A – Z of key issues
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Accounts
Annual Returns
Charities Acts
Charity Records - how can I get hold of them?
Finding a Charity
Fraud
Fund-raising
Giving Safely to Charity
Human Rights Acts and Charities
Income of Charities in England and Wales
Investigating charities
Monitoring Charities
Northern Irish charities
Number of Charities in England and Wales
Political Campaigning by Charities
Registering as a Charity
Review of the Register
Scottish Charities
SORP 2000
Tax
Trustee Act 2000
Trustee Payments
Trustee Responsibilities
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Accounts
Charities benefit from both public donations and from public subsidy, and have to be accountable to the public, their beneficiaries and to the Charity Commission. The current accounting framework for charities has been in operation since 1 March 1996. What each charity has to do to comply with the framework will usually depend on the level of its annual income and/or expenditure.
For more detailed information click below:
[CC61 - Charity Accounts: The framework ]
[CC63 - Independent Examination of Charities]
[CC64 - Receipts and Payments Accounts Pack 2001]
[CC65 - Accruals Accounts Pack ]
[CC62 - Charities SORP 2000: What has changed]
[SORP 2000 - Accounting and Reporting by Charities - Statement of Recommended Practice]
[CC66 - SORP 2000: Examples Reports and Accounts]
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Annual Returns
Charities must by law prepare annual accounts and an annual report. They will benefit from the process of preparing accounts and reports and they are useful tools for trustees. The information contained in the accounts and reports will give the public confidence in the accountability and integrity of charities.
There are approximately 64,000 registered charities with either gross income or total expenditure over £10,000. There is a statutory obligation on these charities to complete our Annual Returns. Between them they hold approximately 99% of the total income held by all registered charities.
We use the answers to the questions in our Annual Returns to monitor charities activities in a number of ways.
Each year charity trustees will receive an Annual Return and a Register Check form together with a covering letter explaining which forms should be completed.
Annual Returns must be completed within 10 months of the end of a charity's financial year. We ask all charities to complete and return the Register Check form as soon as possible so we can amend our Register to reflect any changes.
The amount of information charities have to provide on our Annual Returns depends on the level of income or the amount spent. However, there is certain basic information we request from all registered charities
For more detailed information click below:
Useful Guidelines -Annual Returns and Register Check Form
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Charities Acts
The Charity Commission is charged with a number of responsibilities and powers by virtue of the Charities Acts 1992 and 1993.
To view these Acts please click below:
[Charities Act 1992]
[Charities Act 1993]
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Charity Records - how can I get hold of them?
As charities benefit from public goodwill, funding and subsidy, they have a duty of accountability. By law, registered charities have to send the Commission the following information, depending on their level of income and expenditure:
- Annual returns
- Annual Accounts
- Annual Reports
The Commission also keeps copies of every registered charity's governing document, which states what the charity is set up to do and how it will do it.
To make an appointment to view these documents at any of our three offices call 0870 333 0123 and ask for the Central Register. With over 186,000 registered charities, we store many of their records off-site so it is necessary to make an appointment in order that we have time to order the files in advance.
Charities themselves have a duty to provide copies of their accounts if they are asked to do so by anyone, including the general public. They can make a reasonable charge to cover any administration and photocopying involved in meeting the request.
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Finding a Charity
With over 186,000 registered charities in England and Wales, it can be difficult to find details of an individual charity or particular types of charity. The Commission maintains the computerised Public Register of Charities which contains details of all these charities. The Register can be viewed either at the Public Register at each of our offices in London, Liverpool and Taunton or via our website at www.charitycommission.gov.uk. The Public Register can be searched by name, object (what the charity does and who it helps), locality (county, town etc.), or its registered number.
If you find any difficulty in using the Public Register on our website please call our Contact Centre on 0870 333 0123 and ask for help.
To go to the Public Register of Charities please click here
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Fraud
Charities work tremendously hard to raise funds and support to maintain their services. The vast majority of those raising funds for good causes are honest, but there will unfortunately always be unscrupulous individuals who try to take advantage of the goodwill of others for their own ends.
