UNITED KINGDOM: changes to charities’ annual return sparks concerns

(CIVICUS MonitorIn September 2017, the United Kingdom Charity Commission initiated a public consultation on the annual returns which charities are required to make to the state at the end of each fiscal year. According to the National Council for Voluntary Organisations (NCVO), a civil society umbrella body in the UK, the return is “a snapshot of the charity’s financial information, and enables the Charity Commission to maintain an accurate register of charities [and] identify any regulatory concerns”.

The government is implementing significant changes to the 2018 annual return as part of a two-year project undertaken by the Commission to review the information collected by the charities and adapt the structure of the annual return to a digital format. While the aim was to simplify the process, the Commission has also proposed to increase the amount of information collected. Charities have raised concerns over the possible duplication of information and questioned whether the annual return was the most appropriate time to collect this information. Many also fear that publishing the data without the proper context could erode public trust.

NCVO commented on the situation, stating that:

“We know charities want to comply with their obligations, and are willing to do their bit. But quite reasonably, they want to know why they’re being asked for more and more information, especially if they’ve given it to other public bodies already. If the Charity Commission is going to put more burdens on charities, it’s important it takes time to explain why“.

For its part, the Charity Finance Group (CFG), a membership-based organisation working to improve financial management within the voluntary sector, said:

“Feedback from members indicates that the new questions will actually lead to the annual return becoming much more burdensome for charities, particularly those that have more complex financial structures such as those that work overseas or deliver public services“.

As a result of the consultation, in early January the Commission announced that it will not ask charities about rate relief and Gift Aid. It also amended a question relating to overseas funding sources. Concerns, however, persist, as the Commission will still ask whether charities receive foreign funding. In the first year, this will only include grants from governments, quasi-governmental bodies, charities or NGOs, but from 2019, all sources of foreign income will need to be declared.

Michael Wright, director of membership and communications with Bond, the UK network of organisations working in international development, commented that:

Some of the proposed changes will help alleviate reporting pressures to a small degree. However, the revisions do not go far enough and will still prove unnecessarily burdensome, particularly for small NGOs who have less capacity to record this level of detail around donations“.

Originally published on CIVICUS Monitor

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