This is a sponsored feature supplied by Markel
A crisis can destroy a charity’s reputation and ultimately lead to an organisation's demise. Some charities might never recover from a crisis. But a well-managed situation will give your organisation the best chance of survival.
What is a charity crisis?
Many charities are in positions of trust with both their service users and the general public, so allegations are often devastating for the them, regardless of whether they are true or not.
Examples of a charity in crisis include:
- A child protection charity chief executive convicted of child abuse.
- A charity boss falsely accused of sexual abuse.
- A care worker accused of stealing from a service user.
- A teenage welfare charity accused of letting children in its care take drugs.
- A care charity that had a child with learning difficulties in its care involved in a fatal accident.
- A nursery boss accused of child abuse.
What are the effects of a charity crisis?
When considering a charity crisis, it’s easy to think of negative portrayal of the organisation in the media, but a crisis can have much deeper effects on a charity, as follows.
Loss of consumer confidence
If you work with vulnerable adults or children, depending on the nature of the crisis, your service users are likely to lose trust in the organisation.
Damaged trade relations
If your charity relies on referrals for business – through word of mouth, or perhaps through the NHS or other referrers – a crisis could see your trade relations shattered.
Low staff morale/inability to recruit
Crises can be uncertain times for staff – job security might be at risk and staff might be caught up in a press scandal when they are entirely innocent. As a result, staff morale can hit rock bottom and recruiting new employees can become very difficult.
If a crisis has come about as a result of a charity’s negligence, its finances could be put under huge pressure as legal fees and compensation payouts are made. This can also have a knock-on effect to the charity’s credit ratings and prevent banks from lending money.
The loss of a licence to operate
Investigations by the Charity Commission can be enormously damaging for a company’s reputation – but ultimately the loss of a licence to operate could be fatal to a charity and lead to its closure.
Robin Swinbank is managing partner of the Counsel House, an independent consultancy that supports Markel Insurance policyholders in the event of adverse press, publicity or media attention.
This article is the first in a three-part series from Markel Insurance to help charities manage reputational risk in a crisis. Part two provides 10 steps to managing a charity crisis and part three will offer eight tips for charity trustees when handling a crisis