Over the past two years, we have seen an increasing number of GDPR claims being made alleging that an individual’s data protection rights have been breached.
Earlier this year, the Charity Commission published its inquiry report into Oxfam GB, following allegations about events in Haiti in 2010 involving its staff members. The purpose of the inquiry was to "examine the charity’s governance, including leadership and culture of safeguarding matters, and their management, policies and procedures."
An inquiry is usually a fact-finding exercise that draws conclusions on what happened and highlights lessons to learn for the future to stop similar incidents happening. By reviewing and putting preventative measures in place, an inquiry should ideally instil public confidence in charities and serve justice to all affected.
Following the report’s publication, the Charity Commission faced criticism for taking an aggressive and prosecutorial approach to the inquiry, which took place amid a backdrop of intense media scrutiny into Oxfam and the wider charity sector and the Commission itself. The Commission drew conclusions of ‘mismanagement’, an as-yet-undefined term which is inconsistent with the evidence and narrative presented in the report. Rather, these conclusions appear to have been fuelled by the high-profile context in which the inquiry was conducted.
In her foreword to the Report, Baroness Stowell, Chair of the Charity Commission commented:
“Injustices are not the exclusive preserve of the unjust: they can be presided over by people who are in all other respects well-meaning and decent... Sound processes and systems in charities are crucial to prevent this, but still more important are the people, the attitude and behaviours they display, and the culture they promote.”
This comment summarises how the report moves the goalposts and blurs the lines concerning the expectations of trustees. The regulator assures trustees in its Essential Trustee guidance that they “are volunteers who sometimes make honest mistakes. Trustees are not expected to be perfect – they are expected to do their best to comply with their duties. Charity law generally protects trustees who have acted honestly and reasonably”.
The report, however, through its narrative and hastily drawn conclusions, suggests that the Commission will hold trustees to a much higher standard; one that requires the Commission, in its own words, to be “completely satisfied” of their actions and decisions.
Trustees often ask for a prescriptive checklist of actions to ensure they meet the regulator’s required standards, particularly regarding safeguarding or managing conflicts of interest. The Commission does not provide a checklist and nor should it. Trustees must be able to exercise their discretion within the confines of general legal principles and the context of their charity. However, it is not difficult to see why trustees want more prescriptive guidance from the Commission when we see the conclusions that are drawn by the same regulator when things go wrong. The following are some key steps trustees can take to reduce the risk of regulatory action or to mitigate its effects if it does happen.
- A charity’s policies and procedures are its internal checklist and, although they are not legally required documents, they demonstrate to the public and the regulator that the trustees are meeting their legal and fiduciary duties. Policies and procedures should be checked against the Commission’s guidance on the particular topic to ensure they meet the Commission's requirements.
- Have a programme for auditing whether policies and procedures are being followed in practice and ensuring they are fit for purpose. The outcome of audits, including any changes made as a result, should be captured clearly.
- Record decisions clearly; take clear minutes and save them where they can be accessed in the future. Taking lessons from the inquiry, where trustees are required to make difficult decisions that could be controversial or high-risk, it is important to record the information on which the decision was made and the risk analysis.
- Carry out regular risk reviews and risk assessments of the charity. This will alert the charity to issues but also demonstrates an attitude of care and foresight.
- Ensure the charity has trustee indemnity insurance in place. This gives an added layer of protection to trustees on top of that already afforded to trustees of incorporated organisations.
For charities finding themselves subject to an inquiry, it is important to read the Commission’s summary carefully before publication and challenge inaccuracies, errors, and unfair phraseology. Trustees have a duty to protect the charity’s reputation and this continues throughout an inquiry. There will almost always be a context to the situation that is under investigation and it is important that trustees explain that context and the environment the charity operates in to the Commission.
Trustees that are lax in meeting their legal and fiduciary duties are ultimately putting their charities at risk. However, as we have seen, things can go wrong even when trustees are “well-meaning and decent”. In an age of changing regulatory goal posts, trustees should take steps to demonstrate a mature and consistent approach to governance and regulation.
For more information
For further advice on charity governance, please contact Safa Murad or your usual contact at ACS.
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