Change for charities
Although charity law varies across the UK, charity governance is very much in the spotlight. The Charity Commission for England and Wales (CCEW) recently reported that nearly 40% of small charities - those with annual income below £25,000 - submitted inaccurate financial information.
CCEW is concerned that those given the job of submitting small charity annual returns should be sufficiently skilled to perform the role accurately. It highlighted the fact that failure to provide accurate financial information can be misleading and negatively impact levels of trust in the general public.
Against this background, charities registered in England and Wales should be aware of developments regarding annual returns. Returns must be submitted no later than 10 months after the end of the financial year, and charity trustees must keep the charity’s registered details up to date.
From November 2018, the service to update these details changed. All charities must now check and update their details online before they can submit their annual return. Charities will only need to provide missing information the first time they sign in, or when they need to update their charity details. Charities will be able to choose which sections or information to edit and update.
Information required includes all current trustee names; their contact details, including an email address; and details of the charity UK bank/building society accounts. Bank/building society details will not be available publicly.
From 1 April 2019, full legal names will show to the public, and trustees will not be able to use a ‘public display’ name on the charity register. If, however, this would cause personal danger to an individual, it is possible to apply for a dispensation.
New questions are introduced in the 2018 return, which can be previewed before signing in. Some are optional for 2018, but mandatory from 2019. They are intended to allay 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.
New questions for 2018 include a breakdown of salaries across income bands, and the amount of total employee benefits for the highest paid member of staff. There are also questions about the use of professional fundraisers; receipt of grants and contracts from central government and local authorities; and questions on safeguarding children and adults at risk.
Overseas expenditure is another area of scrutiny. Charities spending money outside England and Wales will need to explain if they have transferred money overseas by a means other than the regulated banking system. Other questions concern controls to monitor overseas expenditure, and whether trustees are satisfied that risk management policies and procedures are adequate for charity activities and place of operations. These are mandatory from 2019, but optional for 2018. Questions about income received from outside the UK are also introduced. Again, some are optional for 2018, but then become mandatory.
The new returns mean some additional work for charities, and may require change to financial systems to capture relevant detail. Please do not hesitate to contact us for further advice.