By far the biggest story in the world of charity finance in 2013 was the discovery of the Cup Trust, a massive tax avoidance scheme registered as a charity. The trust received donations of £176m in two years, claimed £46m in tax relief, and gave just £55,000 to good causes.
HM Revenue & Customs later said that it had made no repayments to anyone who had used a "major tax avoidance scheme" , but the Charity Commission faced criticism because it had known about the Cup Trust, but allowed it to remain on the register. It was heavily criticised over its conduct by both the Public Accounts Committee and the National Audit Office.
Income pressure and the economy have been the number one worry for charities since the start of the economic downturn in 2008, but there were signs this year that charities’ financial position was improving.
Most large charities, such as Cancer Research UK, saw healthy increases in their income, although most disaster relief organisations, such as Oxfam, saw a drop. They offered a good reason, though: there were fewer disasters.
The sector workforce, meanwhile, rose 6 per cent, and charities surveyed by the Institute of Fundraising and the Charity Finance Group said they were now "less pessimistic" about the future.
At the end of the year, Martyn Lewis, chair of the National Council for Voluntary Organisations, said the economy was no longer top of charities’ list of worries. Instead, he said, it was the "febrile political environment" that was the greatest concern.
Social investment remained in the news. This sector grew by 22 per cent, and the government announced a new social investment tax relief in the Budget in March. It will be introduced in 2014.
The government consulted on a range of measures to grow digital giving, and announced a new system for charities to claim Gift Aid online. Charities protested that the new system had been introduced too quickly, and asked for an extended transitional period for the changeover. Even so, several large charities faced problems meeting the deadline.
HMRC and the Charity Commission also agreed that a joint registration process would be launched, perhaps in 2015.
Charities continued to face problems with their pensions provision. Larger charities agreed deals to cap their liabilities, while several small and medium-sized organisations faced closure, and experts warned of a "pensions time bomb" and the rise of the "zombie charity" that existed only to service its pensions debt.
The pensions minister, Steve Webb, told the Charity Finance Group annual conference in May that a number of temporary fixes were available, and promised to look into the issue.
The Charity Finance Group, meanwhile, warned that even charities without these problems needed to deal with the automatic enrolment of all employees in a defined contribution pension scheme and that this was not to be underestimated.