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Updates for Charities

Posted: April 10, 2017

Earlier this year the Prime Minister delivered a key-note speech at the Charity Commissions annual public meeting, the Chair of the Charity Commission William Shawcross, announced: “I was very proud to welcome the Prime Minister as our guest and honoured that she chose the Charity Commission’s public meeting to give such a significant speech. There could be no better indication of the importance of charities to this country, and of our responsibility as regulator.”
Jim Leeves, Burgess Hodgson charity expert, summarises the latest matters of interest to the sector below. The theme throughout is a clear directive from the Charity Commission to ensure that charities are acting transparently in relation to their activities, improving the engagement of Trustees and increase reporting in high risk areas to support and improve confidence in the sector.


Telling the story

The Charity Commission’s stated areas of regulatory focus are as follows:
• financial data
• fraud and financial abuse
• public trust and confidence
• safeguarding
• terrorism and extremism


As we set out in our joint seminar with Furley Page in the Autumn, charity Trustees should ensure that their Annual Report appropriately tells the story of their charity’s activities each year and is used to demonstrate the good work they are doing. Trustees should obviously ensure that the above areas are appropriately considered and that the disclosure requirements of the Charity SORP 2015 are met in their Annual Report and Financial Statements. Key matters to detail include; investment policies adopted; public benefit impact; grant making policies adopted; fundraising activity; reserve policy and plans for the future.
Burgess Hodgson encourage smaller charities without a formal requirement to also include relevant matters in their reporting and that they follow the SORP guidance to demonstrate best practice when communicating to the outside world.
Recently, a consultation has been undertaken by the Charity Commission in relation to proposed changes to the Annual Return and going forward it is proposed that Trustees will be required to provide updated information whenever there are significant changes to a charity’s activities rather than just confirming that the information held by the Commission is correct at the end of the period.


Grant Reporting Requirement
Those charities which receive more than half of their income from financial investments in any year need to check whether they have an obligation to report details of their grant recipients to HM Revenue and Customs (HMRC). If more than half of your charity’s income is from financial investments and those investments are managed for you in whole or in part by a broker, fund manager, independent financial adviser, or wealth manager then you may need to carry out checks on your grant recipients and make a report to HMRC to meet your obligations under the ‘Common Reporting Standard’.
The Common Reporting Standard is a global agreement to combat offshore tax evasion through the sharing of financial information between tax administrations. For more information on the Common Reporting Standard and the reporting requirements please refer to guidance issued by HMRC.


New Fundraising Rules
Poor fundraising practices over recent years has led to new Charities Act fundraising rules to be issued which are effective from 1 November 2016. These impact the Trustees’ Annual Reports for larger charities and the agreements which need to be in place between charities and any third-party fundraisers engaged to raise funds on their behalf. The Commission has also warned Trustees regarding the data protection laws in relation to donors and has updated its online guidance regarding Charity reporting and accounting (CC15d) and Charity fundraising (CC20).


Financial oversight
Issued back in December 2012 the Charity Commission has recently highlighted its checklist of 15 questions that Trustees should be asking in relation to Charity governance, finance and resilience matters. We think that this is a useful tool and a link to the guidance is below.


Jim Leeves has been with Burgess Hodgson since September 2006 and was awarded with the ICAEW’s Diploma in Charity Accounting in January 2013 based on his experience in the sector.
If you would like to discuss any of the matters above, contact Burgess Hodgson on 01227 454627 or email jpl@burgesshodgson.co.uk