The Commission works in a number of ways to combat fraud, often in conjunction with other authorities such as local authorities and trading standards authorities. Firstly, we monitor charity accounts (see also "Monitoring Charities"). This is primarily to make sure that charities which may be in potential trouble get the help and advice they need, but also to make sure that any significant anomalies are picked up and acted upon.
Where causes for concern are established (see also "Investigating Charities") we have a number of powers, including freezing bank accounts, removing trustees and stopping fund-raising. Where appropriate we also refer cases to the police and provide evidence and witnesses where cases come to trial.
We have jurisdiction over any funds that are raised in the name of charity, whether these are raised by registered charities or others. We welcome information on suspected misuse of charitable funds from all sources.
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Fund-raising
Effective charitable work is dependent on having adequate resources, and in many cases this means effective fund-raising. Fund-raising is on the front line of public perception of charity, which makes the methods used and the integrity of the fund-raisers crucial to public confidence. It is very important that trustees manage and control fund-raising effectively, efficiently, and economically. The highest standards need to be adopted and systems for protecting the money raised need to be put into place.
There are a number of regulations affecting charities' fund-raising, and charities need to ensure they are clear about what they can and cannot do when raising money. The Commission is always happy to give advice to charities.
For more information click below:
[CC20 - Charities and Fund-raising]
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Giving Safely to Charity
Public collections by charities on high streets and in shopping centres are a popular way for charities to raise funds. The vast majority of these collections are made by genuine charities for genuine good causes, but some are undertaken by individuals or organisations seeking to line their own pockets.
There are ways that anyone approached to donate in the street can help check that their donation is going to a legitimate charity.
Check them out:
- If collecting in a public place, do they have a license from the local authority or police and display an ID badge? (Look out for any ID that looks altered or photocopied)
- Are they using a sealed container with the charity's registration number on it?
- Can they tell you the proportion of money donated that will go directly to the charity?
- Can they give you details of how you can contact the charity direct?
- Can they show you a copy of the written agreement they have with the charity to collect money on its behalf?
If in doubt:
- Contact your local authority or police to check whether the collector has been granted a license to collect money
- Call us on 0870 333 0123
- Give your donation direct to the charity itself
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Human Rights Acts and Charities
The Human Rights Act 1998 came fully into force on 2 October 2000. Human rights cases can now be brought in UK courts and all public authorities in the UK (including the Charity Commission) have to act in a way which is compatible with the European Convention on Human Rights (ECHR).
The Human Rights Act gives every citizen statutory rights based on the European Convention on Human Rights, which can be enforced against public authorities and private bodies carrying out public functions. The Human Rights Act will therefore have implications for some voluntary organisations, including charities.
While charities will be able to benefit from those rights, they may also have responsibilities, where they are regarded as a public authority for the purposes of the Human Rights Act. Our internal guidance - OG71 B3 - covers how we believe the Human Rights Act will affect some charities, and can be found under "Operational Guidance" on our website.
If a charity carries out a public function for a government department but is unsure as to whether the ECHR has implications for its work, we would advise the charity to contact that department for clarification.
To obtain further information about human rights there are a number of websites and helplines that you may find useful. These include:
The Home Office Human Rights Unit:
http://www.homeoffice.gov.uk/hract
This site contains material on the Human Rights Act, Parliamentary questions, frequently asked questions, and other material relating to the Human Rights Task Force, the Human Rights Act and international human rights instruments.
The Home Office Human Rights Helpline: Telephone: 0207 273 2166
The Council of Europe, Human Rights Directorate:
http://www.humanrights.coe.int/default.htm
This site contains details of the Council's work in the human rights field.
The European Court of Human Rights:
http://www.echr.coe.int/
This site contains details of the European Court of Human Rights' judgements.
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Income of Charities in England and Wales
The total gross income of registered charities in 2002/2003 was estimated at over £29 billion - larger than the GNP of many countries. However, the distribution of this income is uneven, with only 6.52% of charities having an income of over £250,000.
