The Regulator for Charities in England and Wales
(May 2009)
You can also view a colour PDF version of Reporting Serious Incidents - guidance for trustees.
The Charity Commission is the independent regulator of charities in England and Wales. We aim to provide the best possible regulation to increase charities' effectiveness and the public’s confidence and trust in them.
We aim to ensure that our regulation of charities is proportionate and focused on risk. Serious incident reporting is one of our key tools. It ensures that we can provide assistance at the earliest opportunity, targeting our resources where the risks are highest and helping to put charities back on a secure footing where necessary.
This guidance aims to help you determine which incidents are serious and what action you should take. If you have any further concerns or queries, you can contact one of our advisers.
You can find more information on how we assess risk in our Risk and Proportionality Framework for the Commission’s Compliance Work.
Trustees must comply with the legal duties of charity trustees in the administration of a charity. Trustees have a general duty to take reasonable steps to assess and manage risks to their charity’s activities, beneficiaries, property, work or reputation. For further information see our guidance Charities and Risk Management and our publication The Essential Trustee: what you need to know (CC3).
Declaration in Annual Return
Charity law requires trustees to submit, as part of the Annual Return, information specified by the Charity Commission in its regulations. If your charity has an income over £25,000 you must, as part of the Annual Return, sign a declaration that there are no serious incidents or other matters relating to your charity over the previous financial year that you should have brought to our attention but have not. If you are unable to make this declaration then the Annual Return will not be complete and you will have defaulted on your statutory requirement under section 48 of the Charities Act 1993. It is an offence under section 11 of the Charities Act 1993 to provide false or misleading information to the Commission. If you sign the declaration on the Annual Return we will take this as your confirmation that there are no serious incidents you should have told us about.
By reporting serious incidents you show that you are aware of difficulties that have arisen and that you have taken appropriate action. This is very important because safeguarding the assets of the charity and the charity’s beneficiaries are key responsibilities. If a serious incident that has not been reported becomes known to us at a later date, we may consider taking action against the trustees.
Best practice
As a matter of best practice, any serious incident that has resulted or could result in a significant loss of funds or a significant risk to a charity’s property, work, beneficiaries or reputation should be reported to us immediately, not just on completion of the Annual Return. This will enable us to offer you guidance as soon as possible and protect the charity and its beneficiaries.
What is serious or significant?
The following notes outline what is serious or significant.
We have identified several ‘zero tolerance’ issues where the issue itself causes such serious concern that we will always give it our immediate attention. Where such issues arise in charities, we would always regard them as serious incidents that you should report to us. These issues are, in no particular order:
Also, charities above the statutory audit threshold must report on their risk management arrangements in the Annual Return.
In addition to always reporting any zero tolerance issue, we would also normally expect trustees to report an incident if:
Criminal activity
You must inform the police and should also inform us of any suspected criminal activity within or involving the charity as soon as possible after the incident. This includes where an individual may have committed an offence that calls into question their suitability to be involved in or connected to a charity, whether as a trustee, member of staff or volunteer.
What if I have already reported an incident?
If you have already reported it to us, you can make the declaration in the Annual Return. However, if you have already reported a serious incident to the police or another regulator or agency, you should also report it to us.
What if it is just an allegation or suspicion?
You should still report this to us if you have received information that leads you to believe or suspect that a serious incident has happened and you have reasonable grounds for the suspicion. Trustees are responsible for taking appropriate action in response to a suspicion or allegation in order to protect their charity from harm, and we will expect to know what you have done. One of our statutory functions is to identify and investigate apparent misconduct or mismanagement in the administration of charities. We decide our regulatory response, if any, on the basis of evidence.
If you are unsure whether an incident is serious or significant, we recommend you report it to us.
Fraud, theft or significant loss of funds or other property
You should report to us any actual or suspected fraud or theft (or loss due to any other actual or suspected criminal activity) regardless of the scale of funds or value of other property involved.
You should also report to us any significant loss due to other causes, such as fire or having to abandon property, for example in a war zone. As a guide, we would expect you to report any loss of funds or other property with a value of 20% or more of the charity’s income, or £25,000, whichever is the smaller amount. For amounts lower than that, you should decide if they are significant for your charity and should be reported, taking the charity’s income, work and other factors into account. This does not include the value of investment funds lost in the ordinary course of investment business.
Significant sums of money or other property donated to the charity from an unknown or unverified source
This could mean an unusually large one-off donation or a series of smaller donations from a source you cannot identify or check. Donations may take forms other than money, for example, shares or goods.
