Are small charities sleepwalking into a governance and risk management crisis?



category Charities

To School of Risk home
online

 

Toughing it out

Thousands of small charities have it pretty tough. A squeeze on the public purse, council cuts and less loose change in people’s pockets has meant a stranglehold on funding and resources for many.

And all at a time when society needs small charities more than ever: to fill the gaps in frontline services and to help bind our increasingly fragmented communities together.

All of which got us thinking. When relied upon to do so much, and often with so little…who do small charities go to for help and advice? What worries them? And how do they manage their governance and compliance obligations?

The thing is, all charities face risks, whether that be funding, trustee issues or falling short of The Charity Commission’s expectations. And big or small, it’s a fact that charities are expected to follow the guidelines and maintain certain standards.

That can be challenging when resources are stretched. So, we decided to call on the experts at The University of Suffolk to help us find out just how well small charities are managing their risk, governance and compliance issues. And what we might be able to do to help.

 

Tricky terrain

The picture we discovered is one of small charities short on time and cash, lacking proper risk management and governance training, and not always clear on where to go for advice.

And that’s a worry when so many people are so reliant on small charities and what they do for their communities. If small charities get their risk management badly wrong, there’s a danger they’ll simply cease to operate.

So, could small charities be sleepwalking into a risk management and governance crisis? Here’s what our survey of 330 small charity founders, directors, CEOs, trustees, employees and volunteers across the UK revealed.

 

Biggest concerns

It’s no big surprise that money tops the list of worries – specifically loss of funding (70%) and reduced income and revenue streams (74%). Lack of cash also looms large in other questions we asked: it’s cited as the biggest barrier (57%) to respondents seeking risk and governance training.

People are another source of worry. Two-thirds (66%) say they view recruitment of trustees and volunteers as their next most significant risk – highlighting the difficulties small charities can have bringing the right people on board. Managing the risks that go hand-in-hand with staff and volunteers are a concern for 44%.

 

Risk management

Worryingly, one in ten small charities either doesn’t have, or isn’t sure if they have any risk management measures in place. That can leave them very vulnerable should things go wrong.

Also of concern is the fact that even when small charities do have risk management measures in place, the average number is just one. Three was the highest number across all our respondents, suggesting a lack of proper strategy. Respondents blame lack of time (64%), lack of funds (52%) and lack of expertise (39%).

Confidence in risk management is also shaky, with almost half (47%) saying they are only ‘somewhat confident’ or less so in their organisation’s ability to identify and assess risk. The same applies when it comes to managing those risks: 54% feel only ‘somewhat’ or less confident that their organisation is well placed to deal with them.

 

Training

This lack of confidence could be linked to training in risk management and governance being sparse among respondents. Nearly two-thirds (62%) report they have had none at all – most commonly due to a shortage of funds (57%), being short on time (50%), or not knowing where to access training.

All of which begs the question: when people working for small charities come up against a risk or governance issue and feel ill-prepared to deal with it, where do they go for help? If they lack the proper training and can’t solve a problem for themselves, who advises them?

 

Help & advice

Most (55%) say they rely on their board of trustees to supply the expertise, or their peers and colleagues (46%). Of course, that’s all very well if your charity has a board, and the trustees who sit on it are suitably knowledgeable. But what about those who work alone or in isolation? What about the people who have no one to reliably turn to for help and support?

Well, the help is out there. There’s a wealth of information on risk management, governance and other small charity matters on the web. Plus, there’s governing bodies like The Charity Commission and the Fundraising Regulator. And there’s local support networks, such as community foundations and the Council for Voluntary Service (CVSs).

 

Ts & Cs

Having the time or confidence to liaise with these organisations or trawl their websites is another matter. And maybe that’s why take up is generally low. Two-thirds (66%) say they’re ‘not at all’ or ‘not so’ familiar with some of the sector’s main regulators and umbrella organisations*.

Sixty per cent report they’ve consulted the Gov.uk website in the last year, a prime source of advice on charities’ rules and regs. But it’s information provided by local voluntary networks and membership organisations that scores the highest satisfaction rate at 59%.

That’s in the face of only 39% saying they actually make use of their local voluntary networks, with 30% stating they ‘never’ use them. And with small charities citing funding as their biggest worry – and local community foundations providing a major portal for accessing it ­– that seems something of a paradox.

 

Helping hand

It’s clear society badly needs small charities. They fulfil a unique role in helping to glue communities together and successfully plug some of the many gaps left by swingeing cuts to local services. In short, they’re invaluable.

But for small charities to continue doing what they do, they need support. They’re short on funds, resources and time, and they need good advice to help them be the best they can be. They also need help in identifying their risks and making a plan for if those risks turn into problems.

Help is, in fact, ready and waiting. It’s just a matter of knowing how and where to access it easily. To smooth the way, we’ve built a Charity & Community Help Hub that acts as a launch pad, and points you to some of the very best online advice on essential topics like fundraising, good governance, GDPR and health and safety.

We’ll be developing, updating and adding to it on a frequent basis, so make sure to check back regularly. It’s our way of saying ‘thank you’ and doing our own bit to help and support a sector that deserves it.

Download report PDF (4.5 MB)

 

*The Charity Commission, Gov.uk, The Fundraising Regulator, The Information Commissioner’s Office, National Council for Voluntary Organisations (NCVO), UK Community Foundations, Local networks (community foundation, CVS etc)

Share this

More from this category

Do charities need professional indemnity insurance?
Research reveals the UK loves a small charity
Trustees' insurance: why you need it
Buy online in minutes. Less admin, more business!
yay banner image