For a breakdown of registered main charities by income please click here:
Income Pattern
http://www.charitycommission.gov.uk/registeredcharities/factfigures.asp
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Investigating charities
There will always be charities which become victims of abuse or maladministration. Only a small proportion fall into this category, but they inevitably attract attention which can be damaging to charity as a whole.
As in other areas of operation, the Commission looks for best value for money in its use of resources on investigations. Inquiries are primarily the means to put services to charity beneficiaries back on track where, owing to accident or design, things have gone wrong.
Allegations of mismanagement and misconduct come from a range of external sources and also from our own monitoring and accounts scrutiny. Initially, we undertake a preliminary evaluation of the evidence. This is a quick and cost-effective way of gathering information and of identifying those problems that can be resolved by advice, by far the majority. We are aware that the evaluation process can be stressful for those concerned and we have a target of two months in which to complete it.
Where the evaluation shows causes for concern which cannot be resolved with the provision of advice, we will open an inquiry (often known as an investigation). Depending on the outcome of the inquiry, there are a number of steps we can take to ensure, wherever possible, that the charity is put back on a proper footing to enable it to continue working to help its beneficiaries. In 2002/2003 we directly protected £49.3 million of charitable assets.
When the investigation is completed we place the Inquiry report on our website. These can be found under "Advice and Publications" on our website.
For more information on the inquiry process please click here:
[CC47- Complaints about Charities]
[CC47a- Inquiries into Charities: your rights and obligations]
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Monitoring Charities
By law, charities over a certain income or expenditure threshold (currently £10,000) are required to complete an annual return and send us a copy of their accounts, within 10 months of their financial year end. These are subject to checks by us, as part of our commitment to early identification and resolution of problems. Where necessary, issues arising from the accounts and returns are referred to the appropriate specialist units in the Commission. Accounts are also checked for compliance with the Statement of Recommended Practice (SORP) for charity accounts.
In 2000/2001 the three most common concerns referred for further action were fundraising, trustee benefits and charities' relationships with trading subsidiaries.
We take a robust approach to charities over the monitoring threshold which fail in their legal duty to send us their Annual Returns and Accounts. As part of this, we now put the name those charities (currently with income or expenditure over £100,000) who have failed to comply on our website, under "Advice and Publications" .
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Northern Irish charities
The Charity Commission has jurisdiction only for English and Welsh charities. For more information on charities in Northern Ireland please contact:
Northern Ireland
Department for Social Development
Castle Buildings
Stormont
Belfast
BT4 3 PP
Tel: 028 90 569314
Fax: 0289 905 22799
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Number of Charities in England and Wales
There are over 186,000 registered charities in England and Wales. For more detailed information on the number and income breakdown of these charities please click here:
[Income table]
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Political Campaigning by Charities
Charities in England and Wales have a long and distinguished history of contributing to social reform. They continue to make an invaluable contribution to issues central to the well being of the community today.
By law, charities cannot be political bodies, but this doesn't mean they cannot contribute to the political process. However, the way in which they do so must take account of the constraints which the law places on political activity by charities.
A distinction is made between political purposes (what the charity is set up to do) and political activities (things that the charity does to further its stated purpose). While an organisation established for political purposes can never be a charity, the trustees of a charity may do some things of a political nature as a means of achieving the purposes of the charity.
Any political activity undertaken by trustees must be in support of the charity's stated objects and within its powers (i.e. what the charity's governing document says it is allowed to do).
Generally speaking, a charity can engage in political activity if:
- there is a reasonable expectation that the activity will further the stated purposes of the charity and so help its beneficiaries sufficiently to justify the resources used;
- the activity is within the powers which the trustees have to achieve those purposes;
- the activity is consistent with Commission guidelines; and
- the views expressed are based on a well-founded and reasoned case and are expressed in a responsible way
For more detailed information contained in our publication CC9 : Political Activities and Campaigning by Charities please click here
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Registering as a Charity
Organisations can be registered as charities if they meet certain criteria under charity law. Key amongst these are:
- that the organisation's stated purposes are exclusively charitable (i.e. there cannot be some purposes that are charitable and some which are not - they must all be so)
- that the charity is established for the public benefit, or a sufficiently large proportion of it. So, for example, an organisation set up to help one sick child could not be charitable in law, but if it were to help all children with that illness in a given area then it could be.
