Although charity law varies across the UK, charity governance is very much in the spotlight.
A recent report by the Charity Commission for England and Wales (CCEW) suggested that nearly 40% of small charities were submitting inaccurate financial information.
Small charities, defined as those with annual income below £25,000, make up two thirds of the CCEW register. The CCEW is concerned that small charities are not sufficiently skilled when it comes to submitting an annual return.
Charities registered in England and Wales should be aware that returns must be submitted within ten months of the end of the financial year and charity trustees must keep the registered details up to date.
From November 2018, charities must check and update their details online before submitting their annual return. Missing information will only be required the first time they sign in, or when updating their details. They will be able to choose which information to update.
Information required includes all current trustee names, contact details and details of the charity’s UK bank/building society accounts (these will not be available publicly).
From 1 April 2019, full legal names will be public and trustees will not be able to use a ‘public display’ name on the charity register. A dispensation can be applied for in
instances where personal safety is concerned.
New questions have been introduced to dispel public concerns, for example about high levels of pay in charities: or to highlight possible areas of risk, say in relation to money transfer overseas.
These include a breakdown of salaries across income bands and the amount of total employee benefits for the highest paid member of staff (this will not be published on the
public register). Further questions address use of professional fundraisers, receipt of grants and contracts from central government and local authorities, safeguarding children and adults at risk.
Details on overseas expenditure are also being expanded. If a charity has spent money outside England and Wales, it must explain if the transfer was by means other than the regulated banking system. Additional questions ask about whether controls exist to monitor overseas expenditure and whether the trustees are satisfied that risk management
policies and procedures are adequate for the charity’s operations. These are mandatory for returns from 2019 onwards, but optional for 2018.
Questions about income received from outside the UK are also introduced. These include which countries income was from; the value of income by country and the source and amount of such income. Some information will be optional for 2018, but mandatory thereafter.
These changes mean some additional work for charities and may require changes to financial systems to capture relevant detail.
Please do not hesitate to contact us on 01392 211 233 for further advice.