“Damn the torpedoes, full steam ahead.” The American rear admiral – who probably did not in fact use these exact words popularly attributed to him – took a lucky gamble in 1864 during the American Civil War and successfully navigated the torpedo-strewn waters of Mobile Bay. But this approach would not generally be recommended as a way to run a charity.
In issuing a regulatory alert to recently registered military charities, the Charity Commission did not quite accuse those charities of such a cavalier strategy, but it did find evidence of poor practice and management in this sector.
Undermining the undoubted benefit provided by these charities were examples of persistent governance failings, leading the Commission to conclude that a targeted form of alert was warranted, to remind charities of their legal duties and obligations.
21st century conflicts in Iraq and Afghanistan have raised the profile of veterans’ needs and, deservedly, driven the public desire to support them. 187 new military charities have been registered since 2007 and the Commission realised that its caseworkers were handling compliance issues within this group, plus it had become increasingly aware of media reports citing concerns about their practices, specifically regarding fundraising and safeguarding.
A proactive review of a sample of 21 of such charities confirmed Commission suspicions that there were various issues common to them. Public trust and confidence was at risk, with potentially drastic consequences for the vital work of these charities. Trustees are responsible for all aspects of the governance and management of their charities, including compliance with legal requirements, and the Commission’s alert sought to remind military charity trustees of their obligations and to highlight specific areas in need of attention.
For those charities engaged in fundraising, there are myriad regulations with which to comply and potentially serious consequences – including possible irreparable reputational damage – for failing to do so. Already extensive regulations have been bolstered by the introduction of the Charities (Protection and Social Investment) Act 2016.
The Code of Fundraising Practice, which is overseen by the Fundraising Regulator, sets out the standards expected of charitable fundraising organisations across the UK. Guidance is available from the Regulator, as well as from the Commission, and, as trustees are responsible for oversight of compliance with the requirements, they should be familiar with them.
These requirements include particular rules surrounding engagement with a professional fundraiser or a commercial partner, for example that such relationships must be governed by a written, legally compliant agreement between the charity and the professional fundraiser or commercial partner. The rules are designed to ensure transparency and protection for donors, and charities must avoid unscrupulous fundraisers seeking to circumvent the rules.
Trustees’ duty to safeguard beneficiaries, by acting only in their best interests and protecting them from harm, applies to all charities. Those working to support veterans, however, must consider the vulnerability of their beneficiaries and deploy safeguarding policies and procedures accordingly.
Vulnerability can have many causes, including physical or mental health factors, and, although appearances may deceive, veterans suffering from depression or post-traumatic stress disorder are inevitably vulnerable. Charities must recognise this and protect them by identifying their needs and implementing safer recruitment procedures; Disclosure and Barring Service checks; safeguarding training; and suitable reporting and monitoring systems.
The Commission detected other recurring themes. Trustees are detailed to ensure the responsible and efficient stewardship of a charity’s resources: essential to the fulfilment of this duty is effective financial management. This was lacking in several military charities considered by the Commission. Rigorous internal financial controls and procedures, incorporating appropriate checks and balances, help to protect against losses arising from, for example, breaches of procedure, theft, fraud, human error and flawed decisions.
Trustees must decide which controls are appropriate for their charity and ensure that their application is monitored. The controls required vary depending on the size and complexity of the charity and the nature of its activities, but the Commission expects trustees to review its extensive guidance in this area and to devise suitable systems based on the principles espoused in it.
Correct financial management should also prevent unauthorised financial benefits for trustees and charities need to remain vigilant to ensure that these are avoided. Robust policies should also be adopted to prevent other forms of unauthorised benefits to trustees, and to identify and manage conflicts of interest. The latter are not unusual in charities, as individuals’ professional and personal connections often make them attractive trustees, and need not prove problematic, provided they are spotted and properly handled.
Given the high public profile of many military charities and their regular engagement with the public, for example in connection with the provision of services or fundraising, the Commission was concerned to find that many of the charities scrutinised by them lacked adequate complaints procedures.
Transparency and accountability are vital to the maintenance of a charity’s good reputation, which in turn is fundamental to a charity’s survival and its continued ability to undertake charitable activities and provide benefit. The public must be able to locate and use a suitable complaints procedure, and adherence by the charity to such a procedure should enable it to address and resolve such complaints as are raised, thereby preserving its reputation.
The Commission emphasised the extent to which well-intentioned military charities are engaged in valuable work, producing positive outcomes for veterans. Muddle, mistake or a lack of awareness have led, in many cases, to governance failings and inadequate procedures which expose charities – and therefore beneficiaries – to unnecessary risk.
The primary duty of trustees is to act in the best interests of their charity and affected charities are urged to address the Commission’s concerns. Guidance is available from the Commission and the Fundraising Regulator, as well as through legal support. A framework for good governance is described in the recently revised Charity Governance Code, a review of which is a sensible place to start.
Cobseo – the Confederation of Service Charities – is working with the Commission in order to improve the practices of military charities and protect and enhance their vital work to support the Armed Forces family.
The full article can be read on The Charities Management Website by clicking here