THE CHARITY COMMISSION URGES CHARITIES TO DO MORE TO GAIN TRUST THROUGH TRANSPARENCY

Fuelled by its latest monitoring reviews of charity trustees’ annual reports and accounts that show that almost half of the charities registered in the UK fail to demonstrate a clear understanding of the public benefit reporting requirement, the Charity Commission has recently warned that charities must use their annual reports and accounts to share transparent factual information with the public, believing strongly that this is the best basis on which to build trust.

According to the regulator, after reviewing a random sample of 106 charity trustees’ annual reports and accounts to assess how charities were meeting the public benefit reporting standards, it determined that approximately 49% of charities were still failing to divulge the charitable activities they had carried out in their trustees’ annual report with 51% of the charities demonstrating a clear understanding of the public benefit reporting requirement – a 5% improvement on the previous year's result.

According to Nigel Davies (the Commission’s head of accountancy services), the regulator's research into trust and confidence in charities indicates that the public no longer gives charities the benefit of the doubt; they want evidence that charities make a difference when using their money. He believes that public reporting is an opportunity for charities to tell their story and explain to the public what they do and how they use charitable funds.

He also maintains that charities should see it as an opportunity to show how they are making an impact and how they are delivering on their core purpose. Although he is disappointed that too many charities are still not meeting very basic standards when it comes to making key information available to the public, he feels encouraged to see that an increasing number of trustees recognise the value of public benefit reporting.

In fact, the Charity Commission also discovered that the majority of annual reports did include the key aspects of explaining who benefited from the charity’s work, with some including a statement as to why they believed their charity’s activities provided public benefit and the difference they had made to beneficiaries.

All in all, the review of the charity trustees’ annual reports and accounts demonstrated that a fair percentage of charities were providing trustees’ annual reports and accounts of acceptable quality, meeting the regulator’s basic benchmark. However, there is clearly more work to be done across the sector and regulatory guidance from the Commission to improve the quality of future trustees’ annual reports and accounts were provided to 89 charities from the 106 which were assessed.