OPINION: Hot Issue - Should commissioners levy fines for late annual reports?

The Charity Commission is working with the Home Office to develop proposals to fine those charities which fail to submit their annual accounts report on time. This follows the recent public accounts committee report where the Commission suggested that it should vigorously pursue those organisations that fail to do this.

Lynne Robb, finance director, Cancer Research UK - YES

One of the principle aims of producing annual accounts is to ensure that a charity provides a public record of its income, and to demonstrate how this has been spent. The stakeholders have the right to see that a charity has spent its money wisely, and on the causes that they donated their money to.

Therefore it is essential that charities, like companies, submit accurate accounts on time to meet this obligation. The Charity Commission has an essential role in this, to ensure both a high standard and clarity of reporting, and to ensure prompt reporting.

Fining charities that do not submit their accounts on time is one of the routes that the Commission could take, along with options such as public naming of those which do not comply. The sector must show that it polices itself and is proactive on sanctions. However, the level of the fine and some size threshold for smaller charities would need to be considered, to ensure that compliance is directed at the larger charities which should be able to meet these deadlines.

John Graham, director of finance, NSPCC - YES

I think a penalty should be exercised with care, and the penalty should not necessarily be a fine. Rules apply in the corporate sector with fines being imposed on late submissions. My experience is that when accounts are filed late there is often an underlying reason. It will not benefit our sector if, by not enforcing the rules, we allow problems to go unaddressed.

For the benefit of the sector in the longer term, I believe the Charity Commission needs to enforce penalties. We are aware that our support from the public depends on their confidence in our sector. We must demonstrate that rules set to protect the sector are enforced and hence give confidence that we are properly run and regulated.

However, I hope the Charity Commission, while having the right to fine, will exercise some discretion, and not act in a draconian fashion. A fine imposed over a minor infringement will reflect as badly as a fine foregone on a major one. After all, every pound spent on bureaucracy is another pound taken from the charitable cause.

Neil Churchill, director of communications, Age Concern - YES

Charities have a duty to be accountable for their use of resources and it's important that the financial information contained in an annual report is made available to stakeholders and regulators within a reasonable period after the audit has been completed. Penalties may seem harsh but are one way of ensuring that NGOs comply.

However, the annual report does not do the whole job that is needed.

Often they only provide statistics to indicate their financial performance.

This can never show the full picture. Annual reports ought to embody the values and ethos of an organisation and demonstrate stakeholder impact, the influence of services and campaigning, and the consideration given to the voices of clients or beneficiaries. They are the yardsticks by which charities seek to measure their performance in meeting the needs of the client-groups they exist to serve. Although penalties may be a deterrent to charities which do not submit annual reports, the real issue is about information left unsaid in the reports that are submitted.

Andrew Fellows, policy officer, National Association of Councils for Voluntary Service - NO

The idea of punishing charities that don't submit annual returns on time is not one that we would support. There are good reasons why charitable organisations should submit an annual return, and there's no reason why large, well-resourced organisations cannot meet the deadline. However, fines would mean that organisations that already struggle and have limited resources would end up having even fewer.

Instead of fines, why not explore incentives for those which send in their annual returns by a certain date? More importantly, the Charity Commission and others need to look at why some organisations have difficulties submitting annual returns. Is there a need for even more awareness? Or, if it's a question of capacity, how can the Commission, possibly with the help of infrastructure organisations such as Councils for Voluntary Service, do more to support smaller charities?

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in
RSS Feed

Third Sector Insight

Sponsored webcasts, surveys and expert reports from Third Sector partners

Third Sector Logo

Get our bulletins. Read more articles. Join a growing community of Third Sector professionals

Register now