The Regulator for Charities in England and Wales

Introduction to the Compliance Toolkit

This section introduces new and emerging Commission guidance, the compliance toolkit, entitled “Protecting charities from harm”. The guidance was prompted by one of a number of commitments, given in the Commission’s Counter-terrorism Strategy. A key commitment (F1) was:

to develop a ‘toolkit’, in partnership with the sector, to assist charity trustees and their advisors in undertaking risk assessment to better identify and minimise the risk of terrorist abuse and to disrupt those that seek to exploit charities for terrorist purposes. This will build upon already embedded good practice within the sector and learn from those charities that already have significant experience of managing these risks in their activities.

Charities make a vital contribution to society and the national economy, as well as having a wider impact around the world, addressing many of the underlying causes of disaffection that may lead people to turn to violent extremism or terrorism. The Commission fully recognises the importance of enabling charities, operating within the law, to undertake valuable and essential humanitarian and other work in the UK and overseas. In this context the guidance is intended to assist charities to be aware of legal obligations, and to provide best practice advice.

The toolkit guidance

We know that poor governance and administration, and inadequate risk management measures, are key risk factors for charities in respect of abuse by terrorists. We believe that high standards of governance and accountability will safeguard a charity from a range of potential abuse, including terrorist abuse, and make the organisation less vulnerable as a target for any abuse.

The purpose of the guidance therefore – which clarifies legal requirements rather than introduce new ones – is to assist trustees to protect their charity from a range of types of harm and abuse, and will not have a sole focus on terrorist abuse. The guidance will aim in general to:

  • build greater awareness of the risks charities face from terrorism and other financial crime or abuse;
  • promote the steps that should be taken to minimise the risks and lead to the prevention and early detection of terrorist and other abuse;
  • ensure charities understand their legal obligations in relation to terrorism legislation and charity law;
  • highlight examples of best practice in managing risk and building safeguards;
  • encourage initiatives to enhance charities’ transparency and accountability;
  • add value to charities’ work and enhance public understanding of the issues.

We recognise that many charities, including those working overseas in high risk areas, already have good standards in place to minimise the risk from terrorist and other abuse and a great deal of experience of working in complex operating environments. In developing our guidance we are committed to building on our good working relationships with charities to identify how to strengthen existing safeguards and facilitate the identification and sharing of existing good practice.

Scope of the guidance

The scope of the guidance is as follows:

Chapter 1: Charities and Terrorism - Summary (PDF 186kb)

Modules:

Chapter 2: Safeguarding Charity Funds - modules are:

  • Storing and moving funds – the formal banking system; other money transfer systems (Money service bureaux, Hawala); cash; new technologies (e-money, SMS money transfers);
  • The ‘Know Your…’ principles – trustees' responsibilities for due diligence with donors, partners, beneficiaries; monitoring, verification and reporting on end-use of funds;
  • Raising funds; and
  • Fraud and financial crime (including money laundering).

Chapter 3: Safeguarding Charities – People, Property, Reputation – modules may include:

  • Risk – refresher guidance on assessing and managing risk;
  • Reputational risk – association with terrorism;
  • Disputes;
  • Vulnerable beneficiaries – especially safeguarding children;
  • Owning property overseas; and
  • Risk assessment tools and methodologies – examples of sector good practice in different high-risk contexts (country and regional).

Chapter 4: Case study archive (good practice examples from the sector for all chapters) and other sources of help

The “toolkit” is intended to be practical and to include guidance on legal requirements, case studies, checklists, aides-memoire, and example documents. The new guidance complements key existing Commission guidance, such as the The Essential Trustee (CC3) and Hallmarks of an effective charity (CC10).

Future developments

We are committed in due course to analyse and publish key risk factors and vulnerabilities in relation to charities, and produce periodic bulletins for the sector providing information on risks, including risks from terrorism.

We plan to publish the first chapter of the toolkit – Charities and Terrorism – in November 2009; we plan to publish the remaining chapters by March 2010. As sections of the toolkit appear on the website, we will invite charities and others with an interest to send us comment and feedback. We will continue to consult and collaborate with interested charities and other stakeholders to develop the toolkit.

We will also be considering other themes and topics to add to the toolkit in the future where we identify there is a need or demand for further guidance from the Commission.

Contact us

If you have any comments on the above, or if you are able to supply suitable case studies or good practice examples of your charity’s work, or if you are just interested in receiving further information about the toolkit as it develops, please write to the Commission at Charity Commission Direct, PO Box 1227, Liverpool L69 3UG; or email ComplianceOutreach@charitycommission.gsi.gov.uk