Reviews of charity accounts show majority are of acceptable quality but full compliance with the public benefit reporting requirement is low.
A report published today by the Charity Commission suggests that most charities are failing to fully meet the public benefit reporting requirement. Public benefit is at the heart of what charities are about and the regulator says all charities should be able to account to the public about what they have done each year to promote their purposes for the public benefit.
Since 2008, charities must formally report on their charity’s public benefit in their trustees’ annual reports. The minimum requirement for all charities comprises:
- a report of the activities undertaken to further the charity’s purposes for the public benefit
- a statement as to whether the trustees have had due regard to the commission’s guidance on public benefit
The regulator analysed around 220 sets of charities accounts, split between two financial years, those ending during the 12 months to 31 March 2012 and 2013, respectively. The research found that only 27% of accounts in the 2012 sample and only 35% of those in the 2013 sample fully met the legal requirement.
In a separate report also published today, the commission used the same sample of accounts to analyse the overall quality of trustees’ annual reports and accounts to assess how useful they are for users, as well as how closely they comply with the basic legal reporting requirements.
The regulator assessed 68% of the accounts in the 2013 sample and 54% of the accounts in the 2012 sample as being of acceptable quality. The most common reason charities failed to meet the minimum acceptable quality standard was that their trustees’ annual reports were inadequate.
The commission has found an apparent correlation between size of charity and the quality of its accounts. 89% of charities with incomes of over £500k were of acceptable quality; that fell to 53% of charities with incomes of under £250k.
Paula Sussex, chief executive of the Charity Commission, said:
Knowing what charities do and achieve with their resources matters to people. We know from our public trust and confidence research that accountability is among the most important drivers of public trust in charities. So it is crucial that trustees take their annual reporting requirements seriously. That goes beyond getting the figures in your accounts right. It’s about using the opportunity to explain their charities’ impact, to tell their story in a way that its supporters and beneficiaries understand.
Today’s reports set out the action the commission has taken with respect to the charities whose accounts were not satisfactory or whose accounts did not meet the public benefit reporting requirement.
The reports form part of a wider programme of pro-active accounts monitoring reviews by the commission. Previous areas of focus have included charities with pension deficits, charities with net current liabilities and charities whose permanent endowments have reduced.
Notes to editors
- The Charity Commission is the independent regulator of charities in England and Wales.
- Our mission is to be the independent registrar and regulator of charities in England and Wales, acting in the public’s interest, to ensure that:
- charities know what they have to do
- the public know what charities do
- charities are held to account
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Published: 26 March 2015
From: The Charity Commission