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Starting the new financial year on the right foot
Robust financial management is vital so charities can protect themselves against financial difficulties or abuse, and meet the needs of their beneficiaries.
There’s no better time than the start of the new financial year to assess your charity’s financial situation and financial controls, to see how you can improve them. Doing this is key to making sure that your trustees are able to protect the charity’s assets and resources.
We recently updated our Charity finances: trustee essentials (CC25) guidance to help trustees and charity staff get to grips with the basic areas of financial management. It also links to more detailed guidance on a number of areas.
We’ve also updated our handy 15 questions checklist which is a great tool to check you’ve got the basics covered, identify priorities for the coming year, and review your charity’s overall financial effectiveness.
Campaigning during the election period
During the period leading up to the General Election in June, charities should familiarise themselves with our guidance on Campaigning and political activity guidance for charities (CC9), as well as the supplementary guidance on charities, elections and referendums.
We also produced a case report following the 2015 General Election which contains some useful lessons for charities and trustees about campaigning.
What’s your induction process and policy for new trustees?
A proper induction ensures that trustees can become valuable and effective members of the board as quickly as possible. As a minimum we recommend that new recruits to charity boards should be given key documents about the charity, including:
- the charity’s governing document
- the charity’s latest annual report and accounts
- minutes of recent trustee meetings
- the charity’s policy on dealing with conflicts of interest
- any other key documents which trustees will need, for example, the charity’s strategic plan and its vision and values or mission statement
New trustees should meet with other trustees and key people within the charity to get a better understanding of its work and any challenges. They should also read our guidance: The essential trustee: what you need to know, what you need to do (CC3).
We advise charities to invest in the training, support and development of their trustees, as well as members of staff, to increase the contribution that the board can make to the charity’s management. More information is available in the Finding new trustees (CC30) guidance.
Digital update: Charity Commission to launch 2 new digital services
Within the next couple of months, we will be launching 2 brand new digital services that will allow trustees to change their name and amend the objects in their governing document online.
The services have been tested extensively with a number of charities, umbrella bodies and individuals, including those with low digital skills, and we are confident that they are very easy to use and will bring significant time savings for users, compared to the current manual process.
Changes to Department of Health policy for NHS charities
NHS charities no longer need permission from the Secretary of State to change their name or governing document. This means the process is much simpler for these charities.
Warning against using cash couriers
Many charities, particularly those that work overseas, will need to be aware of an alert that we issued recently in collaboration with the police after seeing an increase in the number of charities having cash seized from their fundraisers, agents and representatives at the UK border.
Cash seizures can mean a charity’s beneficiaries lose out, impact on the charity’s activities and result in the loss of donor money. The Commission’s advice is simple: don’t use cash couriers unless there is no other possible means of moving money.
Reminder about your charity’s accounting requirements
Preparing an annual report and accounts provides an important opportunity for trustees to report on what the charity has achieved over the last year and demonstrate to its supporters, potential funders and the public that they have managed its resources effectively and are making a difference to their beneficiaries and meeting its objectives.
The detailed requirements depend mostly on your charity’s size and there is more information about this on GOV.UK, but all registered charities must produce a trustees’ annual report and accounts and make them publicly available.
If your charity’s income is over £25,000 then you must also arrange for an independent examination or, for the largest charities, an audit and file all 3 documents alongside the annual return. If your charity is a company or has an income over £250,000 then you must prepare accruals accounts.
We have recently published reports on the quality of charity accounts, one aimed at small charities and another aimed at larger charities, highlighting the key requirements in meeting readers’ needs and some common mistakes to avoid when preparing your trustees’ annual report and accounts. We’ve also published a reminder of the public benefit reporting requirement.
New accounting templates produced with Companies House
If you are a trustee of a charitable company with an income under £500,000 or helping in preparing those accounts and you’re not sure about what information to include in your annual report and accounts or just want to save time, you can use our new accounting templates that we have developed with Companies House.
Using these will not just help ensure you provide us with the correct information we need as a regulator, but will also help you produce quality accounts that show your supporters how you used their generous donations. There are also templates for non-company charities with incomes under £500,000 and trustees’ annual report templates.
