Revealed: 'worrying' number of small charities with poor risk management | Insurance Business America
Small charities lack proper risk management and governance training, a new report published by digital insurance broker PolicyBee reveals.
The report, Under the radar: risk management in small charities, found 62% of small charities have never received risk and governance training; 10% ‘don’t have’ or ‘aren’t sure’ whether they have any risk management measures in place; 87% only have one risk management measure in place; and 47% of small charities are only partially confident in their capacity to identify and assess risk.
In addition, it outlined specific examples of poorly-managed risks, including a lack of dual signatories on cheques; unidentified or poorly handled conflicts of interest; and lack of induction training for trustees on their legal responsibilities.
Among the biggest concerns of small charities include lack of time (64%), lack of funds (52%) and lack of expertise (39%).
Additionally, the report shows only 8% of small charities have a risk management register in place and 60% of small charities said they are not familiar with major organisations that provide risk and governance advice.
With small charities already struggling due to a lack of funding and resources, managing risk needs to be placed under the spotlight, according to PolicyBee head of marketing Dominique Fell-Clark.
“With the important Christmas fundraising period upon us, small charities may receive more rigorous questioning from potential donors in order to ensure their donations are being handled efficiently, and that the charity as a whole is being managed effectively,” she explained. “As the research highlights, many small charities are currently poorly equipped to identify risk and deploy the measures required to protect both the individuals within their organization and the organization itself.”
“Despite the fact that the risks faced by charities depend on the size, funding, and services offered, the case of small charities deserves special consideration because these organizations are often performing essential frontline services in their local communities on shoestring budgets and many smaller charities are more likely to view risk management measures as a drain on resources,” University of Suffolk, Institute for Social & Economic Research principal investigator Dr Olumide Adisa added. “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.”