In its business plan for 2022/23, the Charity Commission has committed to driving up governance standards, accountability, and transparency in the sector by engaging with trustees directly.
This represents a total transformation of its approach to communications which, until now, has mostly targeted charities at an ‘organisational’ level.
Trustees key to good governance
Good governance is something every charitable organisation wants to be able to confidently say that they have in place, and the role of trustees in achieving this is crucial.
Trustees that understand their responsibilities, and how to fulfil these, will be able to contribute towards achieving the charity’s wider objectives more effectively, and to ensure that the charity’s impact on society is talked about for the right reasons.
According to its plan, the Charity Commission will seek to proactively interact with individual trustees during the course of the next three years and to develop more tailor-made communications based on the information that it can acquire.
In addition, repeated and focused campaigns that address trustee obligations and signpost individuals to practical guidance, refashioned to meet the needs of charities operating in a modern world, will also form part of its renewed approach to supporting the sector.
Associate Partner Emma Wilsher comments: “It is common for Trustee boards to comprise personalities from various walks of life; each individual bringing different motivations and different skills to the table.
“This is often what makes them so dynamic and collaborative, however it is human nature to gravitate towards the things you feel you can excel in. Where Trustees are concerned, this can mean that individuals only involve themselves with certain elements of management that they feel comfortable with and rely on others, who have a more fitting skill set, to pick up the rest.
“This change in the Commission’s approach further emphasises the point that all Trustees are accountable for all aspects of the charity; for example, it is not necessarily appropriate for the Chairman and Treasurer to be the only members of the board that understand financial performance and fraud risk, and so are therefore tasked with signing off the accounts each year.
“At George Hay, we encourage charity boards to invite us to a Trustees’ meeting, at least once each year, so that we can present the headline figures, discuss overall financial performance and, if necessary, the findings of our examination or audit procedures, with all of the board regardless of their role, and be available for their questions.”
Charities annual return, and effective regulation
Another of the Commission’s key objectives for 2022/23, is to improve the way in which it regulates charities.
This, in large part, will rely upon the Commission expanding the range of data that it holds about charities and developing its analysis and use of the data.
A consultation is currently running, until 1 September 2022, to address proposed changes and/or additions to questions on the Annual Return that charities must submit.
The Charity Commission propose collecting more information on topics including, but not limited to:
- Employees and volunteers
- Diversification of income streams
- Payments made to trustees
- Grant-making activity
- Structure and subsidiaries
- Procedures and policies
Any changes confirmed would impact charities operating in England and Wales, with income exceeding £10,000 and with new fiscal years beginning on or after 1 January 2023.
We know all too well that charities can struggle with interpreting the requirements of the Annual Return, as some of the language used is not as clear-cut as it could be, and the accounts do not always cover each aspect. If you need support with this or you would like us to deal with it for on your behalf, please do get in touch.
Accountants for charities and not-for-profit organisations
We have a resolute team of experts who understand the responsibilities that come with Trusteeship and who have the specialist knowledge necessary to support your charity.
In all our work with the Third sector, our initiative-taking and practical advice – whether helping you to understand your role, or to appraise and strengthen governance overall – is designed to help you operate compliantly, achieve financial stability and work towards your core objectives.
We also offer bespoke training sessions for Trustee boards and key management who are not yet up to speed with the requirements of the Charities Act and financial governance, or simply want to be able to interpret their Charity’s financial performance better, and perhaps improve their impact reporting statements.
To discuss your charity’s accounting, audit, or advisory needs with one of our charity accounting professionals, contact us today.