Just over half of UK small charities (54%) lack confidence in their ability to manage risk, while 47% say they are only partially confident in their capacity to identify and assess risk, according to a new report.
The report, Under the radar: risk management in small charities, was commissioned by professional indemnity insurance provider PolicyBee from the Suffolk Institute for Social and Economic Research at the University of Suffolk. It also reveals that one in ten small charities (those with an income under £500,000) say they don’t have or aren’t sure whether they have any risk management measures in place to ensure they achieve their objectives and safeguard funds and assets. The majority (87%) only have one measure in place.
Sixty-four per cent of respondents cited a lack of time, followed by a lack of funds (52%) as the major barriers to putting risk management measures in place, with lack of expertise highlighted by 39%.
In addition, 62% said they had never received risk and governance training, with the biggest hurdles being lack of funding (57%), lack of time (50%) and not knowing where to access training (45%).
The report identifies risk to funding as the outright biggest concern for small charities in the next 12 months whether that be external funding, including grants (70%) or their capacity to generate income streams (74%). The next most pressing risks are their ability to recruit trustees and staff (62%) and then managing the risks associated with them.
However, many small charities are not familiar with the organisations that provide risk and governance advice, according to the report. 60% are not very familiar with seven of the main regulatory bodies and umbrella organisations that support charities in the UK, while nearly a third had never contacted their local community foundation.
PolicyBee’s Dominique Fell-Clark, who is also founder of The Women & Girls Fund, said:
“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.
“The requirement for good governance applies equally to charities of all sizes but external advice can be difficult to access for small charities. Some don’t know where to go, or that advice is even available. And some don’t have the confidence to engage. 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.”
“We are fortunate in the UK to have a robust infrastructure of professional bodies for the charities sector as a whole, and we are urging this group to give serious thought to what their risks are and how they can manage them better.”
PolicyBee has launched an online Charity & Community Help Hub, to point small charities directly to useful information that can help them. It filters the support advice available to deliver a one-stop-shop platform of third-party resources.
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