Charity annual return proposals criticised as ‘significant burden’

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Charity annual return proposals criticised as 'significant burden'

David Holdsworth, Charity Commission

The sector has expressed concern that the Charity Commission’s proposals for its 2018 annual return could produce a “significant administrative burden” and questioned its reasons for wanting more information.

The regulator said it received 271 responses to its consultation, which ran from 1 September to 24 November, and has engaged with a further 70 charities as part of targeted user testing of the new system.

In its consultation document it proposed new requirements for charities to submit information regarding their sources of income and expenditure such as fundraising methods and employee salaries.

Umbrella bodies NCVO and Acevo both questioned the need for charities to submit information in their annual return that is already in the public domain in the form of annual accounts and reports.

They also said their members did not trust the Commission's reasons for seeking the information.

Acevo said in its response: “This duplication of work is exacerbated by the Commission’s proposals to seek additional information covering 10 different business areas, including government contracts, gift aid, safeguarding and charity assets.

“Cumulatively this all represents a significant additional administrative burden on charities.”

While NCVO said: “It is important to consider the impact of all the additional questions taken together. Even if some of them are relatively easy to answer in themselves, they add a significant regulatory burden overall.

“NCVO appreciates the Commission’s commitment to minimising that burden, but is not convinced that the right balance has been struck in all areas.”

The Charity Finance Group (CFG) 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.”

‘Lack of trust’

Both organisations expressed concern about the reason why the Commission was asking for more data to be submitted.

NCVO said: “A key issue that has emerged from our engagement with members is the lack of trust in how the Commission will use the information obtained.

“NCVO’s members have raised more concerns with us about the reasons why the Commission is interested in this information than they have about the regulatory burden they would create.

“We would therefore urge the Commission to be as open and clear as possible about why it is asking for this additional information and how it will be used.”

Acevo also said it thinks the Commission should do more to explain how the new data will be processed.

Chief executive Vicky Browning said: “Civil society is committed to improving transparency and trust, but it’s not clear that publishing raw data without context or narrative will help achieve greater transparency or public confidence.”

The Directory for Social Change also called on the Commission to “clearly explain the reasons for collecting the data, the robustness of the Commission’s research methodology and how findings might be used in the future”.

Charity Finance Group said: “There is a concern that the Charity Commission is seeking to collect data in the hope that there will be a productive use for it, rather than having a clear plan for what the information will be used to achieve.”

Meanwhile, NPC said in its response: “The required information should be meaningful, and charities must realistically be able to collect it.

“Subject to this we are in favour of collecting more information in the annual return, including around how and where money is raised and spent.”

Commission happy with level of response

In a statement last week, David Holdsworth, deputy chief executive at the Charity Commission, said: “We have received an extensive range of constructive feedback and responses about our proposed changes to the annual return and the digital service that supports it.

“I’m very pleased with this level of engagement and the information we’ve gathered during the consultation gives us a sound evidence base as we develop the annual return for 2018. We’re already beginning to analyse the responses and will take on board the feedback we receive.”

The regulator says it will publish a full analysis of consultation responses before the end of February 2018; it expects to make the new annual return available during the first half of 2018.

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