The year in finance: 2014

The main developments of the past twelve months included questions about the finances of Syrian aid charities, changes to VAT relief for hospices and rescue charities, and the arrival of not one but two Sorps

The year in finance
The year in finance

Government attempts to boost social investment, various charity fraudsters in court, concerns about the misuse of the assets of charities working in difficult areas such as Syria and a new Sorp were concerns for charity finance professionals throughout 2014.

In January, the Charity Commission opened statutory inquiries into the finances of two charities helping to deliver aid to Syria.

The risks of working in the country and the possibility of charities financing terror there or elsewhere remained a concern for charities, the commission and the police throughout the year, with several arrests made and banking services being denied to several Muslim charities and charities working in Syria.

Police called for public vigilance for bogus charity collectors, and spoke in favour of greater anti-fraud and counter-terror powers for the Charity Commission.

Again in January, a self-proclaimed bishop was jailed for two years for stealing £186,000 from a charity of which he was trustee – the first of several headline-grabbing fraud cases. In later months the former head of counter-fraud at Oxfam was jailed for stealing £65,000 from the charity, and a volunteer fundraiser for Help for Heroes was sentenced to four and a half years in jail for £300,000 of fraud.

March’s Budget set the rate of social investment tax relief at 30 per cent, and December’s Autumn Statement increased the limit on investments on which the relief can be claimed.

In between, the sector’s scepticism about social investment was expressed on several occasions, and the pioneering HM Prison Peterborough social impact bond recorded underwhelming results, while Big Society Capital continued attempts to stimulate the market.

The announcement of new VAT reliefs for charities including hospices and air ambulances in both of the Budget and the Autumn Statement were also welcomed. These aside, charity sector leaders on both occasions were disappointed – the Budget left them feeling like the "forgotten sector", and the Autumn Statement was branded a mix of "promising noises and fatal errors".

The new Statements of Recommended Practice for charity accounts were published in July. For the first time there were two charity Sorps, one of which was for smaller charities, although this is likely to be abolished as early as 2016. Before you know it, there will be another new Sorp; the Charity Commission and the Office of the Scottish Charity Regulator appointed a new Sorp committee that will serve until 2018.

In the same month, a government announcement that it was dropping plans to make it harder to set up a charity for tax-avoidance purposes was welcomed by the sector. There had been concerns that the proposed powers were disproportionate and would have caused collateral damage to legitimate charities. HM Revenue & Customs claimed two victories against people abusing charities for tax avoidance, one in April and another in May.

In the last months of the year the demise of BeatBullying, a previously lauded charity that went into liquidation in November owing more than £1m to assorted creditors, left a number of people out of jobs and others asking where it all went wrong.

In December, a report into charity investments was published by the charity leaders group Acevo. It recommended more transparency on investments across the sector after the 2013 BBC Panorama exposé on the investments of Comic Relief, which included alcohol, tobacco and arms – all of which the charity pledged in May to remove from its portfolio in future.

Also this month, the Cabinet Office opened a consultation on raising the audit threshold for charities from £500,000 to £1m. The government has, however, so far resisted repeated calls from the sector to begin an early review of the Gift Aid Small Donations Scheme.

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