Terrorism risk for charity funds downgraded by Treasury report from medium-high to low

This year’s National Risk Assessment of Money Laundering and Terrorist Financing says little use of charity funds to finance terrorist activity has happened

The risk of charities being used to fund terrorism has been downgraded from medium-high to low, according to a risk assessment carried out by the Treasury and the Home Office.

The National Risk Assessment of Money Laundering and Terrorist Financing 2017, published yesterday afternoon, says comparatively little terrorist financing is known to have happened given the size of the charity sector. It praises the Charity Commission’s work in this area.

But it warns that some charities, particularly those working abroad, are still vulnerable to this kind of abuse, and says the problem could intensify if banks continue to withdraw services from charities that operate in high-risk areas.

The last National Risk Assessment was published in 2015 and estimated the risk of terrorist financing using charities to be medium-high.

But the latest report deems the risk to be low, saying: “While the risks in the sector are unchanged, government and law enforcement agencies have conducted significant work since 2015 to increase understanding of the sector and the risks that it faces around terrorist financing.

“In comparison to the overall size of the UK charity sector, the amount of known abuse for terrorist financing is very low.”

The document says it is unlikely any charities had been set up specifically to finance terrorism.

But it warns that the 13,000 to 16,000 UK charities that operate internationally face “significantly higher risks”, particularly those operating in areas such as Syria and Iraq.

The 30 per cent of these charities with annual incomes of less than £10,000 are especially vulnerable to abuse because they are less likely to be receiving professional advice and could make honest mistakes or adopt poor practices that put them at risk, the report says.

Where charities have been linked to financing terrorism, the report says, “a significant proportion” have been legitimate charities that have fallen victim to internal abuse by employees, volunteers or trustees, or they have been looted in the country in which they operate.

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A number of aid organisations have had their bank accounts frozen or closed by banks in recent years because of concerns about operating in high-risk areas.

The report acknowledges this and warns: “If this trend persists, de-risking may have the effect of pushing charities out of more intensely regulated areas of activity and into higher risk ways of working, such as transacting through physical cash or unregulated money service businesses, thereby increasing the risks in the sector.”

In the UK, the charities most likely to be at risk are those operating in London, the Midlands and north-west England, according to the report.

The report says the Charity Commission’s outreach programme focusing on charities identified as high-risk has been effective and, with the commission’s guidance and regulatory alerts, was likely to have contributed to reducing the risk of abuse from within charities.

Michelle Russell, director of investigations, monitoring and enforcement at the commission, welcomed the report.

In a statement, she said: “It is essential that those charities that are at greater risk take steps to protect themselves so that charitable funds are not abused.

“Any trace of terrorist financing within the sector corrodes public confidence in charities and cannot be tolerated. One case is one too many, which is why we continue to work proactively with the subsection of the sector that remains at high risk.”

She urged charities to review the compliance resources available in the commission’s website and to ensured they had strong financial, due-diligence and monitoring controls in place to prevent terrorist exploitation.

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Too much focus on full-time volunteering ‘could risk charities being seen as exploitative’

Karl Wilding, director of public policy and volunteering at the National Council for Voluntary Organisations, mulls the issue at a fringe event at the Conservative Party conference

Too much focus on full-time volunteering could perpetuate inequality and risk charities being seen as exploitative, according to Karl Wilding, director of public policy and volunteering at the National Council for Voluntary Organisations.

Speaking at a Conservative Party conference fringe event hosted by the think tank the Centre for Social Justice in Manchester yesterday, Wilding said that although volunteering offered benefits to the volunteers, young people from disadvantaged backgrounds would be unable to afford to participate in full-time, long-term programmes.

The Department for Digital, Culture, Media and Sport commissioned a review last year into the impact of full time volunteering and the possibility of setting up a government-backed scheme, which is due to report back later this month. 

Wilding said the review needed to consider the impact of encouraging full-time volunteering on social mobility.

