Don Bawtree: Commission's annual report on financial abuse and mismanagement

Our columnist's regular update on the issues affecting charity finance professionals

Don Bawtree
Don Bawtree

The Charity Commission has issued its annual report on tackling abuse and mismanagement. Regarding financial mismanagement and crime, its says its case work shows that when trustees fail to manage a charity’s resources responsibly, that charity will be vulnerable to problems – most frequently financial mismanagement, financial abuse and financial crime. The commission also encourages whistleblowers to come forward in a video that also explains how they are protected when they do so.

The commission again comments on the quality of charity accounts. It says that less than half the accounts and annual reports of small charities – those with incomes of £25,000 or less – are up to standard. Larger charities continue to improve, although a quarter of those examined by the commission still produce reports and accounts with major flaws. The commission describes these as accounts that don’t balance or are not transparent enough. For example, a quarter failed to provide the required disclosure on trustee remuneration. The commission is quite right to make a serious point of these shortcomings – the sector can prosper onlyon the basis of complete and credible transparency, and every charity needs to sign up to that ideal.

Legacies

The consultancy nfpSynergy reports some interesting findings on legacy income that seem to suggest that the future of legacy income for charities is not as bleak as many have predicted. The obvious drivers of rising legacies are the fact that people continue to be mortal and house prices continue to rise. On the other hand, this income stream has long been seen as exposed to the combined impacts of increasing longevity and care costs, along with a fall in public confidence in charities. NfpSynergy’s findings suggest that the income stream is still buoyant and that younger people are approximately twice as likely to leave charitable bequests as older people. This is hopeful, and charities need to make sure that they access these funds. Many charities do not see themselves as potential legacy recipients, but there is no reason why every charity should not at least have some sort of legacy proposition. Even if there is no natural donor base, every charity should be asking its trustees at the very least to consider this way of supporting their organisation. One word of warning, though: nfpSynergy’s research also showed that only one in five people who say they will leave something to charity in their will actually does so.

It is worth remembering that legacies of more than 10 per cent of a net estate create a worthwhile tax saving in estates subject to inheritance tax. Another tax saving for some charities relates to VAT, so charities might wish to note that updates have been made to the "type of body" and "declaration" sections of the VAT126 form. VAT126 is used by certain bodies that are not registered for VAT in order to claim the tax back. This includes local authorities and similar bodies, academies, certain charities and non-departmental bodies or similar public bodies.

The new £1 coin

The government has announced that the new £1 coin will enter circulation on 28 March 2017, and has launched a campaign to encourage the public to return the round £1 coins. This is important because they lose their status as legal tender on 15 October this year.

Retailers are being reminded especially about preparing any coin-operated tills or machines, but it will be probably be more important that charities ensure their cash collections, however generated, are banked promptly over the next few months to minimise losses later in the year.

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in

Before commenting please read our rules for commenting on articles.

If you see a comment you find offensive, you can flag it as inappropriate. In the top right-hand corner of an individual comment, you will see 'flag as inappropriate'. Clicking this prompts us to review the comment. For further information see our rules for commenting on articles.

comments powered by Disqus