Small charities should consider risk as much as larger ones, charity director tells conference

Judith Moran of Quaker Social Action says smaller charities can feel overwhelmed by risk management, but there is good guidance to which they can refer

Judith Moran
Judith Moran

Small charities must consider risk as much as larger ones, delegates at the Charity Finance Group’s risk conference heard yesterday.

Speaking at a session called Implement Risk Management: exploring the myth of one size does not fit all, Judith Moran, director of the east London anti-poverty charity Quaker Social Action, said risk was an important consideration for charities of all sizes.

She said organisations did not need experts in risk to take a common-sense approach to it.

"Even though we are small, I think it is critically important we have a can-do and a must-do approach to risk and not do any special pleading," she said.

The Statement of Recommended Practice, the rules governing charity accounts, requires charities that are subject to audit – those that have annual incomes of more than £500,000 or those with gross annual incomes of more than £250,000 and gross assets worth more than £3.26m – to make a statement on risk management in their trustees’ annual reports.

Moran said she thought it was a shame that there was a threshold for providing a risk statement. Speaking to Third Sector after the conference, she said she did not want to make it more difficult for small charities by lowering or removing the threshold.

"It might be useful to adjust the balance in the emphasis of things culturally rather than the way the Charity Commission dictates it," she said. "Looking at risk is as important as showing that what you do makes a difference.

"I would not want to see something quite so black and white as a requirement to do a risk assessment for all charities, but maybe that could be the end of a longer-term process."

She said that smaller charities can feel overwhelmed by the subject, but there was a lot of good guidance available.

A spokeswoman for the Charity Commission said: "Identifying and managing the possible and probable risks that a charity might face over its working life is a key part of effective governance for charities of all sizes and complexity.

"Trustees of smaller charities with gross income below the statutory audit threshold – who should still be concerned about the risks their charity faces – are encouraged to make a risk management statement as a matter of good practice."

Guidance on risk on the commission’s website says there is no legal requirement for charities to have a risk management process, or to follow a particular method.

But it "strongly recommends" charities have a clear risk management policy and process.

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