Opinion

Over the threshold

Finance | 1 Oct 2008

Two camps have been set up with views on the new accounting thresholds. One firmly supports the government’s proposals to raise the income level at which charities should submit their annual report to the Charity Commission to £25,000.

Anything that reduces the regulatory burden of small charities is to be applauded, they say. The other has concerns that this will affect levels of accountability and transparency, and thus damage public trust and confidence for all charities

So which is right? There are very persuasive arguments that the level of reporting and administration faced by small charities is excessive but there must be doubts that this change will actually have any material effect on minimising it. These charities will still have to prepare reports and accounts – the proposal that they shouldn’t being rejected by the government as a step too far. Given that the sole burden of submission to the Charity Commission these days can be as onerous a task as attaching a document to an email, it isn’t immediately apparent what has been gained.

But what about the loss of transparency? Well, the information is still available as every charity is required to provide copies of its financial statements, if requested, to the public. These annual reports were never on the Charity Commission website anyway, and no one can believe that the Commission was scrutinising the figures when they were submitted. Given its tightening funding position, you could argue that the Commission is taking a pragmatic view by streamlining its own administrative burden. While some legitimate concerns have been raised that upping the threshold for preparing accruals accounts will reduce the quality of reporting for smaller charities, are formal accounts the best or only way of demonstrating transparency?

All of which means that there may well be no discernible reduction in transparency or burden and things are pretty much as they were.

Catz off

JK Rowling recently hit the headlines for making a £1m donation to the Labour Party. While it is arguable that it will take a large slice of wizardry and not just cash for Labour to retain power, the point is that she is allowed to give money to a political party. Unlike the Catz Club. While the story got a fair amount of coverage, one suspects that it could have been more damaging if the national media had bothered to look at the charity’s accounts – freely available on the Charity Commission’s website. An illustration that even if transparency is in place, people don’t always look at the information that is available.

It is possible that anyone seeing the precarious financial position that Catz Club is in might well have done their own creative accounting and put two and two together to get any number of answers about why it was donating to the Labour Party.

The Labour Party’s insistence that it technically did nothing wrong in by accepting the donation is frankly astonishing, especially given the high-profile donor scandals of the last couple of years. Surely accepting a donation that the charity was legally not allowed to make reveals a definite flaw in the Labour Party’s procedures.

Thankfully the Charity Commission moved very quickly to resolve the situation and all monies are back where they should be. But the whole episode reflects badly on everyone else involved.

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