By Richard Burkimsher
Hawsons
THE voluntary aspect of a trusteeship is one of the key principles of such a role. Understandably, trustees are also increasingly expected to adopt a professional approach and to be aware of their legal responsibilities when fulfilling their duties. Trustees are ultimately responsible for everything a charity does and they can be held legally accountable for any decisions they make as trustees.
A recent survey conducted by Third Sector Insight noted that despite being aware of their responsibility for risk management, many trustees have not received any specific management training. It was also made apparent that almost a third of those charities surveyed have no crisis management plan in place. The Charity Commission outlines the six main duties of a trustee:
* Ensuring the charity is carrying out its purpose for the public benefit
* Complying with the charity’s governing document and the law
* Acting in the charity’s best interests
* Managing the charity’s resources responsibly
* Acting with reasonable care and skill
* Ensuring the charity is accountable
Risk management is the process of identifying and assessing risks and deciding how best to deal with them. It is the law that non-company charities with incomes of £500,000 or more must include a risk management statement in their trustees’ annual report (this also includes charities with incomes above £250,000 plus gross assets over £3.26 million). The Charity Commission advises that it is good practice for smaller charities to report on their risk management activities, too. By establishing a strong risk management process from the start and involving trustees, it minimises the chances of something going wrong. To be effective, it is vital that the risk management plan is kept up to date and regularly reviewed.
The risks any charity faces will depend on factors such as its size, nature of funding, and its activities. It is thought, from the survey conducted by Third Sector Insight, that the biggest risk that charities are currently facing is termination of funding from other bodies.
As well as planning for current risks, it is important to identify any emerging risks. Emerging risks may include internet and cyber crime such as hacking or online fraud. This type of risk management requires more abstract thinking in order to fully understand what the next issue or threat could potentially be.
If a charity has a strong risk management plan in order, things can still go wrong. Therefore, it is important that in this situation that a robust crisis management plan is in place to fall back on. A crisis could include a decline in funding and donations as well as damage to reputation due to an unforeseen incident or fraud.
The impact fraud can have on a charity can be significant. It can have a detrimental effect on finances and cause distrust with beneficiaries, donors, funders and the general public. To help ease the impact of such an event, a strong communication and public relations plan is important. This can involve having pre-prepared templates to use for making statements to the press or for your website.
If you would like to discuss any matters raised in this article then please contact Richard Burkimsher on 01604 645600 or by email