Don Bawtree: Bill on small donations is published

Plus: Charity Commission issues two reports on financial difficulties, and improving communications and accountability

Don Bawtree
Don Bawtree

The legislation to simplify the Gift Aid Small Donations Scheme has been published in a bill that is rather confusingly called the Small Charitable Donations and Childcare Payments Bill 2016/17. Most charities will be interested only in the first topic, and it should be noted that the adjective "small" relates to the charitable donations, not the childcare payments. The bill removes the need for charities to operate Gift Aid for two years before they can use the scheme, allows contactless payments and ensures that the "community buildings rule" does not result in charities being able to double up their claims.

HM Revenue & Customs has also published a consultation on extending Gift Aid. The idea is to make it easier for a donor to use digital platforms, including text giving, to give to multiple charities. The donor would make a Gift Aid declaration that the intermediary could then hold and use to direct gifts to a variety of charities without needing individual declarations. The intermediary itself would not need to be a charity and the current proposal is that this scheme would operate on an annual basis. Like the small donations scheme, this is another example of government encouraging Gift Aid take-up.

Financial difficulties

The Charity Commission has issued two reports on financial difficulties in charities, one based on a review of more than 100 large bodies with qualified audit reports, and a second based on a more in-depth look at 10 other charities.

Reductions in income were a major reason for problems, followed by a range of issues such as restructuring costs, pension scheme deficits, unplanned overspends or contingent liabilities, such as claims. The commission was able to look at subsequent accounts for some of them and see what happened a year later: about 25 per cent recovered, 25 per cent seemed to get worse and the others are still in the balance. The two key messages seem to be for trustees not to duck the issue but deal with any financial worries at once, and to take note of their auditors' concerns.

Both the Charity Commission and the Office of the Scottish Charity Regulator have previously issued example accounts for charities to follow, available on the Statement of Recommended Practice microsite. So far there is no sign of a third set for Northern Irish charities, but presumably these will follow. Meanwhile, charity accountants will be pleased to note that there is an alternative, and that is to fill in the curious templates that are now available on the Charity Commission website. It would be interesting to see how many organisations use these.


The commission is keen to improve accountability after the recent fall in public confidence in charities. It is interesting to note similar noises emanating from the Financial Reporting Council after the Prime Minister's speech at the Conservative Party conference. The FRC said it aimed to realign the interests of business, so "tackling important issues such as diversity in boardroom representation and executive pay is in the interests of society and business. In particular, we need to look at how boards set pay ... and align pay and culture. We should also look widely at other issues including how directors are held to account in relation to their obligations to all stakeholders."

So it is not just charities that need to work on their communications. All this is very similar to the regulators' suggestions for the next Sorp, for reports to say more about executive remuneration, beneficiaries and accountability generally.

Don Bawtree is lead partner for charities at accountants BDO LLP

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