Important changes to the annual return

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The Charity Commission has announced changes to the annual return, the report all charities must submit to the regulator to hold them accountable to the public. The Commission says the changes, which will apply when charities report on their financial years ending in 2015, will strengthen its ability to identify risk and will ensure people have access to the information they need to make confident decisions about charities.  The announcement follows a consultation with charities on proposed changes to the return.

New questions to be added this year are:

  • In the reporting period, how much income did you receive from contracts from
    a) central or local government to deliver services, and
    b) grants from central or local government?
  • Does your charity have a policy on paying its staff?
  • Has your charity reviewed its financial controls during the reporting period?

The consultation had also proposed a question on charities’ campaigning expenditure and to ask charities with incomes of between £10,000 and £500,000 for key financial information. However, this has not been included as a requirement in the annual return for 2015. The Commission has acknowledged concerns raised by charities that providing information on campaigning expenditure would create a significant amount of work at this time.  It maintains, however, that campaigning expenditure is a matter of public interest and will revisit the issue when it considers changes to the annual return for 2016.

The Commission has also taken into account concerns raised about the proposal to provide key financial information. It says it recognises that including this question would have a particular impact on charities with smaller incomes, and that it will therefore not require charities to supply this information in the annual return. Instead, it will explore whether a technological solution, such as introducing accounting software, might allow it to gather the information it needs to regulate charities effectively, without putting too great a burden on smaller charities.

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