Reporting Serious Incidents: An Overview

On 17 October 2018, the Charity Commission published changes to its guidance on serious incidents, how to spot them and when to report them. In light of this, now is as good a time as ever to remind ourselves of the serious incidents’ reporting regime. This article is intended to provide a brief overview of the regime and the steps that charities should take.

The Commission’s changes came about following its analysis of the safeguarding reports received between 1 February and 31 May 2018. The analysis revealed shortfalls in the regime, or rather trustees’ understanding of the regime, but a significant concern was the extent to which a number of serious incidents go unreported. In this regard, only 1.5% of registered charities have submitted any kind of serious incident report since 2014. Michelle Russell, director of investigations at the Charity Commission, expressed the view that charities that don’t report serious incidents are considered riskier than those that do.

What is a serious incident?

The guidance describes a serious incident as an adverse event, whether actual or alleged, which results in or risks significant:

• Harm to the charity’s beneficiaries, staff, volunteers or others who come into contact with the charity through its work;

• Loss of charity money or assets;

• Damage to charity property; and/or

• Harm to the charity’s work or reputation.

The Commission’s guidance sets out the types of serious incident that they expect charities to report and other authorities or agencies that may be involved. The main categories of reportable incidents are:

• Protecting people and safeguarding incidents;

• Financial crimes (fraud, theft, cyber-crime and money laundering);

• Large donations from an unknown or unverifiable source;

• Links to terrorism or extremism; and

• Other significant incidents, such as financial loss, insolvency, significant data breaches/losses or incidents involving partners that materially affect the charity.

The Commission’s guidance contains detailed information about dealing with safeguarding incidents. Failure to properly manage safeguarding risks is a serious regulatory concern for the Commission and may amount to misconduct. Protecting people should be a priority for all charities and any shortfalls in this regard can seriously damage public trust and confidence in charities and the sector generally.

The responsibility to report

The responsibility to report serious incidents rests with the charity trustees collectively. The task of doing so may be delegated to another person, such as the chief executive or professional advisers. However, it is important that any developments are always communicated to the trustees so that they can make further decisions as appropriate.

Where a serious incident involves a criminal act (whether actual or alleged) it should also be reported to the police. It may also need to be reported to the local authority or other regulators or agencies (depending on the charity’s activities and the requirements of each regulator or agency) and grant providers.

How to report

Where a serious incident takes place, immediate action should be taken to:

• Prevent or minimise any further harm, loss or damage;

• Report it to the Charity Commission as a serious incident (RSI@charitycommission.gsi.gov.uk); and

• Report it to the police where a crime is suspected and/or other relevant regulators/agencies as required.

The report to the Commission should set out exactly what happened and what steps have been taken to deal with the incident, including any measures that will be implemented to ensure a similar incident does not happen again.

It is also necessary to plan what to say to the charity’s staff, volunteers, the public, the media and other stakeholders, such as funders. It may be sensible to prepare a draft press release so that any communication with the media is consistent.

The charity should review what happened in order to prevent it from happening again. Any review will depend on the nature of the incident but it may be necessary to carry out an internal investigation and to obtain professional advice. At the very least, internal controls and procedures should be reviewed and updated and the Commission should be kept updated throughout.

The Commission will consider the report and verify the details. Any follow-on action may include providing regulatory advice and exercising its legal powers to protect the charity and/or its beneficiaries. It will likely require further updates and will monitor the trustees’ progress in dealing with the incident and its aftermath. It is vital that the trustees cooperate with the Commission throughout.

Declaration in the annual return

All charities, regardless of size or income, should report serious incidents to the Commission promptly.

If a charity’s income is over £25,000, the trustees must sign a declaration in the annual return confirming that there were no serious incidents during the previous financial year that should have been reported to the Commission but were not. Until all serious incidents have been reported, the trustees will not be able to make this declaration, or complete the annual return.

Conclusion

Charity trustees should view serious incident reporting as responsible management of a problem, rather than a sign the charity has failed. Unfortunately, serious incidents are a part of a charity’s life and not necessarily always a sign that the trustees have done something wrong. However, reporting serious incidents is a sign that trustees have identified the issues and are taking appropriate action to deal with them.