To notify or not to notify: that is the question!

Notifiable events crop

‚ÄčLianne Lodge asks: what are Notifiable Events and how do they they relate to your charity?

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15th March 2018 by TFN Guest 0 Comments

In response to the recent Oxfam scandal, the Office of the Scottish Charity Regulator (OSCR) has sent out guidance to be discussed at the board level of every charity in relation to safeguarding vulnerable beneficiaries and staff and Notifiable Events.

Trustees may not think that this is a concern for their charity if there is little risk of beneficiaries being abused (for example, a grant giving charity), however, Notifiable Events can crop up in all types of charities and senior staff and trustees must understand their obligations.

But what are Notifiable Events and how might they relate to my charity you might ask?

In Scotland, OSCR introduced Notifiable Events in 2016, however, there was not much publicity around them.

They place the onus on charity trustees to tell OSCR if anything occurs which will have a significant impact on a charity, having regard to its size and nature.

Lianne Lodge

Lianne Lodge

Things go wrong in every walk of life and charities, which do an amazing job, are no different

OSCR want to hear from trustees, as soon as is reasonable, if one of the following things occur:

Fraud and theft – if this happens within your charity it should be reported to the police before submitting a Notifiable Event report to OSCR. You should have regard to the size of the charity and type of offence, for example someone shoplifting a small item from a charity shop may not be a Notifable Event, but someone who is in charge of petty cash diverting sums of money for personal use using false receipts would be.

Significant financial loss - OSCR has suggested that 20% or more of the charity's income is substantial. People regard this as losing funds the charity already has, but an example could include when your charity is no longer in receipt of a significant grant, if this has been one of your key sources of funding.

Abuse or mistreatment of vulnerable beneficiaries - this could include when a charity trustee, member of staff or someone connected to the charity has mistreated or abused a vulnerable person while carrying out the charities activities. It also includes when allegations have been made that such an incident may have happened, even if police do not think a crime has occurred. 

A lack of charity trustees required to make a legal decision - if you have been making decisions with less than the legal number of charity trustees for your particular charity, then your decisions may not be legal. OSCR would like to know if this has happened, and what your charity has done or are doing to correct the situation.

OSCR would like to know where a charity is under investigation from another source. For example, this could include an ongoing police investigation about drug use by staff at one of the charities premises.

When significant sums of money or other property have been donated to the charity from an unknown or unverified source - If your charity receives a significant donation (or an unusual pattern of small donations) that has been given anonymously it is important that you try to identify the source.

Suspicions that the charity and/or its assets are being used to fund criminal activity - this is not necessarily just about terrorism, an example could be when recent financial and narrative reports coming from the operational wing of the charity raised concerns with the board that the monies may be diverted to support sectarian activity. 

Charity trustees acting improperly or whilst disqualified - some people are disqualified from being charity trustees; for example those convicted with dishonesty, currently bankrupt, or disqualified as a company director

Although the notification of events is not a legal obligation, OSCR would be concerned if a significant event was not reported. It is for the charity trustees to decide if an event is significant to their charity in the overall context.

Ultimately trustees need to understand what is happening at the coal face, not just reply on reporting from others (difficult though that may be).

They need to support their chief executive but must also visible should anyone wish to approach them with any concerns about the charity and that information is not being passed to the board.

It has been incredibly disappointing to see the media reports that people are losing trust in charities following the Oxfam scandal.

Things go wrong in every walk of life and charities, which do an amazing job, are no different. However, what really matters is how issues are dealt with when they arise and that is partly where Oxfam seems to have failed.

To prevent this happening to your charity, my advice is that if there is any doubt, it is better to report than not. OSCR is a sensible regulator and will not launch unnecessary inquiries where lessons have been learned.

Lianne Lodge is an associate, charities & private client at Gillespie Macandrew LLP.