There's a lot of talk of war this year. Unsurprising because of the centenary of the First World War, you might think, but I'm talking about another war – the one against terrorism – and charities are in the thick of it; or so it might appear, to judge by recent comments made by William Shawcross, the chair of the Charity Commission. Islamic extremism was "potentially the most deadly" threat faced by the regulator, he said.
Out of a total of 316,527 suspicious activity reports logged by organisations across the UK economy in 2013 to alert the national crime agency to unusual financial activity that could be money laundering or financing terrorism, only 23 came from charities. Of these, only one was referred to the National Terrorist Financial Investigation Unit and regional Counter Terrorism Units – equivalent to 0.12 per cent of all terrorist finance suspicious activity reports. I would not suggest the threat is over-hyped because any abuse of charity funds for terrorist ends cannot be tolerated; but the instances of actual abuse are extremely small in number. I suggest the pendulum is in danger of swinging too far.
The pendulum is in danger of swinging too far
The Financial Action Task Force, the global authority on the matter, says governments should not disrupt or discourage legitimate charitable activity in the name of counter-terrorism measures.
The damage that can be done by the few, exceptional cases of abuse of a charity for terrorist or extremist ends can be massive, but I can't help feeling that it is unwise to single out Islamic extremism or think of it as the "most deadly" threat to charities. It is crucial for us to be alert to abuse in all its forms, irrespective of whether it's fed by religious extremism – Islamic or any other kind. Charities operating in conflict locations are aware of the risks, whether from bribery, corruption or terrorist financing. In fact, the lengths we go to often far outweigh our legal obligations. Despite these efforts, however, we are experiencing increasing difficulties.
In seeking to minimise risks, banks might withdraw their services from some customers to protect themselves from sanctions under the counter-terrorism laws. The Charity Finance Group is working hard to ensure this approach does not prevent charities from operating in difficult environments. After all, if you are in the business of delivering humanitarian relief in areas of serious civil division, higher risk is a fact of life. Conflict breeds abuse – charities know this and react accordingly.
Investigations and enforcement action by the commission play an important part in sending a message to those who seek to abuse charities for improper ends. But there is a danger that we paint the sector as a hotbed of abuse and impropriety, and I fear that the right balance is not being struck.
As the Second World War slogan had it, "loose lips sink ships". Perhaps there is a risk that Shawcross's words could hole the sector below the waterline; and perhaps a more measured note would be more helpful to charities as they navigate these challenging times.
Caron Bradshaw is chief executive of the Charity Finance Group