2016 Charity Accounting and Reporting Round-Up

Set out below is a round-up of charity accounting and reporting in 2016, and reflections on this year of significant change.

1. FRS 102 and the New Accounting Framework

This was the big news this year! After more than two years of anticipating the adoption of Financial Reporting Standard 102 and the revised Charities Statements of Recommended Practice (SORPs), this year has been the year of implementation (accounting periods starting on or after 1 January 2015). Many charities (and auditors as well) have found that no matter how well prepared, there are always practical issues where what seemed clear on first reading proved confusing, or unanticipated issues emerged. It should be said, however, that for some charities the change occurred almost unnoticed, reflecting the evolutionary nature of these SORPs.

As it was already clear last year that the FRSSE was to be withdrawn for accounting periods starting on or after 1 January 2016, probably the majority of eligible charities opted for the FRS102 SORP rather than have one change with the FRSSE SORP this year and another change to FRS102 SORP next year. Some charities opted to continue with the FRSSE for various reasons. In particular, some charities were averse to having to prepare a statement of cash flows, but had income above the £500,000 threshold for preparing them under the updated FRS102 SORP; for those such charities that were eligible for the FRSSE, using the FRSSE SORP was the only way to avoid a cash flow statement (although even then the charity would only be putting off the “evil day” for one more year). Indeed, before SORP Update Bulletin 1 was published in February 2016, even the smallest charities applying FRS102 would have had to prepare a statement of cash flows.

One tiresome issue has been the failure of the UK government to update the charity accounting regulations for England and Wales (as opposed to Scotland where there is no such problem) which still refer to the old 2005 SORP. It is therefore necessary for unincorporated charities and CIOs to use a “true and fair over-ride” to justify use of the 2015 SORP (charitable companies are governed by company law and not the regulations). This inevitably complicates the accounts and the Charity Commission requires independent examiners of such charities to adapt their report.

One technical issue that has arisen is the audit of trustees’ reports. The same legislation (SI 2015/980) that increased the small company thresholds, and which had to be early adopted in order to take advantage of the small entity exemption for statements of cash flow, also required auditors to confirm that directors’ reports were prepared in accordance with legal requirements. Previously they only had to confirm that the reports were consistent with the financial statements. This creates more work for auditors and means that they would normally have to modify their audit report if the requirements for trustees’ reports are not met in full. For accounting periods starting on 1 January 2016 this will apply to all charitable companies (the legislation does not apply to unincorporated charities or CIOs).

Finally, over the last year the whole sector (and perhaps the wider public as well) has had to reflect on the so-called scandals that had afflicted us in the previous year or two. The fallout from Kids Company and fundraising “scandals” have been the topics of a great number of our client conversations. A positive point to take from this is how so many in the sector have embraced the need to understand and learn from the concerns that were raised. This along with the approach of the Charity Commission has certainly raised interest in the issue of wider accountability.

2. The Experience of Adopting the Revised SORPs

Despite the inevitable teething problems, all the preparation for the new SORPs last year stood charities and auditors in good stead for the change and by and large it has been relatively painless, at least for the smaller or more simple charities. For larger or more complex charities, which not only had to cope with more detailed disclosure requirements than smaller charities, but also might have had a number of transitional adjustments (see below), there has been more effort, but such charities are generally better staffed to cope with the extra demands.

Perhaps the single most complicated issue has been that of transitional adjustments where the new accounting policies have resulted in different numbers in the accounts. Working out what has changed, and how, and the effect on comparative amounts and reserves has been a major exercise, particularly where there are multiple adjustments such as multi-employer pension schemes, holiday pay accruals, changes to legacy recognition and donated goods etc.

The first SORP Update Bulletin, mentioned above, brought the definition of “larger charity”, which is important for deciding the level of detail required for disclosures, into line with that used in Scotland and Northern Ireland, i.e. income over £500,000 instead of using the audit threshold which had increased from £500,000 to £1 million. It also exempted “smaller charities” from the requirement to prepare cash flow statements.

