Charity Commission proposals to change the annual return for 2018

Charities with an annual income over £10,000 have to publish an annual return. The Charity Commission has made new proposals which will affect charities on or after 1 January 2018 depending on when they start their financial year.

The proposals include changes to the format and content of the annual return with the aim of reducing the information sent to the Charity Commission for smaller charities whilst obtaining more specific information from larger charities.

This is to be achieved by a new “Update charity detail” service whereby a charity can update simple information such as registration details, changes to activities or policies.

The annual return will consist of three parts: Part A will be specific to each charity asking regulatory questions and will be updated using the new “update charity detail” service. Part B will ask focused financially related questions for charities with an annual income of over £500,000. Part C will contain a declaration that all information provided is accurate.

The proposals include questions on the income and funding of charities.

Under the current annual return regime, charities are asked for information on whether they raise money from the public or whether they work with a commercial participator. This information will remain under the new proposals and similar information relating to contracts between charities and professional fundraisers will now have to be provided.

Furthermore, the new proposals will expand on information regarding the income received from the government to include the amount of this funding and how heavily a charity relies on such funding. Similarly, the new proposals aim to help the Charity Commission understand the overall source of funding and any risk to charities in more depth. Therefore, more detail will have to be provided with regard to the amount of gift aid received and additional questions may also be asked about the sources and amount of overseas funding.

Similarly, the Charity Commission seeks to gain more information from charities in relation to their expenditure with the aim of encouraging charities to become more transparent.

Primarily, this will include charities stating details of staff earning over £60,000 and the salary bands thereafter in addition to the income of its Chief Executives. The current annual return regime requires charities to state whether they pay any of their trustees for their trustee duties, however, the new proposals seek information on whether a trustee was paid for providing professional advice or if any employees have been the charity’s trustees. Moreover, the Charity Commission seeks information on whether the trustee was in receipt of other benefit giving the example of a charity renting property to a trustee below market value.

Where a charity operates outside England and Wales, the annual return will continue to ask its current questions and more detail relating to the location of a charity’s banking system where the charity has operated outside England and Wales in the past.

The new proposals also continue to ask charities about their assets. In relation to property, the proposals ask a new question about rate relief whilst further questions regarding the number of directors in a charity’s subsidiaries will be asked.

Overall, the Charity Commission proposals require charities to provide more in depth information on information it has previously provided with the exception of some new questions in order to make charitable organisations more transparent. The updates to the annual return also remind charities to comply with the law in respect of the payment of trustees for the provision of services to the charity and the management of conflicts of interest.

Posted on: 21/11/2017

This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.

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