The information currently disclosed by charities in accounts and annual returns is not be sufficient to measure whether charities should pay a levy proposed to fund the new Fundraising Regulator, charity finance experts have warned.
Earlier this week Sir Stuart Etherington published a review of the regulation of charity fundraising, and recommended creating a new Fundraising Regulator to replace three existing bodies.
“The review has concluded that the fairest, most effective approach to resourcing the Fundraising Regulator is a levy on fundraising expenditure,” the review document says. “This should apply to organisations reporting an annual fundraising expenditure of £100,000 or more.”
The review says that “this type of expenditure is already recorded in the annual return that charities have to submit to the Charity Commission and is therefore simple to monitor”.
However finance experts have questioned whether sufficient detail is disclosed.
Charities do not currently need to disclose how much they spend specifically on fundraising in their annual reports and accounts, or in their annual returns.
Those with an income over £1m must disclose how much they spend on generating voluntary income, but voluntary income can include many other things than fundraising, such as membership fees or grants, and some fundraising from the public can be included in other categories of expenditure, trading income.
Charities with incomes over £500,000 must fill out annual returns, but can adopt an alternative method to lay out expenditure, so they do not have to declare fundraising expenditure.
One expert, who asked not to be named, said: “For this to work, it would require charities to either voluntarily change the way they declare their income, or be asked to make additional disclosures in the annual return.”
Another said the system would require a “beefed up” annual return before in could function effectively.
An NCVO spokesman defended the proposals.
“We firmly believe that the principle of basing the levy on the level of expenditure on public fundraising is the right and fair thing to do,” he said.
“Basing it on expenditure rather than income makes a lot more sense, and the technicalities are not insurmountable obstacles.”