One important issue that has emerged over the last few months has been the issue of comparatives under FRS102. The FRS102 SORP requires charities to provide comparatives for all amounts in the SOFA. Effectively for the split between restricted, unrestricted and endowment funds instead of just the totals as previously provided. Some accountants were concerned that this did not go far enough in implementing the FRS102 requirement to provide comparatives for all amounts in the financial statements other than where specific exemptions were given in FRS102 (such as fixed asset and investment notes). As a result, the length of the notes section of accounts were virtually doubled because, compared to commercial accounts, charity accounts tend to have much more tabular analysis (like the SOFA). Most accountants tended to argue that massively increasing the length of the accounts did not lead to greater transparency and that if the Financial Reporting Council had been aware of the issue they would have provided extra exemptions for charities in FRS102. Unfortunately, the Charity Commission has now shown its hand by updating its example accounts to show comparatives for fund movements, indicating that it is supporting the move to universal comparatives. While this is not the same as formally amending the SORP by means of an Update Bulletin, it does look like accountants are going to have to start getting used to providing longer, more clunky notes.

All charities have had to grapple with the concept of key management personnel (important particularly because of the need to disclose aggregate remuneration paid to them), but generally there has been little controversy over who should be so classified in addition to the trustees. Where there is a senior management team they have tended to be the obvious candidates.

3. The demise of the FRSSE

Despite the generally pain-free adoption of the FRS102 SORP noted above, there were still a reasonable number of charities that did want to use the FRSSE (Financial Reporting Standard for Smaller Entties) SORP, often for specific reasons and we were happy to support that decision.

Generally our experience has been that the transition from SORP 2005 to the FRSSE SORP 2015 has been relatively painless at least for smaller charities. While there have been inevitable changes to areas such as the accounting policy notes, generally there have been comparatively few changes. In particular there are relatively few changes to the Trustees report and no new requirement for statements of cash flows (as for the FRS102 SORP). The format of the SOFA was simplified, but there was no change for small charities applying the natural classifications.

As for charities applying the FRS102 SORP, there has been the issue of identifying key management personnel, although this is an FRS102 concept it was incorporated into the FRSSE SORP.

Although, as with FRS 102 SORP, income had to be recognised when probable rather than when virtually certain, in many cases this made no practical difference.

This is not to say that the FRSSE SORP did not bring substantial changes compared to SORP 2005, but in practice these changes mainly did not affect many charities.

4. The Independent Examination Consultation

This consultation by the Charity Commission was important to us as we undertake a considerable number of independent examinations. The consultation on the new directions for independent examiners included proposals for further guidance on:

  • Additional points on examiners’ independence
  • Conflicts of interest
  • Related party disclosures
  • Financial sustainability/going concern
  • Group accounts (and in particular whether there should be guidance on the independent examination of such accounts)
  • Reporting matters of material significance and relevant matters to the charity regulator

It also proposed welcome simplification of the examiner’s report and more generally attempts to adopt a simpler and clearer style. None of these issues are particularly controversial and we therefore expect most of these points to be reflected in the new directions when they are published in 2017.

We would particularly welcome clearer guidance on the important issue of independence. New ethical standards for auditors were issued in 2016 which strengthen further the framework for audits, and we consider these criteria are fundamental to the assurance provided by all external scrutinies of charity financial statements.

5. The Charity SORP Consultation

Just when you thought it was safe, there is no getting away from the SORP! One might have been forgiven for thinking that we would all have a break from it after all the shenanigans over the last two or three years (including the February 2016 Update Bulletin). But no, the Charity Commission and OSCR (Office of the Scottish Charity Regulator) are already consulting on the next SORP which is expected to be published in 2019. Specifically they are consulting on 5 areas:

  1. The SORP’s structure, format and accessibility.
  2. Implementation issues that require improvements to the SORP.
  3. SORP Committee member suggestions for changes (including the possibility of an extra layer of reporting for the largest charities, meaning 3 different sets of requirements depending on size; changes to the Trustees’ report; more specific definitions of support costs and fundraising costs; and looking at the perceived problem where capital grants are recognised in full in the year of receipt while the associated expenditure is only recognised over the life of the associated asset).
  4. The Charity regulator suggested themes for possible changes (public benefit reporting, risk management, going concern, enhanced analysis of expenditure, disclosure of where funding comes from and disclosure of key facts).
  5. Other ideas for items to remove, change or add to improve the SORP. This is an opportunity to sort out problems with the SORP (such as the often impractical requirement to disclose the total donations made to a charity by its related parties).

The consultation closed on 11 December 2016. For more information, search for “charities sorp research exercise”.

