Considering charity risk
With all of us facing the realities of what a real economic downturn and recession mean, it is even more important to consider risks facing charities and how some of these issues can be tackled and mitigated in the short term
We all face risks; every organisation of any size has to continuously consider areas of risks it faces. These range from areas like "loss of reputation" to "fraud and corruption" and "failure to comply with regulation" and, significantly, to "failure to grasp opportunities".
Awareness of risk is not enough; you should have a proper plan to tackle the area on a regular basis. There is substantial guidance published by the Charity Commission on this area.
Remember that the trustees must also make a statement about the risk policy of the charity in their annual report.
No longer can charities get away with a bland statement to say that "...the area of risk is considered by the trustees at their meetings and steps taken to mitigate risks..."
I would argue that the two most relevant areas at times like this are:
- Loss of reputation.
- Failure to grasp opportunities.
In many ways they are related and steps can be taken to address these areas together.
Whilst a full blown risk register that is monitored regularly is the best tong term solution, there is always a simple starting point and it does not cost as much, in time or money.
It need not be complicated - nor does it need to be spread across pages and pages. Start off by listing the areas that could cause your charity to lose its reputation (e.g. donations not reaching the charity and this being publicised), and then have a plan of action on how you can take the opportunity to ensure you Maximise your income, and minimise expenditure.
Reza Motazedi - having identified areas of risk, think about preventions and solutions.
If you come up with 20 points, don't despair - it is good enough to start the process.
Having identified areas of interest, think about preventions and solutions. Once this is done, it is important to assign tasks and responsibilities to individuals within the organisation.
Beware not to give too much to the same person - have a wider coverage. More importantly, monitor the progress against the areas on a regular basis.
It is important to bear in mind the guidance available from the Charity Commission when you tackle the area of risk.
Concentrate on major risks that also have a likelihood of happening and. if they did occur, would have a serious impact on the charity.
Risk management is not simply a compliance issue, it is for real, and the same weight should be given to "not taking the opportunities" as is given to preventing "disasters from happening".
Let's consider, for example, the case of taking opportunities. If you are a grant receiving charity, it is important that you establish a system that captures all grants potentially available to your charity
If you miss the opportunity to make sure you know about the grants, then you will have no chance of ever obtaining it.
So this area of making the charity aware of the grant opportunities available to it is key.
The next step is to ensure that not only is a list produced and monitored regularly, but actions are taken to ensure that if there is a way in which the charity can enhance its grant application, then those ways should be followed and its completion fully monitored.
Don't be left behind, make sure your charity explores all the available opportunities, and don't risk being left out