COVID-19 and charities: Serious incident reporting – New Charity Commission guidance published
On 3 June 2020, the Charity Commission published supplementary guidance on serious incident reporting during the coronavirus pandemic, together with COVID-19 specific examples of when to report/not to report serious incidents.
The Commission’s main serious incident reporting guidance remains in place, but is now supplemented by brief additional guidance in recognition of the fact that the pandemic is giving rise to challenges and scenarios that were not envisaged when the main guidance was published.
The Commission emphasises that it is still important that trustees exercise their judgment in deciding whether an incident is ‘significant’ in the context of their charity and that incidents continue to be reported on a timely basis, which the Commission notes will help them gain a better understanding of the risks facing the sector and to provide advice and guidance to charities where required.
Charities should also be aware of the Commission’s Coronavirus (COVID-19) guidance for the charity sector which, although still dated as 7 April 2020, is being updated (eg it has been updated to include a link to the new serious incident reporting guidance).
The gist of the new supplementary guidance is that it is not so much the incident itself (eg having to close premises, a sudden and significant drop in fundraising income, a decision to furlough staff, receiving a scam email linked to the pandemic) that needs to be significant, but rather the impact on the charity (eg not being able to provide vital services, facing insolvency, being conned into making a payment).
The additional guidance notes ‘some key things for trustees to consider’:
- as noted above, having to take action to meet government rules, such as closing premises, should not be considered to be a significant incident in itself. It is the impact of this action on the charity that is key to determining if this should be reported;
- the Commission usually expects charities to report any financial losses that do not involve a crime where they exceed either £25,000 or 20% of the charity’s income. Importantly, however, these thresholds do not apply when considering financial losses that are related to the pandemic. The Commission says that, in respect of the pandemic, trustees should focus on the significance of the impact of any losses rather than the amount;
- trustees may still delegate to others, such as staff members, the responsibility for deciding which incidents should be reported to the Commission. However, such decisions should be reported back to the trustees, who remain ultimately responsible for them;
- the reporting process, using the online form, remains the same. The form should be submitted as soon as is reasonably possible after the incident or when the charity becomes aware that a significant harm or loss is highly likely. The Commission also reminds trustees to use the form to tell it about what the charity is doing about the incident – this is important because it helps the Commission judge whether it is satisfied that the charity is dealing with the incident appropriately, or whether the Commission needs to step in. If the trustees do not explain how they are addressing the situation, the Commission is much more likely to feel that it has a regulatory role; and
- where trustees consider reporting an incident but decide not to report it, the Commission says that they ‘should keep a brief record of their decision and the reasons for it’.
When deciding how to respond to the reports, the Commission says that it will continue to prioritise those that indicate individuals are at risk or that there is a risk of serious harm to a charity’s work. As indicated in the penultimate bullet point above, the Commission will also prioritise reports where it identifies that trustees require advice and guidance to help them to deal with an incident.
The Commission’s latest guidance is welcome, in particular in offering examples specific to the pandemic. The Commission appears to have made a real attempt to offer clear guidance over whether a pandemic-related incident is reportable or not.
For example, where a charity has lost a substantial portion of its income during the pandemic (eg due to needing to cancel fundraising events), the message from the Commission’s new examples is that the charity need not report unless, as a result of that loss, the charity is:
- unable to deliver vital services to at risk beneficiaries; and/or
- insolvent and/or forced to close permanently; or
- highly likely to be insolvent and/or forced to close permanently within the next 12 months.
Of course, many charities will already have reported such incidents, but it is still helpful to have more clarity as the pandemic develops. As the Commission’s guidance notes, however, it is important that trustees who decide not to report an incident in reliance upon this guidance record their decision, and the reason for it, carefully, in case they are later asked to explain or justify that decision.
Please refer to our COVID-19 Hub for other information, insights and FAQs or get in touch with your usual BDB Pitmans contact if you would like to review any points further.