Reporting serious incidents: when does the Charity Commission need to know?

27 JANUARY 2020

The Charity Commission has published a considerable amount of guidance in relation to when charities need to report serious incidents.

Despite all the guidance, however, charities still often struggle to work out whether an incident is in fact reportable, and, given the phrasing of some of the guidance, it is not hard to see why this may be the case.

This article seeks to summarise the current position highlighting links to relevant guidance for charities finding themselves in the difficult position of trying to decide if an incident is reportable.

The current position...

Which incidents are reportable?
An incident is not always as obviously reportable as, for example, a double stabbing and firearms discharge near to a charity’s premises following on from an argument that started in the charity’s bar – although the charity trustees in that case did not, in fact, report that incident to the Commission!

A less simple situation can require a charity’s trustees, to consider both the guidance and the facts of the situation in detail. This is the only way to make sure that they are making their decision taking into account all the relevant information, in accordance with the Commission’s guidance on decision making.

Charity trustees should remember that even if the actual reporting to the Commission is delegated to someone else, such as an employee or a professional advisor, ultimate responsibility for making sure that it happens (and promptly) lies with the charity trustees.

The Commission’s guidance on serious incidents states that a serious incident is:

“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
- damage to your charity’s property
- harm to your charity’s work or reputation”.
It also confirms that the main categories of reportable incidents are as follows:
- Protecting people and safeguarding incidents, where incidents have resulted in significant harm or risk to those coming into contact with the charity, including its beneficiaries, staff, or volunteers.
- Financial crimes, such as fraud, theft, money laundering or cyber-crime.
- Large donations from an unknown or unverifiable source, or suspicious financial activity using the charity’s funds
- Other significant financial loss, such as substantial loss of charity funds due to legal costs incurred in a court case, significant fire damage to the charity’s main premises, a significant financial penalty imposed by a regulator, or the loss of a significant institutional donor which threatens the charity’s survival.
- Links to terrorism or extremism, including “banned” organisations, or kidnapping of staff
- Other significant incidents, including:
  - insolvency,
  - forced withdrawal of banking services without an alternative,
  - significant data breaches, or
  - incidents involving partners that materially affect the charity.
If you need legal advice on reputation management our team can advise organisations and individuals on reputational issues around misuse of private information, breach of data protection and defamation. Get in touch with one of our reputation management experts.
What is “significant”?

What constitutes “significant” harm, loss or damage will depend on context, and will vary from charity to charity. Factors to take into account to decide whether significant harm, loss or damage has occurred or may occur will include the charity’s operations, its finances, staff and reputation.

The fact that “significant” harm, loss or damage is context specific is a common reason that, despite all the guidance from the Commission, charity trustees still find it a time-consuming exercise to determine whether an incident is reportable.

Helpfully, the Commission has provided an examples table to give an indication of the kinds of incidents that should be reported. However, it is not intended to provide a definitive list of incidents that are reportable, and many charities will have encountered incidents that do not feature on in the examples table.

The Commission has previously stated that it prefers charities to make a report, if charity trustees are in doubt as to whether a report is necessary. Charities may wish to seek professional advice if they are in doubt as to whether an incident is reportable or not.

In any case, good records should be kept of the decision making process, including the reasons for coming to the decision made – but especially in cases that appear borderline. This may help charity trustees to demonstrate their compliance with their legal duties in relation to decision making, if the decision is later called into question.
Incidents involving partners
The Commission has recently added to the existing guidance, with separate guidance highlighting situations in which charities should report incidents involving partners, such as trading subsidiaries, delivery partners, or other organisations that receive funding from the charity.

This guidance seeks to set out the considerations of charities which experience serious incidents involving partners, starting by dividing such incidents into three different types:
- incidents involving the charity’s funds, brand, people, or an activity that it either funds or is responsible for
- incidents not involving the charity’s funds, brand or people, but could have a significant impact on the charity, and
- incidents not involving the charity’s funds, brand or people, and have little or no impact on the charity.
The guidance states that the first of these is most likely to trigger the reporting requirement to the Commission, because of the higher risks resulting from the close links between the charity and the incident. The second category is less likely to trigger the reporting requirement but may still need reporting in some circumstances such as where, for example, the incident causes or is likely to cause “material reputational damage” to the charity. The guidance suggests that the third category would not normally trigger the reporting requirement.

However, the guidance is very clear that whether reporting is required for any category of serious incident involving a partner is still a question of context, and the charity trustees will have to make a decision taking into account the specific facts of the incident, the actual or likely impact on the charity, and the risk to the charity.

For this reason, although the new guidance is to welcomed, because it should help charities facing the question as to whether they should report an incident involving a partner organisation easily to locate the Commission’s guidance for such situations, charity trustees will see that the new guidance does not make their job significantly easier – the onus is still very much on them to consider all the relevant factors before coming to a decision on whether an incident is, in fact, reportable.
When to report to the Commission?

The Commission states in its guidance that charity trustees should ensure a report of the serious incident is made as soon as reasonably possible after it happens, or immediately after the trustees become aware of it.

If more facts that are relevant to the serious incident become apparent after the report is made to the Commission, it is possible to update the report after it is submitted.

So, even if it is the case that the charity has not yet completed out all its investigations into a serious incident, if it is clear that a serious incident has occurred, and the charity is able to provide the Commission with the information required for a report (as set out in the section of the guidance “How to submit a report”), the fact that not all investigations have been completed need not prevent a report being submitted to the Commission.

It is very important that all relevant information is provided to the Commission in the original serious incident report, and in any subsequent updates. The Commission’s investigation into Oxfam was reopened in 2019 as a result of information being published in the national press that suggested Oxfam had not been “full and frank” in its reporting to the Commission of the original serious safeguarding incident in 2011.

The serious incident report and any subsequent updates can be submitted to the Commission using the same online form.
Don’t forget other reporting requirements

Depending on the type of incident, and the work of the charity, reports of the serious incident may need to be made to organisations other than the Charity Commission.

Criminal activity will need to be reported to the Police, Action Fraud or the National Crime Agency. However, some incidents may require reporting to multiple agencies and regulators.

For example, a safeguarding incident involving a charity that provides care or education services may require a report to be submitted to another of that charity’s regulators, such as the CQC or Ofsted, and / or the local authority, as well as the police.
Key steps to take on discovering a serious incident has occurred
Charity trustees should:
- Make sure any further harm, loss or damage is either prevented or minimised.
- Ensure a report of the serious incident is made as soon as reasonably possible after it happens, or immediately after the trustees become aware of it.
- As appropriate, report the incident to other authorities and regulators.
- Work out what to tell the charity’s staff, volunteers and members about the serious incident, as well as the public and the media. If the charity presumes there may be some media interest in a serious incident, and have a response planned, that is better than being caught on the back foot!
- Review what has happened, and take action to prevent it from happening again. This may involve strengthening internal controls and procedures, or seeking appropriate help from professional advisors.

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Reporting serious incidents: when does the Charity Commission need to know?

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