Broker Update: Ecclesiastical Report Looks at Risks to Charity Sector

A new report revealing the biggest risks facing the charity sector will help brokers support their charity clients through uncertain times.

Ecclesiastical, insurer of more than 45,000 charities in the UK, has published its first Charity Risk Barometer, an in-depth study exploring the immediate and emerging risks facing the charity sector.

The report, entitled ‘Risk and reward in an uncertain world’ also highlights potential solutions, with expert commentary from leading thinkers in the sector.

It will help brokers gain a deeper understanding of the issues facing charities and enable them to work with their clients to find solutions.

The report asked charity leaders about the biggest risks facing them over the short- (12months), medium- (1-3 years) and long-term (5 years).

Funding continues to be the major concern for all charities. The research found it was the top issue for charity leaders for the short-and medium-term and the second biggest concern over the next five years.

Unsurprisingly, the impact of Brexit is a major concern for the year ahead, with more than half of charities citing it as a concern, followed closely by growing political instability. Brexit was more of an issue for larger charities and became less important to all charities over the longer-term.

In the wake of the Charity Commission’s criticism of Oxfam’s handling of the sexual exploitation scandal, reputational risks are also high on charities’ agendas, emerging as the biggest perceived risk over the long-term.

The threat of cyber-attack was also revealed as a major concern alongside a number of emerging risks including charities’ ability to attract and retain talent, stress-related burnout among staff and engaging with the next generation of supporters.

In these increasingly uncertain times, the report also highlights the need for charities to think more strategically about risk management to ensure their future prosperity.

Three-quarters of boards have risk discussions as a standing agenda item, but one in four charity leaders feel they aren’t spending enough time considering risk at a strategic level. Worryingly one in three small charities don’t spend any time considering strategic risk on a regular basis.

The research also found that many charities were taking a short-term view of risk. One in five charities is only looking ahead 12 months when considering their strategic risks, and just 40 per cent are looking beyond three years.

Angus Roy, charity director at Ecclesiastical Insurance, said: “These are challenging times for the sector – uncertainty is the new norm and new risks are emerging all of the time. It is imperative that charities spend more time thinking about not only the potential rewards, but also the risks they are facing, now and in the future.

“As a specialist partner to the charity sector, our role is to help customers manage their risks and our research shows that too many charities are taking a short-term view, which may be limiting their ability to grasp new opportunities and identify emerging threats.

“Brokers have an important role to play in supporting their charity clients to understand and manage their risks and we hope this new report will provide invaluable insight for them.”

Insurance Edge Comment:

Perhaps the biggest risk to UK charities is the reputational damage caused by scandals, such as those involving Oxfam, Unicef and Save The Children (STC) over the last few years. The public disgust over the poor management of charities, with many trustees seemingly blind to the manipulators, sexual predators and serial fraudsters, all operating in plain sight at a senior level within their organisations, has led to donations dropping.

The death of 92 year old Olive Cooke back in 2015, hounded constantly by outsourced call centre and mail-out fundraisers, also helped to dent the reputation of UK charities.

Let’s be blunt; The solution to this trend isn’t more insurance against reputational risk, it is a root and branch reform of the entire charity sector:

We need a cap on salaries of 100K – nobody with a conscience would demand more.

Detailed accounts must be published each year, with individual salaries over 50K listed, plus all expenses and strict money laundering regulations applied to charities when it comes to cash payments. This would prevent another Kids Company scandal.

The constant telephone pestering of the over 65 age group needs to be outlawed. On-street chugging should also be banned.