Questions added to arts charities’ annual returns

Arts charities will now be required to submit information about pay packages for top staff and overseas income as part of a wave of transparency reforms at the Charity Commission.

All annual returns submitted to the Government watchdog from 1 January 2018 will also need to include information about trustee benefits, such as payments for professional advice, but will not have to detail the amount of Gift Aid claimed or whether charities claim rate relief.

Explaining the changes, the Charity Commission said the annual return will in the future be limited to gathering financial and regulatory information that is relevant to each charity.

“This approach will enable us to make the annual return more proportionate and to remove regulatory burden where we are able to do so,” it said.

Staff packages

The changes follow a 12-week public consultation, completed in late 2017 by a large range of charities, umbrella bodies and individuals, about the extent to which current annual returns should change.

New questions about total remuneration received by staff members, including salary, bonuses, pension contributions, private health care and other benefits in kind are to be included.

The number of staff receiving total packages worth over £60k must be declared and displayed in £10k bands up to £150k, after which the numbers will be expressed in bands of £50k. This information, which charities must already provide in their statutory accounts, will be made public.

In addition, charities will be required to provide information about their highest-paid employee, although the Commission’s consultation response backs away from previous plans to ask for the exact salary earned by Chief Executives. This information will remain with the Commission and will only be used for regulatory purposes.

Trustee payments

Respondents to the consultation welcomed new questions about whether trustees were paid for their work or for providing professional advice, and if they were in receipt of other benefits, such as access to accommodation at below market rate.

The Charity Commission said this question was added in order to “inform work which we do to raise awareness of when payments can be made to trustees and to highlight the importance of only making such payments when authorised”.

AP raised concerns around this issue in 2014 in relation to the National Funding Scheme, a charity which paid more than £300k to two private companies run by a trustee and former Chief Executive and has since been reviewed by the Charity Commission.

Overseas donations

All charities, regardless of size, will now have to provide information on overseas donations and income. Charities with an income of over £25k a year will have to provide information on the total value of all individual payments from donors or institutions outside the UK which are more than £25k.

Organisations with an income of £25k or less will only have to report individual payments from donors or institutions outside the UK if the payments constitute 80% or more of the charity’s gross income for the financial year.

Recognising that some charities may need to make changes to their financial systems to collect and sort this information, the Commission has made parts of the question relating to private institutions outside the UK voluntary for the annual return in 2018, and mandatory from 2019.

Wake-up call

Accountant Mahmood Reza said relatively large charities should already have the internal systems that collect the relevant data, but the changes “may be a wake-up call” for those with inefficient internal reporting.

He also warned the Charity Commission’s new focus on digital reporting and away from human interaction would impact negatively on charities.

“Access to the Charity Commission by phone is a protracted process already. This burden is only going to increase as there are less individuals devoted to personal interaction.

“The slack will have to fall onto charities.”