24 October 2014
The Charity Commission has made changes to the annual return, the tool it uses to hold charities accountable to the public.
The changes have been made to strengthen the regulator’s ability to identify risk and ensure people have access to the information they need to make confident decisions about charities. They will be applicable when charities report on their financial years ending in 2015.
A consultation process was carried out by the Charity Commission on the proposed changes. The annual return 2015 will include three new question areas, which received broad support in the consultation:
In the reporting period, how much income did you receive from: contracts from central or local government to deliver services; and or grants from central or local government?
Does your charity have a policy on paying its staff?
Has your charity reviewed its financial controls during the reporting period?
The consultation also proposed a question on charities’ campaigning expenditure, which will not be reflected in the annual return for 2015, as it would create a significant amount of work for charities.
However, the regulator maintains that charities’ campaigning expenditure is a matter of public interest and will revisit the issue when it considers changes to the annual return for 2016.
The Charity Commission has also taken into account concerns raised about a proposal to ask charities with incomes of between £10,000 and £500,000 for key financial information – the regulator will not require charities to supply this information in the annual return as it would impact particularly on charities with smaller incomes.
Instead, it will explore whether a technological solution, for example the introduction of accounting software, might allow it to gather the information it needs to regulate charities effectively, without putting too great a burden on smaller charities.
Paula Sussex, Chief Executive of the Charity Commission said: ‘The public rightly expects charities to be accountable and transparent. They also expect us to regulate effectively and to use the tools at our disposal to do so. This additional information will help achieve both aims. I hope it will also encourage trustees to monitor their charity’s financial controls and carefully consider what they pay their staff.’