Regulator proposes doubling number of ‘core questions’ in annual return

The Charity Commission has launched a consultation on proposed changes, which include increasing the number of questions charities must answer from 16 to 32

Charities will be asked to provide more information to the regulator about sources of income and staff costs under new proposals.

The Charity Commission announced yesterday that it was consulting on changes to the annual return, which would apply to charities with annual incomes of more than £10,000.

The commission said the proposals focused on collecting more information about sources of charities’ income, potential risks posed by charities’ governance, the regions of the UK where charities work, and staff costs.

It said that, although the changes would mean adding more questions to the annual return, the commission aimed to ensure the burden on charities was “reasonable and proportionate”.

The number of “core questions”, which all charities must answer, will double from 16 to 32 under the proposals.

The suggested new questions about income would focus on whether a charity relied on a single source for more than a quarter of its income.

Charities over-reliant on single sources of income “can be more financially unstable unless the correct procedures are followed”, the proposals warn, adding that the commission will ask more about income from people connected to a charity to monitor risks of conflicts of interest.

The commission also proposes requesting information about the regions where a charity operates, rather than just the address where it is based, although it acknowledges that this “could create a significant data collection and administration burden for some charities because of their model of service delivery or structure”.

The proposed new annual return would also ask charities for the first time to declare if they work with adults or children at risk and whether a trading subsidiary had been dissolved during the year.

In addition, the proposals would allow the commission to introduce more questions about income and demand on charities at short notice, in the event of future crises similar to the Covid-19 pandemic.

Helen Stephenson, chief executive of the Charity Commission, said: “The annual return is a crucial tool that helps charities account for their work to us as regulator, and to the public and funders.

“It’s important we get the questions right, but also that we keep the burden on charities completing the return proportionate, so I encourage charities to look at the proposed changes and have their say as part of our consultation.

“Looking ahead, the new information we hope to gather through the annual return will benefit the sector, as well as the commission as regulator, by allowing us to make more detailed, richer information about the sector available, which in turn can inform the public and funders in making better informed decisions about which charities to support.”

The consultation closes on 1 September. Any changes will come into force in January 2023.

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