The irony of the Charity Commission “Regulatory alert to charities – safeguarding” issued 19 December 2017 and the recent high profile Presidents Club and Oxfam scandals have not been lost on us.
Reputational risk should not be underestimated by charities as years of hard work and impact can be wiped out by one indiscretion.
The events in each situation were very different but the impact has been the same, the loss of credibility in the public’s eye.
President’s Club was a charitable trust whose Trustees held a fundraising event that was subsequently exposed as exploiting young women. The trust itself has ceased activity following this case and Donee’s have been left in a situation where they need to make a judgement as to whether or not to return these monies. Ordinarily it would be unlikely a Donee would ever be aware of such circumstances about the funds they had received; but once they are they need to weigh up what is in the best interest and the needs of their charity.
Oxfam’s issue is different in that it was Employees / volunteers that were exploiting sex workers in a country they were sending aid to, so it is their representatives rather than the Trustees who have brought the charity into disrepute in the public eye. There has been public outrage reported in the media; a fall in donations and support; and public resignation of high profile Trustees. This in itself is disappointing as these Trustees are focusing in limiting their own exposure rather than working with the charity to investigate what has happened, improve safeguards to prevent this occurring again and generally “weathering the storm”.
Interestingly since the news broke an additional 26 charities have made a further 80 reports of safeguarding breaches.
Other news the team at Dafferns will be monitoring over the coming months is the exposure draft on the changes to the Charity SORP which follows hot on the heels of the Financial Reporting Council’s triennial review of FRS102. We will be working to keep you up to date on how any changes will impact on your Financial Statements.