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Charity Commission issues regulatory alert to large service-delivery charities

26 Jun 2020 News

The Charity Commission has written to hundreds of charities warning them about the risks of weak governance.

The regulator’s warning came on the same day it published an inquiry report into the Royal National Institute for the Blind (RNIB), which criticised “dysfunction in leadership and governance over many years” at the charity.

The RNIB has apologised for its failings.

The alert was sent to 600 of the country’s largest charities and published online. It is aimed at those which have an income over £9m and a complex governance and management structure, and which are service-providers with frontline staff that directly serve and interact with beneficiaries, some of whom may be vulnerable. 

Helen Stephenson, chief executive of the Charity Commission, urged trustees not to “ignore the potential impact” of these incidents on trust and support for the sector as a whole.

Advice

The alert makes a series of recommendations to help trustees “avoid potential harm to people, or to your charity’s finances or reputation”.

This includes maintaining a strategy for regular communication with senior staff, identifying and managing risk, reviewing governance and management committees to ensure they provided the relevant skills and oversight, and putting in place transparent and effective systems for handling complaints.

The alert also contains advice for charity chief executives, including having systems to report “significant incidents” to the board and monitoring contracts with suppliers to make sure the charity is confident about how third parties will carry out their work.

Charity Commission: Governance failures ‘have impacted the sector as a whole’

In an accompanying letter, Stephenson says: “Over the past few years, we have seen grave governance failings in some household name charities. These failings have resulted in serious incidents which have put people at risk of harm and exposed the charities in question to financial and reputational damage.

“These cases have also impacted the sector as a whole.”

She adds: “We cannot ignore the potential impact of these failings on public trust and on the support on which charity relies.”

Stephenson also writes: “I know that this is a very difficult time, both for the country and for the sector, and I am mindful of the significant demands being on placed on those running charities.

“But irrespective of the current context, the matters raised through our inquiries are extremely important, and need to be raised with you now.”

Follow up

The Commission has said it will follow up its warnings with a sample of large charities later in the year, to check what measures have been put in place to manage these risks.

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