He said volunteering was “an incredibly powerful social intervention” in helping volunteers into employment, but questioned whether it needed to be full-time to be valuable.

“Might we be making social mobility problems in this country even worse, by giving some people who already able to give themselves a leg up, an even bigger leg up by creating opportunities that are going to strengthen their CV significantly?” he said.

He said that it might be easier and more cost effective to allow jobseekers to spend more of their time volunteering, rather than insisting they actively look for jobs.

Another concern, he said, was how a full-time volunteering programme would be perceived.

He said: “Are we opening ourselves up to the charge that full-time volunteering, which will require changes to minimum wage legislation to enable us to pay a stipend, is just us finding another way to exploit young people?”

Wilding also said that there were only about 1,000 people volunteering full time and warned that such volunteering could be going against the grain of current volunteering patterns.

“All the trends tell us that the way people are getting involved is actually shifting away from full-time volunteering to episodic, disjointed pieces of time,” he said.

But James Probert, director of strategy and impact at City Year, a charity that supports young people to complete a year’s full-time volunteering, said many of Wilding’s concerns could be dealt with by a change in the legal status of full time volunteers.

Talking about the current legislative set up, he said: “If you do volunteering you are ‘Neet’ – not in employment, education or training – there is no other box for people who are not doing it alongside work or studying.”

He said minimum wage rules, under which people could be paid subsistence expenses but not a stipend and could not receive benefits in kind such as recognised training, was making it very difficult for volunteers and organisations that wanted to provide opportunities.

He said he wanted to see a recognised system for taking a year out to volunteer, pointing to similar systems in America, France and Italy.

Lack of access, he said, was “a problem with the status quo” which could be improved by taking replicating the government’s the International Citizen Service, which offers 12-month volunteering opportunities overseas as a domestic gap year, which “doesn’t cost a lot of money and isn’t only for rich kids”.

He said he hoped the government would allow volunteers on such a scheme to receive benefits at around the same rate as job seekers’ allowance to help support them.

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Jobs at risk at Combat Stress as it bids to become more sustainable

About 13 per cent of the charity’s 300-strong workforce will either lose their jobs or have their roles changed under plans to save £1.6m a year

The veterans mental health charity Combat Stress is to undertake a second round of job losses this year as part of plans to save £1.6m a year.

The charity shed 12 jobs in January when it decided to focus solely on providing mental health services to ex-servicemen and women rather than general welfare support as well.

Now an estimated 13 per cent of the organisation’s 300-strong workforce will either lose their jobs or see their roles changed as part of a five-year strategy announced to staff yesterday. 

Sue Freeth, who became chief executive in January last year, said the existing business model was not sustainable and the new strategy would help the charity to break even.

According to documents filed with the Charity Commission, Combat Stress had a deficit of £3.6m in the financial year ending 31 March 2016, generating £13m and spending £16.6m. Four years earlier the charity had income of £15.8m and expenditure of £12.3m.

“These changes have got to get us back into the black and, more importantly, we have to make sure we have a model of delivery that meets the increase in demand for services,” Freeth told Third Sector.

The charity used £6m of reserves to fund its previous five-year plan. “We can’t do that again,” said Freeth.

Reserves stand at £5.2m, which represents five-and-a-half months’ budgeted unrestricted expenditure. The charity’s reserves policy is to have six months.

Services at the charity’s treatment centres in Ayr, Shropshire and Surrey will be integrated and streamlined as part of the bid to save money. Freeth said that in addition to the charity’s existing six-week programmes it would run some shorter schemes lasting one or two weeks. 

The proposals will be put to the organisation’s employee forum. A final decision is expected in the week commencing 20 November.

Freeth said the charity was “open to listening to alternative suggestions”, but added: “We are confident that what we are proposing makes sense and will get our organisation to where we want.

“These changes are in response to what veterans and commissioners in the NHS want to see and will help us develop a model we can sustain. At the moment our model of delivery is not sustainable. We need to be more flexible and agile.”

