Charities have much to risk without a robust risk strategy says lawyer

8th October 2013

Comments made in last weekend's papers that people giving money to help refugees from the civil war in Syria may be inadvertently supporting terrorism highlight that now more than ever organisations need to ensure effective monitoring and verification of the end of use charity funds and have in place a robust risk assessment strategy, a specialist charity lawyer says.

Kirsty McEwen, head of Higgs & Sons' charity, community and social enterprise team, has spent all of her career advising charities and not for profit organisations on all aspects of their operations, and has acted for the Charity Commission in its regulatory and investigative work.

She says that although known cases of terrorist abuse of charity funds are very low and that the Charity Commission will vigorously pursue any such allegations, this latest news should signal a warning to all charities, but in particular grant making charities, about the importance of carrying out due diligence checks to effectively monitor the end use of funds, and having in place a risk assessment process which is reviewed annually. 

"Recent events in Nairobi and Syria have highlighted the desperate need for humanitarian assistance and development work in countries affected by disasters, internal conflicts and military action.  The risks of operating in many of these countries can be high and charities can face significant challenges in delivering that aid and assistance safely.

"The latest news about the risk of charity funds being diverted toward extremist groups offers a stark warning to all charities in the UK," explains Kirsty.

"Often, conditions on the ground in the midst of conflict make it difficult or impossible for charities to know where aid ends up.

"In this case, the Disasters Emergency Committee, which represents 14 of Britain's biggest charities, has raised £20 million since the launch of its Syria Crisis Appeal in March.

"Its members include the British Red Cross, Oxfam and Save the Children. However, it has said it is unable to guarantee that no cash is falling into the hands of terrorists. The Charity Commission is so concerned that it has issued a regulatory alert to fund-raising bodies."

All charity trustees should at least annually review and assess the risks faced by their charity in all areas of its work and plan for the management of those risks. Charities that are required by law to have their accounts audited must make a risk management statement in their trustees' annual report confirming that the charity trustees have given consideration to the major risks to which the charity is exposed and satisfied themselves that systems or procedures are established in order to manage those risks.

Kirsty, who administers a number of grant-making charities, also sits on the Board of Trustees of several charities, says that trustees need to be aware of their obligations when it comes to managing risk.

"The Syrian example may be at the extreme end, but risk is an inevitable part of running any not for profit organisation. The responsibility for the management and control of a charity rests with the trustees and their proactive involvement in all aspects of the risk management process is essential, particularly in setting the parameters of the process and reviewing and considering the results.

"I would advise all charities to have a risk management strategy in place and regularly review that strategy as the organisation grows and develops."

Higgs & Sons works from two offices in the Black Country - Waterfront Business Park in Brierley Hill and Kingswinford. The firm employs more than 200 people, which includes over 100 specialist lawyers.

For specialist advice in developing and reviewing your risk assessment strategy and process, please contact Kirsty on 0845 111 5050 or email


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