Certain charities are exempt from our supervision because they are considered to be adequately supervised by, or accountable too, some other body or authority. However, exempt charities are still subject to the legal rules generally applicable to charities, and the provisions of the 1993 Charities Act (unless specifically excluded).
Since 1999, we have developed the concept of registration as the "Gateway'" to a continuing relationship with a charity. We are committed to ensuring that charities admitted to the Public Register meet certain basic standards of governance and have a workable governing document.
For more detailed information on registering as a charity please click below:
[CC21: Registering as a charity]
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Review of the Register
The Register of Charities contains details of all registered charities in England and Wales - over 186,000 of them. Since the Register was first created over 35 years ago, the understanding of what is legally charitable has not stayed static but has continued to evolve. As a result, there are almost certainly organisations on the Register that most people would not now regard as charitable and organisations not on it that perhaps they might.
We are taking a long, hard look at the Register to consider, within the law, whether those organisations which currently benefit from charitable status should continue to do so, and whether there is scope to develop further the boundaries of charitable status. Both will be done by the flexible use of our powers to apply and interpret the law.
The Review is not about removing charities from the Register, but is about whether there is scope to develop further the boundaries of charitable status by the flexible use of our powers. It is not about changing or revising the law: that is not in the Commission's remit. It is about the flexible use of our powers within the current law.
The aim of the Review, is to bring the understanding of what is charitable into the new millennium, to maintain the vital role charities play in society by keeping them in step with the changing needs of society.
We see public consultation is an essential part of this, helping to identify changing social circumstances. The end result of most Review consultations is the publication of new or revised guidance, which is published in the RR (Review of the Register) series of Commission publications.
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Review publications already available are:
The Hallmarks of a well-run Charity CC60
The Review of the Register of Charities RR1
Recognising New Charitable Purpose RR1A
Charities for the Relief of Unemployment RR2
The Promotion of Urban and Rural Regeneration RR3
The Recreational Charities Act RR4
Community Capacity Building RR5
Maintaining an accurate Register RR6
Independence from the State RR7
The Public Character of Charity RR8
Preservation & Conservation RR9
Museums and Art Galleries RR10
Charitable Status and Sport RR11
The Promotion of Human Rights RR12
All these can be found on our website at www.charitycommission.gov.uk under the "Register" heading
For more information on the Review contact : Bob Smith, Review Administrator, Charity Commission, Room 301, Woodfield House, Taunton TA1 4EH. Email: review@charitycommission.gsi.gov.uk
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Scottish Charities
The Charity Commission has jurisdiction only for English and Welsh charities. For more information on charities in Scotland please contact:
Scotland
Scottish Charities Office
25 Chambers Street
Edinburgh
EH1 1LA
Scotland
Tel:01312262626
Fax: 0131 226 6912
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Tax
Because they benefit society as a whole, charities benefit from a number of tax reliefs, including:
- Income tax and corporation tax reliefs
- Rating relief
- Capital Gains tax
- Value Added Tax
- Inheritance Tax; and
- Gift Aid - tax relief on Gift Aid donations
These reliefs are dependent on a number of different criteria.
The Charity Commission does not administer or co-ordinate tax for charities. Depending on the relief involved, this falls under the jurisdiction of either Customs and Excise or Inland Revenue (Charities).
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Where to get further information:
For VAT: Local VAT offices issue free VAT notices and leaflets. Their telephone numbers can be found under "Customs and Excise" and they will also deal with enquiries.
Customs and Excise also run a National Advice Service on 0845 010 9000. This will also provide the addresses of local Customs and Excise offices. Their website is very useful and can be found at www.hmce.gov.uk
For more information on Income and Corporation Tax, Inheritance Tax, Capital Gains Tax and Corporation Tax contact IR (Charities) on 0151 472 6036.
