In the light of the Oxfam scandal and other threats, charities need to get a stronger grip of all the issues and risks facing them
Trustees of global charities have many issues and priorities competing for their time and attention, with concerns about future funding impacting on organisations across the sector.
It is likely that some will have started to feel the impact of Brexit, particularly those in receipt of grants from the European Union (EU). For those charities, it is vital that they plan for risks to income streams and take proactive steps to mitigate the risk.
A review of the annual reports of 189 international UK charities found that 77% stated future funding and fundraising as a key challenge. However, only nine per cent mentioned Brexit specifically as a principal risk, which is perplexing given the ongoing uncertainty over the UK’s plans to exit the EU.
It is important to remember that trustees are volunteers, and to support them with their legal responsibility for running their charities they should seek expert advice where it is needed
For international charities, Brexit is not the only global challenge on their plate. Trustees must consider and plan for changes to the political environment in all the countries they operate.
Of course, not all such activities are predictable, and charities may need to respond to changing situations quickly and in a way that protects beneficiaries, staff and the reputation of the charity.
This task is immense, which is why it’s vital that trustees can identify and prioritise risks, and that those risks are then managed at the appropriate levels within the charity.
The recently published report by the Charity Commission into how Oxfam dealt with claims of serious sexual misconduct by its staff in Haiti stated that it appeared Oxfam’s priority was to protect donor relations and avoid donor withdrawal. This should be an alert for all charities to review how they balance their focus on governance and risk management whilst ensuring that they raise the funds needed to ensure the charity continues to be viable.
If a charity has local country offices, they need to consider the risks relevant to that country office at a detailed level. The UK board of trustees needs to be able to take a strategic view and it doesn’t necessarily need to consider every single risk, as it could be overloaded with minor concerns. What is important is that the board knows it’s considering the right things.
Charities must have a robust framework in place so that risks are considered at the right level and significant matters are brought to the attention of the trustees.
There should also be a framework for reporting key upcoming issues to the trustees, and trustees need to make sure there are the right insight and control mechanisms in place. For charities operating overseas, this can include monitoring visits to local offices, reporting from local offices, internal audit, and external audits at local offices if necessary.
It is important to remember that trustees are volunteers, and to support them with their legal responsibility for running their charities they should seek expert advice where it is needed. Auditors and accountants can provide valuable expertise and experience throughout the financial year and not just at year-end when the accounts are being prepared.
No one can predict the future, but what we can do is plan. Through effective risk management and strong governance, trustees can prepare the charity to deal with upcoming challenges including Brexit. In turn, they can safeguard their reputations, protect their staff and continue making a world of difference to their beneficiaries.
Steve Harper is charities director at Haysmacintyre.
