The top risks facing charities in Scotland

  • Charities in Scotland are coming under pressure from all angles
  • Both political and economic uncertainty is an important consideration
  • We take a look at the top risks facing charities in Scotland

In a climate of political and economic uncertainty, charities in Scotland are coming under pressure from all angles.

From the challenges involved in assembling a pro-active managing board with the right skill set, to the reputational damage that governance failures can inflict, we take a look at some of the top risks facing Scottish charities today.

Competition for funding

The competition for charity funding has never been more intense. A switch from government grants to contracts has been a trend experienced by all charities over the last decade or so. Add to this the sheer number of registered charities – 24,000 in Scotland alone ­– and funding pipelines soon start running dry.

While it is great to see so many thriving, intense competition means that charities need to work hard to stand out, and organise effectively to ensure that every penny possible goes to the intended cause.

Working with new partners

Charities are increasingly working with local authorities and the NHS, which opens up its own challenges.

Charities need to ask themselves “what risks are we exposed to by this relationship?” Branching into new partnerships can be a great way for charities to swell the coffers. However, all parties need to be clear about the nature of the contract and what needs to be delivered – a cancelled contract helps no one.

Reputational and brand risk

We have all read about unethical fundraising practices, controversial executive pay, high-profile governance failures and perceived profligate spending. Unfortunately, mistakes by charities make big news.

Avoiding reputational damage and bad news stories ultimately comes down to strong governance. Whether investing in datasets to target donors, or reviewing staff pay, charities of all sizes need to consider the PR angle and the dangers of being labelled with the ‘unethical’ tag.

Cyber risk and fraud

No sectors are immune from the dangers of fraud and cyber crime. The Cyber Security Breaches Survey 2017 reveals that nearly half of all charities in the UK suffered a breach or attack over the previous 12-months.

While it may be impossible to completely avoid the dangers of cyber crime, steps can be taken to minimise the risks. An Information Governance Health Check, available to all Zurich customers, is a great place to start.

Putting together a skilled and varied board

Establishing an experienced board with a range of skillsets is one of the most effective ways to minimise risk. A crucial part of this is planning for the future.

Does the board collectively have the range of skills needed, and understand the risks to the organisation if it is to thrive? Does it regularly consider the range of risks the organisation faces and take actions to mitigate them?

While varied skillsets are important, there is also no shame in calling in outside help. Identify where the skills gaps are, and build an external network capable of filling them.