Most charities are failing to implement policies and procedures in all areas the Charity Commission expects them to have in place around issues such as financial reporting and reporting serious incidents.

The warning has emerged in research based on analysis of more than 151,000 charities.

The regulator expects charities to have policies and procedures around financial reserves and controls, risk management, serious incident reporting and concerning trustee conflicts of interest and expenses.

But only one in four has these in place for all these areas, found the research by financial management firm Sorbus.

More than half do not have policies in place on managing financial reserves and just under three in five do not have them for internal risk management, managing trustee conflicts of interest and serious incident reporting.

Meanwhile, more than three in five do not have policies in place around trustee expenses and just under half do have them in place for internal financial controls.

Charities working with vulnerable people are also advised to have safeguarding policies and procedures in place.

However, almost three in ten charities working with children, older people and those with disabilities do not have a safeguarding policy “exposing these groups to unacceptable risks”.

“The responses point to a significant discrepancy between regulatory expectations and sector practice,” found Sorbus.

It added: “The consequences of governance failures are both profound and often overlooked within the charity sector.

“Unlike private businesses, where market forces eventually eliminate ineffective organisations, charities can continue operating in a state of mediocrity almost indefinitely.

“Failure to implement proper governance not only limits a charity's impact but can also expose it, and its trustees, to serious legal, financial, and reputational risks.”

It warns that already “high profile governance scandals have severely damaged the reputation of individual charities, their founders and the broader charitable sector”.

It points out that since January 2024 the Charity Commission has published 28 statutory inquiries into charities, with one or more trustees disqualified in 16 of these. In ten cases charities were removed from the register.

Sorbus specifically highlights the example of Captain Tom’s Foundation, the charity set up in the name of pandemic fundraiser the late Captain Tom Moore by his daughter and son-in-law.

The Charity Commission said last year that the charity’s former trustee and chief executive Hannah Ingram-Moore, and her husband and former trustee Colin Ingram-Moore had a “pattern of behaviour, which saw them “repeatedly benefitting personally” from the Foundation.

This included direct and indirect benefit from the couple’s private companies’ links to the late record-breaking fundraiser’s charity.

Sorbus concludes that “while the bespoke nature of each charity's operations makes a one-size-fits-all approach challenging, the concerning disconnect between Charity Commission expectations and actual practices, coupled with the frequency and severity of governance issues identified through statutory inquiries, points to a systemic problem”.

Earlier this month the first major revision of the Charity Governance Code was published. This included a greater focus on ensuring trustees promote inclusivity.

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