All charities need to produce charity accounts. The level of detail required varies depending on the size of the charity. There are 168,000 registered charities but 104,000 of these have income of less than £25,000 per year. There are only 712 charities reporting income of over £1 million per year.
Research by The Charity Commission says that around 46% of charity accounts do not meet the minimum standards required. Among smaller charities, the rate is much worse. In fact, 63% of charities with income between £25,000 and £250,000 failed to meet the standard.
The Charity Commission also says that fewer than 50% of Trustee Reports are good. Since a Trustee Report is an integral part of the information submitted to The Charity Commission these are important.
Other failings were highlighted, including failures to manage conflicts of interest and 26% did not properly report related party transactions.
What is the point?
The first issue is that charities whose accounts do not meet minimum standards are more likely to be subject to enquiry, and possible investigation, by The Charity Commission. Checking of compliance is being stepped up following recent publicity over charity failings.
A major second issue is that most funding and grant bodies rely on the published accounts to decide whether or not to give money. If the accounts aren’t up to standard, at best the funder will ask a lot more questions which take valuable time to respond to. At worst, the funder just will not give the money.
If you are a charity trustee, you don’t want the hassle and inconvenience resulting from a Charity Commission enquiry. You won’t want the stigma attaching to you should issues be found – even if you had no knowledge of any wrongdoing or carelessness.
Make sure you are aware of what is going on in your charity. Look at financial and other information produced – don’t just rely on others. Try to ensure there is a wide spread of knowledge among trustees and that trustees are not interconnected.
If you have any doubts, raise these with The Charity Commission.
Most charity trustees do brilliant work and there are relatively few problems but when they do occur, the public tends to take notice, particularly if it is a local issue.
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