Haysmacintyre and Hempsons have recently released their third Hospice and Care Benchmarking Report. This report is compiled from responses to a series of questions covering structure, governance arrangements, risk management, financial monitoring and CQC regulations, as well as our own observations arising from the results of the survey and our combined knowledge of the sector.
The report submissions and drafting all took place prior to the current Covid-19 pandemic reaching its peak, although a number of the themes and recommendations in the report remain valid and arguably are more important in today’s more uncertain world. Funding for the sector is obviously the key consideration and given the impact of coronavirus on care staff and the difficulty recruiting in the sector, new challenges continue to emerge and will need to be tracked carefully from a financial and operational perspective.
The top recommendations from this report are summarised below:
1) Governance – To keep under regular review the sub-committee structure in order to ensure that it remains fit for purpose and relevant. In the current environment, additional committees may well be set up. It is key to ensure that they have proper terms of reference and clear delegated authority where necessary.
The Charity Governance code offers a really good summary of governance procedures and we would encourage all charities to read the guidance and adopt as many of the principles as they are able to. It appears there are still organisations who are not referring to it in their annual reports, even though the direction of travel was to adopt or explain.
2) Clinical governance – A number of respondents to the survey did not have a specific clinical governance committee. Given the increased focus and risk in this area, we would always recommend that such a committee is in place with a designated lead to manage and report on the day to day, or that it is clearly delegated to a committee to take the lead in this area.
3) Reserves policies – Lots has been written in this area, and it is unfortunate that many will be suffering financial hardship in times like this. Now it is more critical than ever to ensure that your reserves policy is relevant, meets the needs of the business and links with your overarching charity strategy, and particularly to any fundraising appeals. There are various articles and webinars on going concern in the current climate and I would encourage all organisations to ensure that they are looking carefully at future financial modelling, not just from a reserves position but also to assist in decision-making and helping to evidence their ability to continue as a going concern.
4) IT and data security – Given that care charities will hold sensitive data on residents, donors and other employees, it is vital to have robust IT security and policies in order to support the business and to protect both your organisation and the people that work in it. We have seen an increase in attacks, and as hackers become more sophisticated, they will turn to other means to try and exploit organisations. Ensuring that there is an internal lead for data protection who is suitably trained will help to mitigate these risks.
5) Tax and trading subsidiaries – This is an area to keep under constant review. Ensure that you have an appropriate service-level agreement in place for services provided to the subsidiary (or indeed any other external organisation), and that any transactions are dealt with on an arms length basis as far as possible. It should be treated as any other third-party relationship. HMRC is particularly interested in these arrangements at the moment and they can have VAT consequences depending on the detail of the agreement itself. Speak to your advisers before finalising any agreements. More information on trading subsidiaries and Gift Aid can be found here.
6) Self-employed status – Whilst the government is being lobbied to relax the IR35 rules, and we now know that the implementation has been deferred, self-employed status is still an area where charities in this sector can face pressure. The onus is on you as the engager to ensure that you are comfortable with the status of anyone you engage. If in doubt, place on payroll, although you then have other employment considerations to take into account. Again, this is an area that HMRC is very interested in. The best advice is to document your considerations to evidence your due diligence for every individual you engage off payroll.
The full report can be found at: https://bit.ly/2T5te2M
Richard Weaver is partner and head of charities and not-for-profit at haysmacintyre