Changes to the land disposal framework for housing associations
As of 6 April 2017, English registered providers of social housing (RPs) no longer have to obtain consent from the Homes and Communities Agency, or Welsh ministers in relation to land in Wales, to dispose of land and grant mortgages. As a result, RPs which are registered charities will generally now need to comply with sections 117-121 of the Charities Act 2011 when they dispose of land, and with section 124 when granting mortgages over land.
Making the right decision for your charity
Charity boards have to make difficult decisions on a regular basis. The Commission’s It’s your decision guidance offers advice for trustees about how to approach decision making, and key things to consider. As a reminder, when making decisions trustees have a legal duty to:
- act within their powers
- act in good faith and only in the interests of the charity
- make sure they are sufficiently informed
- take account of all relevant factors
- ignore any irrelevant factors
- manage conflicts of interest
- make decisions that are within the range of decisions that a reasonable trustee body could make
Charities and workplace pensions: do you know your automatic enrolment duties?
You will have automatic enrolment duties even if you only employ one member of staff. Charities are not exempt from this legal requirement.
You’ll need to assess your staff, put them into a pension scheme if they meet certain criteria, tell them what you’ve done (whether or not they meet the criteria to be automatically enrolled), and complete and submit a Declaration of Compliance to The Pensions Regulator by a set date.
The Pensions Regulator has guidance on their website to support you, including an online duties checker (which takes a few minutes to complete) to help you understand what you need to do, and by when.
To find out more visit The Pensions Regulator’s website.
Are you demonstrating commitment to best practice fundraising?
Charity fundraising: a guide to trustee duties (CC20) sets out the law and good practice principles for trustees to follow when dealing with fundraising. It highlights the importance of following the recognised standards for fundraising, which are set by the Fundraising Regulator in the Code of Fundraising Practice.
Charities can now demonstrate their commitment to best practice fundraising in 2 ways:
- charities with fundraising costs in excess of £100,000, by paying the voluntary levy to meet the costs of the Fundraising Regulator; letters and invoices have already gone out to all charities covered by the levy. If you have any queries or are not sure if your charity has paid, please contact email@example.com
- other charities can now voluntarily register with the FR
Charities who demonstrate their support receive public recognition on the register displayed on the Fundraising Regulator’s website, and can use the regulator’s badge on their fundraising and marketing material.
Fundraising Preference Service: are you ready?
The Fundraising Regulator will soon be launching a fundraising preference service that allows the public to select charities that they don’t want to receive direct marketing communications from.
Read the information and short leaflet that are available on the Fundraising Regulator’s website to make sure you understand how the changes will affect communication with your supporters.
Larger charities: test your resilience against fraud
The Commission is encouraging larger charities to make use of a free tool aimed at helping them assess their resilience against fraud and protect charity assets. The Self-Assessment Fraud Resilience (SAFR) Tool has 29 tracker questions allowing an organisations to establish:
- how well it understands the nature and cost of fraud
- whether it has an effective strategy to address the problem
- whether it has a counter-fraud structure which helps it implement its strategy
- the extent to which fraud is managed like any other business issue
Whilst charities’ individual responses will be strictly confidential, the Commission will use an overview of outcomes, allowing it to identify areas of particular strength or weakness. This will help us to improve guidance and establish longer term trends.
Automatic disqualification changes
Please note that the new automatic disqualification provisions for trustees and senior managers have not yet been implemented. A decision on implementation will be for the new government after the General Election on 8 June to make. The Commission will then provide further updates.
Keeping in contact with the Commission
Our contact centre is open 10am to 12pm and 1pm to 3pm, Monday to Friday on 0300 066 9197; we will be able to help if you are experiencing technical problems with an annual return, a registration application or any of our online forms.
You can also sign up for GOV.UK alerts so you know when we update our web content. This is the simplest way to keep up-to-date with the latest information. You’ll be asked for an email address to create a subscription, and can choose how often you’d like to be alerted when we publish web updates.