to the Commission could amount to a breach of trustees’ duties and could prompt regulatory action. 

How to spot a serious incident?

The Commission’s guidance on reporting serious incidents acts as a helpful guide as to whether or not a particular incident should be reported.

In brief, the guidance describes a serious incident as being an adverse event - either actual or alleged - which either results in or risks significant harm to anyone who comes into contact with the charity through its work (for example, the charity’s beneficiaries or staff), loss of the charity’s money/assets, damage to its property or harm to the charity’s work or reputation.

Within this, the main categories of reportable incident set out in the guidance include:

• Protecting people and safeguarding incidents, such as incidents resulting in or risking significant harm to beneficiaries and others who come into contact with a charity through its work;
• Financial crimes, for example fraud, theft, cyber-crime and money laundering;
• Suspicious financial activity involving the charity’s funds (including large donations from an unknown or unverifiable source);
• Links to terrorism or extremism;
• Other significant financial loss, for example due to serious damage to property;
• Other significant incidents, such as insolvency and significant data breaches/losses.

It is up to the trustees to make a judgment call about whether a particular incident is ‘significant’ and should be reported, taking into account the context of the charity and its unique circumstances, although often professional advice can also be helpful.  What may be significant for one charity may not necessarily be significant for another.  The Commission’s guidance and examples table can be a helpful aid in many circumstances.  Taking one of the many examples listed by way of illustration, an allegation that a staff member has physically or sexually assaulted a beneficiary whilst under the charity’s care will clearly be reportable, whereas a logged accident report involving no significant harm will not be.

How to report?

Since 2019, reporting of serious incidents to the Commission has been via online form, with the Commission expecting to be provided with enough detail to gain a clear picture of what happened and when, the extent of any loss or harm and how the incident and any associated risks are being dealt with.

Once the Commission receives the report, it will assess the nature and level of any risks.  It is the role of the Commission to ensure that trustees are complying with their legal duties and managing the incident responsibly.  For example, they will be assessing whether the trustees have taken action to limit the impact of the incident and, where possible, prevent it happening again.  While in most cases the Commission recognises that trustees can deal with an incident themselves (with assistance from professional advisers where necessary), having oversight of serious incidents allows the Commission to use its powers as regulator in certain circumstances to protect a charity from further harm.  In a wider context, this oversight allows the Commission to help identify risks for other charities and identify trends.

Trustees should also bear in mind their other reporting obligations.  Depending on the nature of the incident, trustees may need to notify the police, Local Authority or other relevant regulator (e.g. CQC or Ofsted), in addition to notifying the Commission.

What if you get it wrong?

If trustees fail to report a serious incident in line with the guidance, this could constitute a breach of their legal duties and regulatory action by the Commission could potentially follow, with failure to report incidents involving safeguarding issues likely to be taken particularly seriously. 

As the guidance states: “If trustees fail to report a serious incident that subsequently comes to light, the Commission may consider this to be mismanagement…” and “This may prompt regulatory action, particularly if further abuse or damage has arisen following the initial incident”.

For charity trustees, a re-read of the Commission’s guidance on reporting serious incidents could therefore be time well spent.

We regularly advise charities that are facing serious incidents, both on the management of the incident itself and also in reporting that incident to the Charity Commission (and other regulators).  If you have any concerns in relation to reporting serious incidents in your charity, please do contact us for assistance.