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Charitable acts

Finance | Ian Allsop | 1 Dec 2006

In the end, it seemed a bit of an anti-climax when the Charities Bill received Royal Assent on 8 November. Perhaps it was the fact that those of us who have closely followed the path of the new legislation over the last four years have got so used to the probability of most of the provisions becoming law, it was hard to get too excited when it actually happened.

There will be no immediate effect, apart from getting used to referring to an Act rather than a Bill, in much the same way as it can take until the end of January to stop automatically using the previous year when writing the date. At the time of writing, the Cabinet Office had yet to issue details of when various parts of the Act will be implemented, but nothing that materially affects charities will happen this side of Christmas.

Although busy finance directors probably have better things to do with their time than to read Hansard, there is some knockabout stuff in the transcript of the third reading debate in the Commons, in particular during the lengthy four-hour debate on charitable purposes and public benefit.

As well as revealing the salary that Campbell Robb (pictured) will receive in his new role as director general of the Office of the Third Sector (and a mention of Charity Finance), the parliamentary jousting also skirted such topics as the merits of darts as a sport promoting physical wellbeing. However, the net result was that John Grogan's amendment that the Charity Commission, when it assesses whether a charity provides public benefit, should consider "the effect of placing any undue restriction on obtaining that benefit", was defeated.

Grogan has criticised NCVO for turning its back on the amendment in return for the concession that a review of how the Charity Commission is applying public benefit will be undertaken in three years. NCVO countered by saying it changed tack because it felt the review concession and the Commission's stated approach represented a significant shift. Whatever the truth of this, there has been a lack of clarity about NCVO's perceived position on public benefit throughout this long-running saga.

The result is that the scrutiny that the Charity Commission will receive as it takes forward its plans on determining public benefit, from the media, charity law community and charities themselves, will be intense. Perhaps more so than that afforded to the charities having to actually demonstrate their worth. The Act may be passed, but the real fun starts now.

TAR very much

Those who have been in the sector for some time may remember widespread grumbling when Sorp 2000 required charities to include a statement on their risk management. In reality, it was only asking charities to explicitly clarify things they should have been considering already, and now thinking on risk has moved on to such a degree that it is embedded into most charities' strategy as second nature.

The negative reaction to the new requirements on the trustees' annual report (TAR) contained within Sorp 2005 has echoes of this. Some charities have complained that reporting on objectives, outcomes and performance is burdensome, and a waste of time (and resource) as nobody will bother to read it. While there may not be vast swathes of the general public poring over the narrative detail of a charity's statutory accounts, the documents are freely available, so it is worth making a good job of it, and taking the opportunity to tell a really good story about what you are doing. Additionally, it is really only asking charities to report on areas that they should already be thinking about. Having to present this information to the outside world is an opportunity to assess where you are at.

Perhaps one of the reasons that the public doesn't read this stuff is because not enough effort has been made to make it accessible and exciting. Although the very large charities have internal marketing resources dedicated to positive messages, for others one of the main stumbling blocks could be that finance directors, who often end up producing the TAR despite it being nominally the responsibility of trustees, lack the writing and communication skills to do the job properly. This is something that needs to be addressed if charities are to take advantage of this chance to sell what they do and do well. If the new requirements end up having a positive effect than perhaps it won't be seen so much as a burden and once charities get used to producing the TAR a few times, one suspects we will once again look back and wonder quite what all the fuss was about.

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