In June this year, the Charity Commission began consulting on a range of changes to its Annual Return, through which it hopes to gather more data about your charity. The consultation closed on 1 September 2022.
A flexible approach
The Commission says that it wants to make the Annual Return more flexible, so that it can adapt to unforeseen circumstances and gather specific data from charities at certain times. The new proposals include:
- A system of core questions, with the ability to omit certain questions depending on a range of factors, such as whether the Commission wants particular information in a certain year.
- A question that can be added to the Annual Return if required, in response to an unexpected sector-wide event (such as the pandemic, or the war in Ukraine), which will allow it to gather specific data on how your charity is coping and responding to such an event.
New questions
The Commission says that it has looked to simplify the existing questions on the Annual Return, easing the burden on charities. However, it also proposes to add 23 new questions, doubling the number of core questions (to be completed by everyone) from 16 to 32. In total, there will be a maximum of 52 questions to be completed (up from 36). Alongside this, the Commission has issued draft guidance and a glossary to assist charities and trustees with the changes.
Some of the proposals for new questions include:
- Information on the diversity of your charity’s income -5 new questions gathering more in-depth information on your charity’s income streams, including any income from corporate or individual donors or connected parties.
- Where your money is going – A new question for grant-makers looking at what percentage of grants were made to individuals and to other charities.
- Greater clarity on income from outside the UK – Charities will have to indicate how a payment was received via a drop-down list of options (which will also include cryptocurrency).
- Agreements with overseas partners – The Commission will ask if your charity has formal written agreements in place with its overseas partners.
- Where you operate – Greater understanding of where your charity delivers services/ undertakes operations in the UK.
- Who you employ and where – New questions will be including looking at the number of staff your charity employs both in the UK and overseas and at payroll costs.
Next Steps
The Commission says that it will publish its response to the findings of the consultation in the Autumn, with the finalised questions included in the new Annual Return Regulations which will come into force on 1 January 2023. It is envisaged that the new Annual Return will apply to charities’ financial years starting on or after that date.
Bates Wells submitted a brief response to the consultation: