Charities in England and Wales have been asked to respond to a government review, which asks whether financial thresholds should rise in line with inflation.
The 10-week consultation, published today by the Department for Culture, Media and Sport (DCMS), asks whether all 21 financial thresholds in charity law should rise with inflation, increase partially or stay at current rates.
Potential changes include increasing the audit threshold from £1m to £1.5m in terms of annual income, which would mean around 2,000 charities would no longer be required to have their accounts fully audited.
The consultation follows a 2017 report by the Law Commission which recommended the government should periodically review all financial thresholds in the Charities Act 2011, “with a view to increasing them in line with inflation”.
The government accepted the report’s recommendation and committed to reviewing them at least every 10 years, subject to resources.
Government backs unchanged registration threshold
For some thresholds, not including the audit requirement, the government expressed its preferred option in the consultation.
The government recommended keeping the registration threshold at £5,000, which the document says would increase the number of charities required to register with the Charity Commission over time.
Increasing it with inflation to £10,000 would mean 17,000 charities no longer needing to register, the consultation says.
“Raising the threshold would require significant changes to the Charity Commission’s registration systems,” it reads.
“This change would take significant time and resources, and wouldn’t be achievable without significant additional government funding.”
Meanwhile, the government proposed raising the remuneration threshold above which an individual is considered a professional fundraiser in line with inflation.
This means that it would increase from £10 a day or £1,000 a year to £15 or £1,500, respectively.
The consultation says the government would also want to increase remuneration for lower-paid collectors in line with inflation to ensure it is aligned with those for professional fundraisers.
‘Regulatory landscape must be proportionate’
The consultation says reviewing the financial thresholds “ensures that charities continue to be sufficiently transparent and accountable” and ensures that the commission “has appropriate oversight of the sector in order to do its job effectively”.
“A sufficiently well-regulated sector means the public continue to trust that their donations to charities are being used effectively for the benefit of the public,” it says.
“The government’s growth mission also aims to provide a better regulatory landscape, to help organisations thrive.”
It adds that the regulatory landscape “must be proportionate and reduce unnecessary administrative burdens on charities where possible, particularly for small organisations”.
“As time goes by, inflationary increases mean that more small organisations are caught by additional layers of regulation where they weren’t captured previously,” it says.
The consultation closes on 12 June and can be completed here.
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