Charity Commission Publishes Response to Consultation on the Annual Return for 2018

In our December edition of the Charities Law Brief, we reported that the Charity Commission's consultation on its proposed changes to the 2018 annual return had closed. The Commission has now published its response to the consultation and we summarise the main outcomes below.

Which questions have the Commission decided to keep in their original form?

The Commission has decided to keep its proposed question sets for the following sections and these will not be amended:

• Fundraising
• Income from central and local government
• Payments to trustees
• Expenditure in countries outside England and Wales

The Commission also intends to publish the information provided under each of these questions on the charity's public register page.

Which questions have the Commission decided to keep but in amended form?

The Commission has also decided to retain a number of question sets, but in amended form, including making some of the information voluntary for the 2018 annual return (this will be mandatory from 2019). In particular, it has amended the following:

• Income received from outside the United Kingdom - the Commission had proposed to require charities to report on overseas income broken down by country and type of source. However, it now proposes to ask only for total figures of donations over £25,000 for each country, received from individuals and institutions (other than certain not-for-profit organisations). A slightly modified regime will apply for charities with income under £25,000. The Commission has confirmed that it will not publish individual charities' responses to this question.
  
  
• Employees' salaries - the Commission had proposed to ask for the salary of the charity's CEO. However, in part reflecting concerns about identifying an individual, the Commission will now ask about the highest paid employee instead. This question, together with the question requiring the charity to break down, by band, the number of employees paid more than £60,000, will require information about total employee benefits rather than salary alone. The Commission has confirmed that it will not publish information relating to the employee benefits of the highest paid employee, but it will publish the numbers of staff receiving remuneration in excess of £60,000 by income bands.
  
  
• Trading subsidiaries - the Commission had proposed to ask for the number of charity trustees who are also directors of the subsidiary. However, it has now expanded this question to ask if any of the charity trustees are also directors of any of the charity's subsidiaries, as the wording originally proposed in the consultation would not work for charities with more than one subsidiary. The Commission has also confirmed that it will publish the information provided on the charity's public register page.
  
  
• Safeguarding - the Commission had proposed to ask whether DBS checks had been carried out on any trustees, staff or volunteers working directly with vulnerable beneficiaries. However, in response to comments received, the Commission has decided to amend this question in order to provide greater clarity over which positions require a valid DBS check. It will also provide guidance about what is meant by a vulnerable beneficiary. At this stage, the Commission does not intend to make the information public, however it will closely monitor how this question is answered and may consider publishing the information on the charity's public register page in future to promote accountability and transparency.

Which questions are the Commission withdrawing?

Although the Commission has opted to include a majority of the question sets (either in original or amended form) proposed in its consultation to the 2018 annual return, it has also decided to remove two questions on the basis that the information provided will not assist the Commission in its current form. The questions to be removed are around gift aid and managing charity land and buildings.

How will the Commission use the information provided?

In its report, the Commission sets out three main ways that it will use the information provided in the 2018 annual return, as follows: 

1. To increase knowledge about the charity sector, how it operates and the risks it faces by:
   
   a) publishing the information on the charity's register page
   b) assessing levels of risk across the sector, in subsectors or at an individual level through analysis of particular subject areas
   c) using the information to inform the Commission's priorities and approach
   d) identifying charities to invite to consultation events to further explore specific subjects
   e) analysing data to better understand the impact of policy proposals or implementation.
   
   

2. To promote compliance by trustees with their legal duties and good practice by identifying charities that may be at risk.
   
   

3. To help the Commission assess risk in the decisions it makes to take action relating to particular charities, either by providing guidance and support, or by intervening where required to protect the charity or its assets.

Conclusion

Whilst the Commission has ultimately decided to retain a majority of its proposed questions, it has clearly taken on board much of the feedback which it received to its consultation and has amended or completely removed certain questions where relevant. It is clear that the Commission is seeking to strike a balance between obtaining important and useful information from charities, whilst being careful not to impose on them too much of a regulatory and administrative burden. It has also given us greater clarity about which information is relevant and how it will be used, including identifying those charities with characteristics which may indicate risk.

For more information, please contact Andrew Wherrett in the Charity Law team on 0117 314 5269.