Changes to the Charity Commission's Annual Return from 2023

As many will be aware, the Charity Commission launched a consultation during 2022 on changing the questions in the annual return. This is the set of questions that all charities with income of over £10,000 have to answer online every year, whether accounts need to be filed or not.

The proposed changes could have been quite far-reaching, and imposed onerous burdens on charities – particularly smaller charities who do not have the resources or staff to compile a lot of information. It was not just a matter of collecting this information, but some of the questions were very unclear in their proposed formulation and it wasn’t apparent that it would help the Commission achieve any proportionate aims. (It’s worth pointing out that the Commission has a definite data-driven agenda, and the proposed questions flow from that strategy).

As one example, there were a number of proposed questions around charities’ premises, asking for either actual addresses, or post code data for all locations from which a charity operates. We strongly argued this was not helpful, and wouldn’t give the Charity Commission sensible information nor the ability to identify so-called “charity poverty”, where certain areas seemed to be over- or under-served by charities. It would also be almost impossible for a church with many house groups – what counts as a location from which the charity delivers services, every house in that case?

We, and a number of other organisations, trustees and individuals responded to the consultation, and our response was well in line with that of other institutions such as the Institute of Chartered Accountants in England and Wales, but making clear the particular difficulties for churches and Christian charities.

The outcomes of the consultation were positive:

• Five fewer questions than previously proposed;
• Much improved wording for 13 questions, using more standard terms;
• Value thresholds introduced for four of the new questions, so that some questions only apply if a charity is over a particular size;
• Requirement to report items as percentages of proportions removed, instead requiring values which can be more directly reported, saving the charity from having to do calculations;
• Increased rounding levels at which data can be reported, for example £100 instead of £1;
• Six questions will only be included in 2023 (for example whether a charity is a subsidiary, or part of a group), and then removed in 2024 as the Commission can obtain the information elsewhere.

 

The Charity Commission’s guidance on how to prepare a charity annual return has been updated, and a brief summary of the changes for the different income thresholds are as follows:

All charities who complete an annual return (income more than £10k and all CIOs) have to answer basic questions. New questions include:

• Whether the charity’s public address on the register is correct, and provide the address for administrative headquarters if different;
• Additional questions on safeguarding & risk;
• For an external event (specified by the Commission, and varying from year-to-year, for example Covid, war in Ukraine, cost-of-living crisis), how or whether the charity has been affected;
• Whether charities have written agreements in place with partners who provide services on their behalf overseas (this includes grant recipients). Charities may need to revisit their arrangements with overseas partners in light of this question.

Charities with income over £100k

• Need to provide the single highest donation from corporate donors, single donors and related parties.

 

Policies

Something else to note is that there is an amended version of the question which asks about the policies that a charity has in place. The current question asks whether a charity has a number of policies, such as risk management, investment, conflict of interest, complains handling, etc.

The Commission will now additionally ask whether a charity has these new policies:

• Serious incident reporting
• Trustee expenses
• Campaigns and political activity
• Bullying and harassment
• Social media
• Engaging external speakers at charity events

The following policies have been removed from the list:

• Volunteer management
• Paying staff
• Grant-making

Just because the Commission asks about these policies does not mean that they are mandatory, but your policies are listed on your Commission register entry. Some might be more relevant than others. Stewardship provides a policy pack for purchase on our website which covers most of the existing policies and we will be reviewing this in the coming months in light of the changes to the Annual Return.

The questions on safeguarding have also become more detailed, which is not surprising given this is the Commission’s number one priority. They now ask specifically whether the charity has obtained all required Standard, Enhanced, and Enhanced with Barred List DBS checks. This may mean that the person completing the Annual Return will need to consult with the safeguarding lead of the organisation to get some assurance around this.

All in all, for most charities you should be able to complete the questions with information that is readily available, but larger charities may need to do some data-gathering. We would therefore recommend that you do not leave this until the day of your filing deadline!