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Annual return consultation

Written by: Kristina Kopic, ICAEW
Published on: 25 Jul 2022

The Charity Commission is consulting on changes to the Annual Return (AR). Here’s why we encourage charities to make their voices heard before the closing deadline of 1 September.

Proposed changes

The Charity Commission is planning to update its Annual Return to gather more information and better sector insights. The proposed changes would result in a doubling of the return’s core questions from 16 to 32 and the Commission is seeking your views to assess whether the benefits outweigh the increased administrative burden of a longer AR.

The proposed additional questions seek wide-ranging information, for example, about the diversification and potential conflicts of interest relating to the charity’s income streams, its relationship with overseas partners, its organisational framework, headcount and payroll.

Why so many new questions?

The Charity Commission is hoping that the enlarged AR will lead to better insights about the risks faced by charities and will improve the accountability of charities to their stakeholders.

As chartered accountants, we value the prospect of improved data insights and transparent reporting. However, there is a risk that charities would find it very time-consuming to gather and verify the data to answer the proposed additional questions accurately. Moreover, there is a risk of duplicated effort if some of the questions are already answered in the annual report and accounts of charities.

Is the Commission asking the right questions?

Charities may question whether the proposed new questions are answering the most pertinent questions of the sector. For example, a number of charities and campaigners, including New Philanthropy Capital, Reach Volunteering and Charity So White, have written an open letter to the Chief Executive of the Charity Commission to challenge the regulator’s perceived lack of urgency in tackling the charity sector’s “massive diversity problem.” They call for additional information requirements on larger charities about diversity at board and senior leadership level.

Reflecting on the key drivers of public trust and support for charities, do you think the annual return captures the key information required to measure progress and demonstrate accountability?

Have your say

We encourage all charities to respond to the consultation before 1 September.

What do you think: Are the new questions addressing the key information needs of the charity sector? Is the additional effort required to gather information proportionate? Are the new questions designed to fill information gaps on key issues?

You may also reflect on the likely reliability of the answers to new or updated questions and whether meaningful insights on key information gaps are likely to arise from the proposed changes.