The Charity Commission has proposed that charities should have to disclose their campaign spending and public sector income in their Annual Returns.
But charity infrastructure bodies have said they are worried the proposals will add too much red tape.
The Charity Commission has today launched a consultation on changes to the Annual Return for 2015, which also proposes asking charities with incomes over £10,000, and all CIOs, to fill out a shorter annual return, with some key financial information.
At present only charities with an income of more than £500,000 are required to provide detailed financial information through the annual return.
The Sorp committee has twice rejected proposals for charities to declare income from public sector sources in charitable accounts.
Caron Bradshaw, chief executive of CFG, said: "The Commission needs to avoid appearing to try and put back into requirements matters that were rejected during the development of the SORP for example the need for separate disclosures of income from government contracts.
"And whilst we still don’t object in principle to proposals to disclose additional information we are troubled by what this information may be used for and how easy it will be to calculate the information required by some of these disclosures.
Sector concerned by proposals
Sir Stuart Etherington, chief executive of the NCVO, said: “How much charities spend on campaigning is not a regulatory matter, and we are concerned to see the proposal for mandatory disclosure in the annual return.
"We are in favour of the principle of transparency and believe that charities can and should communicate clearly with the public about their activities.
"However, as charities do not currently account for campaigning costs separately in this way, this new accounting requirement would be likely to be unduly burdensome for charities and trying to arrive at a single figure would certainly be difficult, given the different elements of spending that may be considered as campaigning costs. We will discuss this in more detail with NCVO members before responding to the consultation.”
Jay Kennedy, director of policy at the Directory of Social Change, also made similar comments. Speaking to Civil Society News, he said: “We are not averse to these proposals. And they are not necessarily bad but it needs to be thought through.
"How would you calculate campainging costs? Will it be different than what is specified in the Lobbying Act? Will the part of the chief executive salary be included if they are in the media advancing a cause or networking with political figures?”
He added that the income charities received from public service delivery would be easier to pin down, but there would be arguments of whether it just meant contracts, grants or both.
Asheem Singh, Acevo’s director of policy, said the proposals will be a burden to the secor:
"These unwelcome proposals from the Charity Commission will only add to the growing administrative burden being heaped on the voluntary sector. At a time of scarce resources and growing demand for the sector’s services, it is senseless to subject charities to yet more bureaucratic requirements that will divert staff and funds from the front line.
"Charities are already working to be more transparent and open without more top-down interference. Rather than concerning itself with these exercises in micromanagement, the Commission should concentrate on getting on with its day job of safeguarding charities’ independence and cracking down on abuse."
Recommended by PASC
Last year, the Public Administration Select Committee (PASC) said that by law charities be required to declare spend on political campaigning and their levels of statutory income. At the time the government welcomed the proposals. Speaking to Civil Society News, Bernard Jenkin, chair of the Public Administration Select Committee, said he was pleased that the Charity Commission had accepted the PASC's recommendations.
"The Charity Commission has a statutory obligation to maintain confidence in the charitable sector," he said. "And sometimes campaigns undermines that confidence.
"All we are asking is for charities to be transparent on what they spend on campaigning. Most people who donate to Oxfam don't expect it to be campaigning on domestic government policy. It might be a tiny amount of spend but it should be transparent."
Disclose remuneration policy and financial controls
The Charity Commission also proposes encouraging charities to disclose whether they have a remuneration policy for paying executive staff in the annual return, and whether or not a charity has carried out a review of its financial controls during the reporting year.
Jane Hobson, head of policy at the Charity Commission, said: “We do not want to create an undue burden on charities, but the information which we collect from them is one of our most valuable regulatory tools, and we want to ensure we are able to make the best use of the annual return. We think the public has a right to access this information about the charities which they support, and are keen to hear views from anyone with an interest in the register of charities as well charities that complete the annual return.
“The proposed new questions highlight some high-profile topics in the sector today, and we believe they will promote accountability and transparency and encourage good practice. We will be holding discussions with stakeholders about the proposals, and if they are introduced, guidance will be published to help charities provide.”
The closing date for responses to the consultation is 12 August.
What will smaller charities be asked to disclose?
The regulator has proposes that charities with an income of between £10,000 and £500,000, and all CIOs, disclose the following information:
- Voluntary income
- Income from investments
- Remaining income not analysed elsewhere
- Total income
- Spending on charitable activities
- Spending on raised funds
- Remaining spending not analysed
- Total spending