International UK charities are now reporting more risks associated with safeguarding and politics, according to new research by the specialist charities team at haysmacintyre. This follows a wave of high-profile, negative media attention putting some of the biggest names in the sector under the spotlight.
The research analysed the annual reports and accounts of 180 international UK charities with a total income of £6.2bn and suggests that high-profile cases around spending, safeguarding and fundraising, as well as economic and political uncertainty, are causing an increasingly difficult environment for many in the sector. This has led many organisations to reassess the primary areas of risk for their charities.
More charities are citing government policy and the political climate as a risk – now one in five (20%), up from 9% in 2018. This could include issues ranging from the attitude of government donors towards international aid to abiding with local laws and regulations.
Surprisingly, only 15% of charities cited Brexit as a risk, a modest increase from 2018, when it was 11%. The likely impact of Brexit is unknown, and this has made a significant contribution to the political uncertainty charities are experiencing.
The most commonly reported risk was in relation to future funding and fundraising. However, this has fallen from 60% of charities in 2018 to 58% in 2019, which is surprising given the level of uncertainty in the global economy. Brexit also poses a financial threat to those who receive EU funding.
More than one in four (28%) charities reported safeguarding as one of their principal risks, compared to only 8% last year. This dramatic increase is most likely due to media attention surrounding high-profile cases and increased awareness in the sector.
When the unacceptable behaviour by some Oxfam staff in Haiti in 2011 was made public in 2018, it was revealed that the charity encouraged a culture of secrecy and staff were instructed not to talk about safeguarding issues. The research by haysmacintyre suggests charities are becoming more open.
Steve Harper, Charities Director at haysmacintyre, said:
“Our research shows that international UK charities are operating in a challenging and difficult environment and trustees have a significant number of risks to prioritise and manage.
“The current challenging media environment has led to increased scrutiny of organisations and charities are learning from the experience of others. There is an increased willingness to acknowledge that safeguarding is a risk area and to talk about it publicly. Organisations are also being more open about the risks they face due to the politics of the local areas they operate in.”
Reflecting on the recent media story about RNLI spending less than 2% of its total annual expenditure on international drowning prevention activity, Steve Harper added:
“It is important that charities are on the front foot when communicating the range of their activities. One of the challenges they face is the difference in perception between what some charities do and what they actually do, even when there is transparency in the annual report about the full range of activities.
“The annual report is a key tool for showing what activities have taken place and how these relate to achieving their objectives. It is also an opportunity to articulate the organisation’s vision for the future. Charities must ensure they have a clear story to tell about their finances and their approach to risk management.”
Trustees have legal responsibility for the running of charities and the time that they give, often voluntarily, forms the backbone of the charity sector. However, there is a risk they do not always have the right mix of professional expertise required to oversee a large global organisation.
According to haysmacintyre, there is a recognition amongst charities that trustees need to professionalise and ensure they have the right training and experience. haysmacintyre’s trustee training programme autumn seminar has received over 85% more bookings than in 2018, with the October event at capacity.
To support boards in their governance role, haysmacintyre has produced a guide as part of its ‘Questions to Ask’ series covering some of the initial questions that trustees should ask to aid risk management. This is available to download at https://www.haysmacintyre.com.