We would expect you to report any such payment (or payments) totalling £25,000 or more. The risks of accepting a donation from an unknown or unverified source may be greater when the donor attaches specific conditions (for example, to apply the funds through a particular group or organisation). You should be able to verify the source and ultimate destination of charity funds, to comply with your general legal duties (see below). You do not need to report a donation where you know the source or the donation represents the proceeds of a collection.
Our guidance on Charities and Terrorism (OG 96) also advises on donations from unknown sources, or with particular conditions attached, to minimise the risk of charities being used for money laundering.
Legal requirement
Changes in tax law following the Finance Act 2006 section 54 mean that a charity should keep records of substantial donors and transactions with those donors. This is to avoid a tax liability. Trustees’ general legal duties mean that they must act with due diligence in the receipt (and expenditure) of funds.
The charity (including any individual staff, trustees or volunteers) has any known or alleged link to a proscribed (banned) organisation or to terrorist or other unlawful activity
In 2008, the Counter-Terrorism Act amended sections 19 and 22 of the Terrorism Act 2000. These sections relate to the duty to disclose a belief or suspicion that a terrorism offence has been committed when the information comes to your attention through trade, profession, business or employment. This is relevant for trustees of charities, as ‘employment’ has been amended to specifically include voluntary work. If it comes to your attention or you suspect that another trustee, member of staff, volunteer or anyone associated with the charity has any such links, you must immediately inform the police and should also inform us. Included within ‘links’ is making facilitation payments (bribes or inducements) or paying protection money or ransoms to suspected terrorist, criminal or proscribed (banned) organisations.
You can find our policy and approach on charities and terrorism in our Counter-Terrorism Strategy on our website. This explains more about how we handle allegations of charities’ involvement in terrorism, the duties of trustees and the reporting of suspicions.
You can find a list of proscribed organisations on the Home Office website at http://security.homeoffice.gov.uk/legislation/current-legislation/terrorism-act-2000/proscribed-groups
There is a list of entities or people designated under terrorism legislation, with guidance on designation, on the HM Treasury website at
http://www.hm-treasury.gov.uk/fin_sanctions_index.htm
A person disqualified from acting as a trustee has been or is currently acting as a trustee of the charity
How you handle this kind of incident and the two incidents that follow will show whether you have proper systems in place to check the eligibility of trustees and to safeguard children and other vulnerable beneficiaries.
Legal requirement
Some people are disqualified by law from acting as trustees, including anyone described in section 72(1) of the Charities Act 1993. You can obtain more details in our publication CC30 Finding New Trustees – What charities need to know.
It is normally an offence to act as a trustee while disqualified unless we have given a waiver under section 72(4) of the Charities Act 1993 (some special provisions apply to the administration of charitable companies). In addition to the disqualifications above, which apply to all types of charities, the Criminal Justice and Court Services Act 2000 disqualifies certain individuals from holding a range of positions, including trusteeship, in children’s charities. We do not have the authority to give a waiver for this type of disqualification.
There may also be restrictions in the charity’s governing document.
You can find out more on disqualifications and waivers of disqualification in section E of our publication CC30 Finding New Trustees - What charities need to know.
The charity does not have a policy for safeguarding its vulnerable beneficiaries (e.g. children and young people, people with disabilities and older people)
Trustees should have systems in place for safeguarding vulnerable beneficiaries. You can see our guidance on safeguarding children on our website.
We do not administer legislation on safeguarding children and vulnerable adults, but we aim to protect public confidence in the integrity of charities.
The Department for Children, Schools and Families is responsible for government policy on safeguarding children. You can obtain more information at http://www.everychildmatters.gov.uk/
The Department of Health is responsible for government policy on safeguarding vulnerable adults. There is more information at http://www.dh.gov.uk/en/index.htm
The legislation on safeguarding children and vulnerable adults is changing. For the latest information, please visit http://www.everychildmatters.gov.uk/independentsafeguardingauthority/
The charity has no vetting procedure to ensure that a trustee or member of staff is eligible to act in the position he or she is being appointed to
The law does not require charities to ask prospective new trustees to sign a declaration of their eligibility to act but it is best practice to do so. You can see a model declaration on our website.
There are legal restrictions on who can be a trustee. We would have a serious regulatory concern if you failed to put systems in place to vet trustees or to protect vulnerable beneficiaries.
You should ensure that you have suitable vetting procedures for staff and volunteers. These could include CRB checks where appropriate (see information about CRB checks below). In some circumstances we may regard failure to conduct suitable checks as evidence of misconduct, mismanagement or both, in the administration of the charity.
Are CRB checks a legal requirement?
Making a CRB check involves disclosing sensitive, personal information that would normally be confidential, so charities are legally entitled to make checks for certain positions only. But for some specific positions a CRB check is a legal requirement.
