Charity Annual Returns

Charity Annual Returns

Over the summer the Charity Commission ran a consultation on the charity annual return. Every charity with an income over £10,000 and all CIOs must submit an annual return within 10 months of the end of its financial year. The new annual return will apply to charities’ financial years starting on or after 1 January 2023.

The consultation aimed to improve the quality of data collected, in order to better analyse, identify risks earlier and increase public trust and confidence. It will support the Commission’s ambition to use analytics to become a data-driven regulator, identifying issues before they emerge and having the data to enable policy makers and the public to better understand the sector.

There are two strands of the proposed changes. Firstly, it is revising and simplifying existing questions. Secondly, it adds an extra 23 new questions to the annual return.

The new questions relate to topics including:

• Information about different income sources, as limited or single sources of funding can be risky;
• Trustee payments – to bring it into line with new rules under the Charities Act 2022 (see above);
• The premises from which the charity operates, as currently the Commission is only aware of the address given at registration;
• Data protection and cyber security;
• Details of a charity’s wider organisational framework;
• The number of staff and payroll costs; and
• Whether the charity works with vulnerable groups.

The consultation proposes an additional ability for the Commission to ask questions relating to “major external change”, for example the pandemic or the war in Ukraine, without the need to alter parliamentary regulations that set out the annual return questions. They give the example that during the pandemic they were aware that the annual return gave no information about how the charity was coping with and responding to the situation.

The Commission hopes that the simplification will outweigh the additional burden of answering many new questions. However, it is inevitable that trustees will have to spend much longer preparing the annual return as they will need to access substantial amounts of extra information to complete the annual return. The Commission will publish its response to the consultation in Autumn 2023, so it won’t be long until we know what form the new annual return will take.

Annual Return Consultation