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Trustee Act 2000
The powers and duties of many trustees were changed in several areas by the Trustee Act 2000, which came into force on 1 February 2001. The Act applies to many, but not all, charities. Generally speaking, it applies to charities set up as trusts or as unincorporated associations, but not charities set up as companies. The main features are:
- A new general power of investment
- A power to acquire land
- A power to employ agents and delegate particular types of function to them
- A power to employ agents to undertake a range of functions
- A power to appoint nominees and custodians
- A requirement to keep the actions of agents, nominees and custodians under review
This is a very brief outline of what is in the Act. More detailed information can be found in guidance on our website at www.charitycommission.gov.uk by searching on "Trustee Act 2000" or in OG86 under 'Operational Guidance'.
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Trustee Payments
The law states that trustees cannot receive any benefit (which includes payment, services, facilities, funds or other benefits of measurable value) from their charity unless they have specific legal authority to do so.
The principle of unpaid trusteeship has been one of the defining characteristics of the charitable sector contributing to the public confidence in charities, and was generally endorsed by respondents to our public consultation on the payment of trustees in late 1999.
This principle works on the basis that if trustees are not allowed to receive any benefits from their charity, they will not have any conflict of interests when they come to allocate charity resources. It is part of a wider rule that trustees should not put themselves into a position where their duties as trustees might conflict with their personal interests.
Trustees are allowed to receive repayment for reasonable out-of-pocket expenses incurred in the course of their duties as trustees
However, there may be circumstances in which it is in the best interests of the charity for one or more of the trustees to be paid.
If trustees want to pay one of their trustees, they will first need to check whether or not the governing document of the charity contains a power to pay trustees. If there is such a power, the trustees will then need to consider whether or not the use of the power is in the best interests of the charity at that time.
If the governing document of the charity does not contain a power to pay trustees, then the trustees of the charity will need to approach us for authority. In order to give our authority, the trustees will need to convince us that paying a trustee is both necessary and reasonable and in the best interests of the charity.
For more detailed information click here
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Trustee Responsibilities
A charity's trustees are the people responsible under the charity's governing document for controlling the management and administration of the charity, regardless of what they are called, e.g executive or management committee, directors etc.
No-one under the age of 18 can be appointed as a trustee, and some people are disqualified by law from acting as charity trustees.
It is an offence to act as a charity trustee while disqualified unless the Commission has given a waiver under section 72(4) of the Charities Act 1993.
Trustees are required to act reasonably and prudently in all matters relating to the charity and need always to bear in mind the interests of the charity. They cannot let their personal views or prejudices affect their conduct as trustees. They need to exercise the same degree of care in dealing with the administration of their charity as a prudent businessman or woman would exercise in managing their own affairs or those of someone else for whom they were responsible.
We recommend that trustees be selected for what they can contribute to the charity. They ought not to be appointed for their status or position in the community alone: this is the function of patrons. Trustees need to be able - and willing - to give time to the efficient administration of the charity and the fulfillment of its trusts. We recommend they be selected on the basis of their relevant experience and skills and must be prepared to take an active part in the running of the charity.
For more detailed information on the responsibilities of charity trustees please click here
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SORP 2000
The revised Statement of Recommended Practice - SORP 2000 - came fully into effect on 1 January 2001. The changes introduced by SORP 2000 apply to the accounts of charities with an income of over £100,000 and all charitable companies.
SORP 2000 is a comprehensive statement, supported by new Regulations made by the Home Office. The key changes are important and will help to improve charities' accountability and openness even further.
Our summary booklet, CC62 - Charities SORP 2000: What has changed, explains:
- The main changes from the Charities SORP 1995; and
- Why the changes were made and how they were agreed.
To access CC62, please click here
Our guidance, CC61 - Charity Accounts 2001: The framework, explains:
- The wider charity accounting framework of which SORP 2000 is a major part; and
- The requirements for charities in various income bands in order for them to comply with SORP 2000 and the 2000 Accounting Regulations.
To access CC61, please click here
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