Commission consults on radical changes to annual return

Interested parties have until November to comment on Charity Commission proposals to change annual returns, which would include questions on overseas funding and chief executive pay

Charity Commission
Charity Commission

The Charity Commission has published a three-month consultation on proposed radical changes to the annual return for 2018, including questions on overseas funding and chief executive pay.

The consultation, which opened on Friday and will run until 24 November, also proposes a new "update charity detail" service so that charities can inform the Charity Commission when they change their registered details, key activities and policies.

This service would also help charities to answer questions related to their organisation and context, and allow them to receive tailored updates and alerts from the commission.

Among the proposed new questions for charities in the 2018 annual return is one asking for details on the number of staff earning more than £60,000 a year within bands of £10,000, similar to the format in charities’ annual reports and accounts. It would also ask charities to say how much their chief executives are paid.

The proposals include requirements to report whether a charity receives overseas funding, the countries they get that income from and the value of the income from each relevant category, the consultation says.

This would funding from overseas governments or government bodies, the European Union, overseas charities, foreign donors, and private companies and organisations.

In July, the Home Secretary, Amber Rudd, said in a statement to the House of Commons that the commission would require charities to declare in their annual returns overseas funding sources and the amount they receive.

The proposed new annual return would also ask for details on operating and spending outside England and Wales, including whether money was transferred outside the regulated banking system, details of the charity’s risk-management policy and whether the charity had monitoring processes in place around overseas expenditure.

There are also proposed additional questions on charities’ relationships and contracts with professional fundraisers, the consultation says.

The annual return could also include a number of questions about payments to trustees, specifically new questions on whether any former trustees are employed by the charity and whether any trustees are directors of trading subsidiaries.

Charities would be asked whether trustees are paid for providing professional advice or receive other benefits from the charity, such as renting property below market value.

Other questions deal with the amount charities claim in Gift Aid and whether checks have been carried out on staff or volunteers working with vulnerable people.

If the new annual return is introduced after the consultation, the changes will apply to charities’ financial years starting on or after 1 January 2018. This is the second consultation the Charity Commission has run on reforming the annual return in the past 12 months.

Helen Stephenson, chief executive of the Charity Commission, said: "We believe the changes that are proposed will help strengthen our ability to regulate charities and improve public trust and confidence.

"The voice of charities and their umbrella bodies will be important to informing our approach, and we look forward to engaging widely and constructively in the coming weeks."

Andrew O’Brien, head of policy and engagement at the Charity Finance Group, said: "We believe that the commission needs to have the information it needs to do its job properly, but we must make sure that this doesn’t lead to any unnecessary administrative burden for charities. It is also important that changes made to annual returns are accompanied by appropriate guidance and support for charities to answer them effectively."

Elizabeth Chamberlain, head of policy and public services at the National Council for Voluntary Organisations, told Third Sector she welcomed the new questions promoting greater transparency, such as those concerning executive pay, and the decision to consult on the new questions.

But she said there was a question about how the Charity Commission would use the data it collected and it was important the commission "gets that balance right between acting as the regulator and acting as an information provider".

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