The Charity Commission has today published the results of its
latest monitoring reviews of charity trustees’ annual reports and
accounts. The findings reveal a modest improvement in the quality
of public reporting, but the regulator says that too many
charities are still falling short in this area.
Public benefit reporting plays a key role in providing
transparency so that the public can understand exactly what a
charity does and how their donations are being used.
As part of its proactive monitoring work, the Commission
scrutinised a random sample of 106 charity trustees’ annual
reports and accounts filed with it to assess:
- how charities are meeting the public benefit reporting
standards
- whether the accounts meet readers’ needs, including a
separate sample of “small charities”
Telling your story well: Public benefit reporting by charities
Trustees have a legal responsibility to comply with the
Commission’s guidance on public benefit
reporting. All registered charities must publish a trustees’
annual report, setting out the charity’s activities for the
public benefit.
The Commission’s review found that 51% of the charities reviewed
demonstrated a clear understanding of the public benefit
reporting requirement – a 5% improvement from last year’s result.
The majority of annual reports also included key aspects of
public benefit reporting, with 71% explaining who benefitted from
the charity’s activities, and 62% including a public benefit
statement.
Some trustees had expanded their statement to explain why they
believed their charity’s activities provided public benefit,
whilst others discussed the difference that they had made,
particularly to beneficiaries.
Do charity and small charity annual reports and accounts meet the
reader’s needs?
The Commission examined whether the charities’ trustees’ annual
reports and accounts as a whole met readers’ needs, based on a
range of criteria.
For the sample of charities with incomes over £25,000, the
Commission found that 74% of the trustees’ annual reports and
accounts reviewed were of acceptable quality, meeting the basic
benchmark set by the Commission.
The most common reason for inadequate reporting was that the
trustees’ annual report did not explain the charitable activities
the charity had carried out.
For the sample of small charities, the Commission found that 64%
of the charities provided trustees’ annual reports and accounts
of acceptable quality, meeting the regulator’s basic benchmark.
The main reason for inadequate reporting was that the charity
failed to provide one or both of the trustees’ annual report and
the accounts.
The Commission has provided regulatory guidance to 89 charities
included in the reviews in order to help the trustees improve the
quality of future trustees’ annual reports and accounts.
Nigel Davies, Head of Accountancy Services at the Charity
Commission for England and Wales said:
“Our research into trust and confidence in charities shows that
the public no longer give charities the benefit of the doubt;
they want evidence that charities make a difference when using
their money. Public reporting is an opportunity for charities to
tell their story and explain to the public what they do and how
they use charitable funds.
“Producing a trustees’ annual report and accounts is not an
administrative box-ticking exercise. It is a chance to show how
your charity is making an impact and how you are delivering on
your core purpose.
“Today’s results show that too many charities are still not
meeting very basic standards when it comes to making key
information available to the public. I am encouraged to see that
an increasing number of trustees recognise the value of public
benefit reporting, but there is clearly more work to be done
across the sector.”
The full reports are available on GOV.UK.
Ends
Notes to editors
- The Commission’s research into public trust and confidence in
charities was published on 11 July 2018 and is available
on GOV.UK.
- The Charity Commission is the regulator of charities in
England and Wales. To find out more about our work see
the about us page
on GOV.UK.
- Search for charities on our check
charity tool.
- To assess whether small charities accounts met readers’
needs, the Commission included a separate sample of 110 small
charities, those with incomes less than £25,000, who are not
required to routinely file their trustees’ annual report and
accounts with the regulator (except for Charitable Incorporated
Organisations)
- In addition to producing an annual report, all registered
charities must prepare accounts and, where the charity’s income
is over £25,000, arrange for them to be scrutinised through an
audit or independent examination. They must also file their set
of accounts with the regulator.
