Regulation with Rosie: Charity branch finances

The Charity Commission's Rosie Chapman on charity branch finances.

We're constantly told that possessing anything from credit cards to an eBay account makes us vulnerable to identity fraud.

But what of charities that may experience the oxymoron of benevolent identity fraud? Well-meaning identity theft can happen when local branches of a charity or friends' groups fundraise for their own activities, using methods such as street collections or applying to local trusts for funds. They don't always realise they aren't independent organisations and that the main or parent charity needs to know about this activity in detail, because they'll be expected to cover them in their accounts.

If your charity has branches or local groups, any activities using your charity number to raise or spend funds must be included in full in the accounts. Trying to piece this information together retrospectively can be a headache, so trustees should ensure that they explain upfront what information they need from local groups. They should set up systems through which branches can report their activities to the main charity's head of finance, along with details of any bank accounts they hold, including year-end balances.

This kind of confusion can happen at a micro-level too. Some charities run activities where users pay towards transport or entrance-fee costs. This money is often collected in and paid out by the organiser on the day, with only the net cost of the activity included in the accounting records, when all activity income and expenditure needs to be included.

Finally, some charities have separate activities. For example, if a community centre runs a playgroup and mentions its charity status and the registered charity number in its publicity, all the proceeds must be included in the charity's accounts in full.

  • Rosie Chapman is executive director of policy and effectiveness at the commission.

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