The Charity Commission’s guidance on serious incident reporting is now familiar, but it was not designed to deal with the specific challenges created by the coronavirus pandemic. The Commission has acknowledged this and, on 3 June, released some bespoke guidance on coronavirus-related incidents.
Like the main serious incident guidance, it comprises a covering sheet with a list of key areas for trustees to consider and a table of extra examples, which explains when different sorts of incident are and are not reportable. The main points to note are:
- Existing guidance – The special guidance supplements the Commission’s main guidance on serious incident reporting and should be read alongside it. However, in practice, the extra examples table is very clear about what charities need to report.
- General approach – The special guidance takes an impact-based approach, so with a few exceptions, charities are expected to consider the overall significance and effect of what has happened, rather than black and white questions about whether the type of incident is automatically reportable.
- Financial loss thresholds – The usual requirement to report losses of £25K or 20 per cent of income does not apply. Instead, charities should focus on the impact of the loss on the basis described below. If the loss is not related to the pandemic, the normal guidance and reporting thresholds stand, but, at the moment, we expect those circumstances to be rare.
- Lockdown measures – The following incidents: closure of premises/cessation of operations (whether mandatory or optional); loss of income; or use of the furlough scheme, are only reportable if they result in the charity being:
- unable to deliver vital services to at risk beneficiaries;
- insolvent or forced to close permanently; or
- highly likely to be insolvent and/or forced to close permanently within the next 12 months.
- Outbreaks of the virus – Isolated infections, whether suspected or actual, are not reportable and wider coronavirus outbreaks among charity personnel or beneficiaries are only reportable if the charity:
- is still operating; and
- becomes unable to deliver vital services to at risk beneficiaries or continue its normal operations because of the infections.
- Automatically reportable incidents – The following incidents are automatically reportable: virus-related scams and frauds to which the charity has fallen victim (unsuccessful attempts are not reportable); HMRC investigating the charity for abuse of the furlough scheme; police investigating the charity for a breach of the lockdown; allegations of abuse of beneficiaries by charity staff or volunteers; and members of staff alleging they have suffered significant harm due to working conditions during the pandemic.
- Reporting – Charities making a coronavirus-related report should use the normal online form. The special guidance indicates that trustees may delegate the decision about whether to make a report to members of staff and others, provided their decision is reported to the trustees. However, as the special guidance sets a high bar for reporting, in practice we would generally expect the board to be involved in discussions about whether any of the reportable incidents have occurred – not because of the reporting regime, but because of their overall gravity and the scale of their impact on the charity. Exceptions to that might include minor scams and fraud and allegations of abuse where the charity has well-rehearsed policies in place for delegating decisions about whether to make reports related to safeguarding to certain members of the board or committees. Charities should also bear in mind that the online reporting form asks for confirmation of how many trustees know about the incident at the time the report is made.
The special guidance is concise, focussed and helpful. It is a welcome clarification of the earlier and more general comments made in the Commission’s April guidance on managing coronavirus-related financial difficulties and we think charities will find it reassuring. The Commission’s wider coronavirus guidance for the charity-sector, has also been updated to refer to the special guidance. If readers are interested in finding out more about how to address some of the situations which need to be reported to the Commission, for example, by releasing permanent endowment or borrowing, our coronavirus Q&A contains more information.
If you require further information about anything covered in this briefing, please contact Hannah Whyatt, or your usual contact at the firm on +44 (0)20 3375 7000.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, June 2020