Our publication CC30 Finding New Trustees - What charities need to know tells you in section F when CRB checks are legally required.
What should trustees do?
You must make CRB checks if these are legally required. In addition we advise you to make CRB checks if you are legally entitled to do so; this will ensure you fulfil your trustee duties. CRB checks on continuing trustees should be carried out regularly.
You need to consider whether you are legally required or entitled to make CRB checks. The legislation is complex: take professional advice if necessary.
If you do not make CRB checks and vulnerable beneficiaries are put at risk as a result, we will look at whether there was a legal requirement or entitlement to carry out checks. This will help us decide whether or not the charity is being properly managed.
Suspicions, allegations and incidents of abuse or mistreatment of beneficiaries
You should report this if any one or more of the following things occur:-
As well as reporting to us, you should also notify the relevant regulator or statutory agency responsible for dealing with such incidents.
We realise that the sector is diverse and that defining the beneficiaries and people connected to the charity may not be straightforward. If you are not sure whether to report an incident, please contact us.
The charity has been subject to a criminal investigation, or an investigation by another regulator or agency; or sanctions have been imposed or concerns raised by another regulator or agency such as the Health and Safety Executive or Ofsted
You should inform us if the charity has been the subject of any criminal investigation or if another regulator or agency has imposed any formal sanction on it. If you are unsure what ‘concerns’ should be reported to us, you should refer back to the zero tolerance issues as a starting point. Our teams can advise on a case-by-case basis.
Questions we may ask
When you report a serious incident to us, you should provide as much information as possible to help us decide what, if any, action is appropriate. You may not have all the details but please be prepared to answer questions and provide information about the incident. For any incident, it would be helpful to tell us:
You can contact us by letter, or email or call 0845 300 0218 and one of our advisers will help you.
Confidential or sensitive information
We appreciate some of the information provided may be of a sensitive nature and undertake to treat and handle this appropriately and with care. We ask for this information only to fulfil our statutory functions as the regulator of charities.
As a public authority, the Freedom of Information Act applies to us. However, a range of exemptions may apply to this kind of information, for example data protection, commercially sensitive information and information that the law gives a quality of confidentiality. Our ability to share information with other regulators and agencies is also restricted under section 10 of the Charities Act 1993. If the information you provide is particularly sensitive or confidential and this is not likely to be evident to us, you will need to tell us and explain why this is so.
Any personal data that you disclose will be held securely and in accordance with the rules on data protection. We will safeguard personal details, treat them as confidential and only disclose them to someone outside the Commission under the following circumstances where:
We will ensure that any disclosure made for this purpose is proportionate, considers your right to privacy, and is dealt with fairly and lawfully in accordance with the data protection principles of the Data Protection Act.
The Data Protection Act 1998 regulates the use of ‘personal data’, which is essentially any information, however stored, about identifiable living individuals. As a ‘data controller’ under the Act, the Charity Commission must comply with its requirements.
We take a risk-based and proportionate approach to regulation and aim to target our resources and action where the risks are highest and where we can have greatest impact. Our approach to issues of serious concern takes into account the severity of the issue and the degree of risk it poses to the charity and to its assets, beneficiaries, integrity and reputation; as well as the risk to the public and to the reputation of the charity sector in general.
We will immediately assess all serious incident reports objectively to decide the most proportionate and effective response. This means we decide whether we will get further involved with the issue, the level of priority and attention we will give it, and where in the Commission it will be dealt with. This depends on the particular circumstances, the seriousness and scale of the problem, and the available evidence.
We treat each case individually, considering factors that may increase or decrease the risks to the charity. Here are a few examples of the factors we take into account:
We will assess the circumstances of each case using our Risk and Proportionality Framework and we will rapidly decide the most appropriate and proportionate course of action to take. This may involve:
Our officer conducting the evaluation will consider the information provided and use our risk-assessment criteria to decide what further action is appropriate. We cannot say what our action will be for any given issue, as our response will depend on:
Our response may be that:
As a modern regulator, our overall approach focuses on providing support and guidance and promoting best practice as well as ensuring that charities comply with their legal obligations. Where we can, we aim to encourage and support charities to improve their performance by working in partnership with them. Our concern is always to protect the charity and promote public confidence and trust in charities generally.
Still not sure?
If you have any concerns or questions about what to report or how we will handle information you provide, please contact us by letter, or email, or call 0845 300 0218, and one of our advisers will help you.
Send your completed report to:
Charity Commission
PO Box 1329
Liverpool
L69 3DY
For all other enquiries contact us at: Charity Commission Direct