Charities are not doing enough to demonstrate their public benefit, or explain how they spend their money, according to reviews of charity accounts, published today by the Charity Commission.
Charity trustees are under an important legal duty to publish a trustees’ annual report and accounts, by which they are accountable to the Commission and the public. The regulator has therefore carried out proactive scrutiny of charity accounts and trustees’ annual reports*, and assessed these against public expectations and public benefit reporting requirements.
Just 70% of trustees’ annual reports and accounts in the ‘Public reporting review’ met the Commission’s basic benchmark of user requirements, compared with last year’s 74%. The quality benchmark was based on recent research into trust in charities which found that ‘ensuring a reasonable proportion of donations make it to the end cause’ and ‘making a positive difference to the cause they work for’ were the most important factors driving public trust and confidence in charities.
The main reasons why charities’ accounts submissions did not meet the Commission’s basic benchmark were failure to evidence that their accounts had been subject to independent scrutiny by an auditor or independent examiner, as required by law, and/ or not providing meaningful information about their charity’s purposes or the activities carried out to achieve those purposes.
Just 52% of trustees’ annual reports in the ‘Public Benefit reporting’ review met the public benefit reporting requirements. Although this is a 1% increase on last year, trustees are still falling short on the requirements to explain activities undertaken by the charity to further its purposes for the public benefit, and to provide a ‘public benefit statement’.