Small charities are ‘sleepwalking’ into a risk management crisis, report finds

Small charities from across the UK are ‘sleepwalking’ into a risk management and governance crisis, a new report has revealed.

The report, Under the radar: risk management in small charities, commissioned by PolicyBee from the University of Suffolk, revealed only half of small charities are confident in identifying and tackling risk.

Findings revealed 60 per cent of small charities have never received any risk and governance training, while 87 per cent have just one risk management measure in place.

According to the research, which was undertaken by the University of Suffolk's Institute for Social and Economic Research, almost half of small charities (47%) are only ‘partially’ confident in their capacity to identify and assess risk, while more than half (54%) feel 'less than fully confident' in their ability to manage risk.

The figures shine a light on a significant proportion of small charities in the UK, which have concerns about their ability to spot risks before they happen, and then be able to deal with them.

The statistics follow a heightened focus on charity safeguarding following allegations of poor safeguarding procedures at Oxfam earlier this year.

Despite increased regulation around poor safeguarding, 64 per cent of respondents from small charities cite a lack of time and a lack of funds (54%) as the major barriers for putting any risk measures in place. Lack of expertise was also highlighted as an issue.

“At a time when the charities sector as a whole is under increasing scrutiny, the lack of funding and resources among small charities is leading to shortfalls in risk management. This puts many in danger of sleepwalking into a governance and compliance crisis,” PolicyBee spokesperson, Dominque Fell-Clark said.

“While some organisations may be fortunate enough to have experienced trustees, many will not, leaving them poorly equipped to identify and deploy the measures required to protect both the individuals within an organisation and the organisation itself.”

Further findings from the report revealed only 8 per cent of small charities have a risk management register in place, despite the Charity Commission’s recommendation for all charities to adopt a statement, regardless of annual income.

University of Suffolk principal investigator, Dr Olumide Adisa said the case for small charities “deserves special consideration” because of the nature of the services they provide to local communities on “shoestring budgets”.

“Understanding how small charities identify, assess and mitigate risks can make a real difference to their longevity and sustainability as it highlights the extent to which different types of risk are dealt with in these organisations and the barriers that remain,” she said.

“This research has confirmed our suspicions that lack of funding and resources limit the ability of small charities to put suitable risk management measures in place, demonstrating an urgent need to shore up support around risk management for these organisations.”

Following the research, PolicyBee has today launched an online charity and community help hub to point charities in the direction of useful information with regards to strengthening risk management.

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