Sector representative bodies have said they are concerned that the Charity Commission’s proposed changes to the annual return exaggerate some of the risks charities face and could place “further regulatory burden” on some charities. 

Three umbrella bodies, NCVO, the Charity Finance Group and the Association of Charitable Foundations, have written a joint letter to the commission setting out concerns, as well as submitting formal responses separately.

The annual return consultation, published in December, considers whether the commission should "make some structural changes to how we collect information for the annual return in 2017".

The commission said it was concerned particularly with whether:

• Charities should keep the fundamental information up to date more regularly that annually
• Questions should be focused to match the Commission’s strategic priorities and targeted at the relevant charities
• The regulatory burden can be lifted by making sure the annual return is more targeted and proportionate

The infrastructure bodies' response aims to “highlight some overarching concerns” about proposed changes and urges the regulator to “consider particularly how the proposed changes may impact on charities with limited resources”.
 
It warns that: “By framing the annual return around the risk priorities, the reality of the risks facing charities may be exaggerated, and it will be hard for charities to assess the relative weightiness of each factor in their own context.” 

Transparency 

The letter also says that charities are committed to transparency but, says: “If charities do not understand or identify with the commission’s risk priorities, they may find some questions asked in the annual return unnecessary or uninvited, and not see the benefit of sharing such information.” 

It recommends the commission add some “commentary explaining what purpose the information requested serves and how it will be used, so as to make the link more explicit to the public interest”. 

Call for greater clarity 

In its submission, NCVO said it would like “greater clarity in relation to the Commission’s intentions regarding what will happen if a charity fails to provide information ‘as soon as they can’ and whether the Commission has any plans to introduce enforcement methods to ensure compliance”.  

NCVO also said having a separate section for ‘public trust and confidence’ was not helpful. 

It said: “In order for the grouping of questions to be beneficial to the commission’s risk management processes by providing meaningful evidence of actual risk, the categories need to be sufficiently particularised and not too general. 

“On that basis, we are not convinced that it is helpful to have a separate generic category of questions related to ‘public trust and confidence’.” 

NCVO also urged the commission to consider making sample forms available and suggested charities would appreciate a downloadable completed versions for their annual return “for their own records”. 

DSC: ‘the logic of the consultation isn’t clear’ 

The Directory of Social Change has also submitted a response to the commission. 

It echoed concerns about the risk priorities and also said it was concerned that insisting charities keep records “up-to-date in real time” is “unrealistic” for small charities. 

“It is also unclear whether charities will still be required to submit an ‘annual’ return if they are already keeping information updated on a rolling basis,” it said. 

DSC also said it was difficult to answer some of the questions because some aspects of changes are being consulted on separately. 

It said: “Given that the information that is collected in the annual return may change after this review, the logic of conducting the present consultation isn’t completely clear and makes it difficult to comment on the implications of the commission’s proposed changes.” 
 

Commission response

Jane Adderley, head of first contact at the commission, said: “We are pleased with the quantity and quality of responses to our consultation about the annual return. Charities and others have made some very thoughtful and detailed submissions and I would like to thank everybody who took the time to share their thoughts.

“We will now consider the responses and will communicate on our next steps for the annual return 2017 in due course.”