By Lisa Carr, specialist charity insurance adviser at MyCharityGuard
Small doesn’t always mean perfectly formed.
Because you’re of limited size, you can’t always call upon the same quantity or quality of resources as some of the bigger charities.
That can engender a do-it-yourself approach. And while that’s fine, and can even trigger some inventive and creative ways of doing things, it also means that corners occasionally get cut.
Are the warning lights flashing yet? If not, they should be – because if your approach isn’t thorough and no one makes sure all the boxes are ticked, it can leave your charity vulnerable to things going wrong.
Here are the top 5 risks small charities need to be alerted to – and some advice for neatly side-stepping potential pitfalls.
All charities need the right trustees in place. That doesn’t only mean people who are passionate about the cause – it means individuals who can bring relevant skills to the table.
Naturally, you’ll need people with expertise in essential areas like finance, strategy and fundraising. But in our technological age, someone with digital know-how can make all the difference. They can open your eyes to new ways of campaigning.
Trustees also need to be aware of the precise degree of responsibility they’re taking on. That’s because they’re legally responsible for a charity’s activities, in the same way directors are responsible for a business’ activities.
That makes them personally liable if, for example, someone claims the charity has done something wrong or unlawful, or if funds are said to have been used unwisely. It can put life savings and even houses at risk.
Trustees’ insurance can help by paying for legal expertise and expenses, as well as covering any damages.
Events are a fundraising staple, be it a local coffee morning or an all-singing, all-dancing fun day. Tickets are sold, buckets are shaken, cash flows into the charity coffers and – hopefully – everyone goes home happy.
But despite the careful preparation that goes into such occasions, sometimes not everything goes to plan. And we’re not just talking about the unpredictable British weather.
Some events are riskier than others, of course. If there’s a bouncy castle or an inflatable slide involved, bumps, scrapes and even broken bones can’t be ruled out. And some people would say that high-rope walks are just asking for trouble.
But much more innocuous accidents can happen, too. Someone can slip on grass made wet by a splat-Brown Owl-with-a-sponge stall, seriously injuring their back. Or a visitor to a cream tea event in a stately home might knock over a precious antique vase.
All kinds of unprepared-for incidents can occur, and they can all mean a claim for damages.
That’s why charities should always do a proper risk assessment before staging a fundraiser – as well as ensuring they have the proper insurance in place. It covers any claims for compensation.
Volunteers are the lifeblood of a charity. They willingly give up their time for your cause, and tackle all manner of tasks.
It’s pretty safe to say your charity couldn’t survive without them. And as such, it’s your duty to make sure they’re properly protected.
There are laws you’ll have to comply with. For example, there are restrictions on the number of hours youngsters can volunteer for (check with your local council), while under 14s can’t legally be involved in any profit-making venture – eg, serving in a shop.
Also, if your charity has employees, employer’s liability insurance is a legal requirement. Otherwise, the fines from the Health and Safety Executive (HSE) are eye-watering.
However, the HSE also considers volunteers to be ‘employees’, and says you have a duty to protect their health and safety. It’s a slightly grey area as far as the letter of the law is concerned, but it won’t stop a volunteer suing for damages if they’re injured helping you out and then say it’s your charity’s fault. Employers’ and volunteers’ liability insurance protects your charity against claims for bodily injury, paying for defence costs and compensation.
Services & advice
If your charity provides a service or gives advice, there’s always the possibility of a mistake being made. To err is human, after all, and the charity sector is nothing less than person-centric.
Say your charity helps people start up their own business. So, an out-of-work middle-aged man takes your advisers’ advice on board and uses his redundancy payout to fund a new business – which after a short while falls flat on its face and goes bust.
Or you’re in the business of providing additional support to the elderly. But a frail old lady says one of your volunteer carers handled her inexpertly during a visit, causing her to fall and break her hip while being helped into the garden.
In cases like these, a claim for financial loss follows all too often. So, you need to be prepared, otherwise the addition strain on your charity’s finances can prove fatal.
Professional indemnity insurance protects against claims of negligence whether they’re justified or not, and covers all associated legal fees, damages and fines.
Depending on how digital your charity is, there are two potential worries.
If you handle, process or store personal details for any donors digitally, or if you carry out email marketing, then you need to be up to speed with the new General Data Protection Regulation. It comes into force in May 2018.
There are strict new rules for how your charity can contact people, even if they’ve already opted in to receive emails. And there are further regulations to ensure the safety and portability of everyone’s stored personal data. Failure to comply comes with the threat of big fines from the Information Commissioner’s Office (ICO).
Cybercrime is the other thing that might be on your mind. If you do a lot of your fundraising via websites or social media, or your charity is very IT-reliant, then the last thing you need is a cyber-attack. It can put your systems into melt-down and place fundraising on hold indefinitely.
It’s not just the big guns that are the favourite target of hackers these days, either. Anyone seems to be fair game, and if your data’s stolen, it can be even more problematic, because then the ICO gets involved again.
To protect your IT infrastructure and data, you need to have proper systems in place. That means having someone responsible for IT, who’ll make sure proper security software is installed and up-to-date, and that all staff and volunteers are trained to be cyber aware.
For digitally reliant charities, it can pay to have cyber insurance as back-up. This covers the costs of a hack or data breach, including system repairs, data recovery and lost income from being offline.
The future’s bright
It’s far from all bad, though.
Knowledge is power, as they say. And now you’re aware of some of the main pitfalls, you’re in better shape to protect your charity’s future – and watch it flourish.
MyCharityGuard is a tailored insurance package for small charities from PolicyBee, independent online insurance brokers.