Combat Stress, which was founded in 1919 as the Ex-Servicemen’s Welfare Society, is due to unveil a £45,000 brand refresh today as part of its five-year plan.

Freeth described the old brand as “cold” and said the new look, created by the agency Texture, gave the charity a warmer, more authentic feel.

Referrals for the charity’s services have increased by 143 per cent over the past 10 years, partly due to recent military conflicts in Afghanistan and Iraq and also because veterans are more willing to seek help.

– This article was updated on 20 September 2017. It originally said that some six-week programmes might be condensed into one or two weeks. 

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Jobs at risk at RNIB after commercial venture struggles

RNIB Solutions, which was set up by the charity in 2013, made a loss of £4.2m in 2016/17

More than 50 jobs are at risk at the RNIB after a division set up by the charity to eliminate its deficit required a £10m subsidy over three years.

A business case document seen by Third Sector shows that at least 52 jobs could be at risk and a number of other staff could have their hours reduced after the charity was forced to subsidise RNIB Solutions, a directorate set up by the charity in 2013 to generate income and provide services such as talking books and a Braille library.

An RNIB spokesman told Third Sector the document was an internal consultation document that had been given to staff who might be affected and that the charity hoped the difficult decisions could be made in the most sensitive and respectful way possible.

According to the document, Solutions, a division of the charity which has 261 staff members, was set up to eliminate the charity’s deficit, but in 2016/17 it spent £16.6m against an income of £12.4m – leaving a loss of £4.2m.

“This was not an anomaly in a single year; similar levels of deficit were delivered during the previous year (2015/16) and are expected to be delivered during the current year (2017/18),” the document says.

“In total Solutions will have consumed circa £10m of charity subsidy over a three-year period. This has contributed to RNIB as a whole also running significant deficits over the last three years.”

According to information available on the Charity Commission website, RNIB as a whole has run at a deficit for four of its last five financial years. For the year ending 31 March 2016, it had an income of £114.5m but spent £123.1m. 

The average monthly number of employees at the whole charity during the year to March 2017 was 2,321, according to the RNIB spokesman.

The document says the main reason for Solutions’ deficit was the high and rising cost of providing its services.

It also says the charity had initially expected Solutions’ commercial services, such as commercial transcription, consultancy and training to cover the cost of all of its services and deliver a surplus for the charity, but this had not been the case – the commercial activities had generated £1m, but the cost of running it had been £5m.

Many of the services are “highly complex, very manual, built on outdated or unstable infrastructure and are neither efficient nor scalable”, causing problems resulting in frequent customer complaints, according to the document.

“A lot of our resources and energy are being spent each week fire fighting and dealing with the latest issue or problem,” it says.

The document calls for Solutions to reduce its costs and find more efficient ways to provide its services – including through restructuring its teams.

It lists 52 jobs that are at risk of being cut, plus some workers in seven different areas could also have their hours reduced. The document also lists the creation of 36.75 full-time equivalent roles.

An additional 19 full-time equivalent roles as transcription production assistant are listed under new jobs – but this role is also listed in the changed roles, where it shows the number of roles has actually been reduced from 21.72 FTE.

The RNIB spokesman said: “This is an internal consultation document for those affected and as such it would be inappropriate, and disrespectful to those directly concerned, for us to disclose its details to those outside of the organisation. A number of staff have been placed at risk of redundancy with every effort made to ensure job losses are minimal and people are redeployed where appropriate.”

Third Sector reported in February that up to 200 jobs were at risk at RNIB, according to unions. 

The RNIB spokesman told Third Sector today that in that round of job cuts, 30 people had been made redundant and a further 70 had taken voluntary redundancy.

“Sadly, there were job losses,” he said. “We worked closely with the unions to ensure that the jobs losses were minimal and that people were redeployed where appropriate.

“Like any charity we have to make careful decisions to ensure our long-term sustainability. These are challenging times and we have to keep a careful watch of where we are spending our money to make the most of the resources we have.”

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