'Light touch' will reduce trust in charities, says Navca chair

Charity Commission plans to raise the financial threshold at which charities must submit financial accounts could result in more fraud and threaten public confidence in local organisations, Navca has warned.

The umbrella body has written to the regulator as part of a consultation on raising the income levels that trigger certain obligations for charities, including filing annual trustees' reports and independent verification of their accounts.

The commission is proposing to increase the annual income threshold for these requirements from £10,000 to £25,000 to reduce the administrative burden on small charities. It estimates the move would excuse 23,000 charities from submitting annual accounts.

"We believe the proposals will reduce public confidence in charities," says the letter from Navca, which represents local infrastructure groups. "They will increase the risk of fraud or mismanagement, bringing bad media publicity."

It added that this would make it harder to find people who were prepared to become charity trustees.

Mike Martin, chair of Navca and director of Reading Voluntary Action, said the move would allow greater scope for wrongdoing.

"The Charity Commission operates a fairly light-touch already," he said. "We don't think the existing requirements are hugely burdensome.

"We are questioning the move to an even lighter touch. It seems to me that the formal relationship between small organisations and the commission is going to be very tenuous. We are far from convinced that removing this requirement is a good thing."

In his response to Navca's letter, Andrew Hind, chief executive of the Charity Commission, said the move was not designed to save the regulator money.

"The current financial climate is well known," he said. "But the recommendations were driven mainly by a desire to find the minimum burden on charities that is consistent with effective regulation, rather than finding ways to ease the burden on the commission.

"We know some of the recommendations would carry risks to public trust and confidence in small charities. The consultation puts the case for these changes; we believe it is a good one."

Bernard Collier, chief executive of Voluntary Action Westminster, said the move was proportionate. "There will be a marginally increased risk of fraud, but you are talking about small amounts of money," he said. "That's not to say the organisations shouldn't be accounting for things properly, but these thresholds have not changed for some time."

The consultation will run until 31 March.

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