6. Other Reporting Requirements

Beyond financial reporting, there are some areas of concern both immediately and in the more distant future. These include the Common Reporting Standard, that particularly affects grant makers, and the lack of clarity over the rules is causing considerable worry; and in the longer term, Making Tax Digital will affect how most of us interact with HMRC, and whilst charities have significant exemptions, many will still be affected, such as through requirements applicable to trading subsidiaries.

7. Consultation on Reporting on “Matters of Material Significance”

This consultation caused some concerns with both auditors/ independent examiners and charities. Generally we are concerned that the proposed revisions will add significant and largely unnecessary burden held by auditors and independent examiners and we made this clear in our submission to the Charity Commission in response to the consultation. We are also concerned that there should be greater clarity on what is precisely meant by the expression “matters of material significance”. We take particular exception to three proposals:

  • Reporting on any modified audit or independent examination report, regardless of its relevance to the Charity Commission in its regulatory capacity.
  • Reporting where charities have not taken our advice given in management reports etc., which we believe could result in charities putting pressure on auditors to water down their reports.
  • Reporting on conflicts of interest in accordance with Charity Commission guidance, which we believe places an undue burden on auditors, and even more so on independent examiners, who would be expected to keep up to date with the large body of Charity Commission guidance on this issue.

There seem to be an increasing number of tenders that we receive where the time required to undertake the review thoroughly has been grossly under-estimated. Charities need to take care that the value of the process is not undermined by it being undertaken without sufficient care or with undue haste.

If you have any concerns or would like to discuss the issues raised in more detail, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with a member of our Not for Profit team.

This article originally appeared on the blog of our member firm, MHA MacIntyre Hudson.

Data Protection Alert for Charities

The Charity Commission and the new Fundraising Regulator have issued a joint alert, warning charities to “immediately cease” any fundraising activity that breaches the Data Protection Act.

The recently revised guidance on fundraising, CC20, was also highlighted as important for charities to follow.

Two high profile charities have been found to be in breach of the Data Protection Act, particularly regarding the inappropriate sharing of contact data. They have been issued with monetary penalties by the Information Commissioner. It is understood that further charities are also under investigation.

David Holdsworth, Chief Operating Officer and Registrar of Charities for England and Wales, said:

“Charities must learn the lessons from this week and do so quickly. Practices that some charities consider ‘common practice’ are in breach of the data protection requirements and should be ceased immediately.”

If you have any questions or concerns, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with a member of our Not for Profit team.

This article originally appeared on the blog of our member firm, MHA MacIntyre Hudson.

Keeping Your Charity on the Right Track – Month to Month Plan to Better Governance

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The Not for Profit sector is dealing with continued challenges from numerous directions. Changing legislation is placing a cost burden onto organisations already struggling with funding issues. Governance continues to be key in maintaining and developing a successful organisation, being alive to taxation changes has become imperative and the charity regulators are adopting a more rigorous approach.

Never has governance been more important in the third sector. We have created a tool that can help you improve your organisation’s governance in a stepped and measured way. However, there are many tools, guides and websites you can use to help you on your journey. We can also help you with bespoke training, assistance with strategy and implementation controls and so on. This guide has been put together to offer guidance and support to Finance teams, Trustees and the Senior Management teams in Not for Profit organisations. We hope you find this report useful.

The report covers the following topics:

  • Month 1 – Are we an Effective Board?
  • Month 2 – Effective Finance Function and Reporting to the Board
  • Month 3 – Effective Financial Reporting – SORP Compliance
  • Month 4 – Charity Reserves
  • Month 5 – The Tax Implications of Strategic Plans
  • Month 6 – Effective use of Resources
  • Month 7 – Reporting
  • Month 8 – Internal Controls Reviews
  • Month 9 – How do Your Internal Controls Stand up to Fraud?
  • Month 10 – Cyber Security
  • Month 11 – Making the Most of VAT
  • Month 12 – Your Month to Month Checklist

Use your ‘Month to Month Checklist’ at the start to assess where you are now in each of the areas. Once you have read a section, fill in the ‘Where do you want to be and how will you get there?’ part of the checklist. Then at the end of the year, assess whether you achieved your goals or not.

Read the full report: Keeping Your Charity on the Right Track

Don’t worry if you don’t quite get to where you want to be. If there is something that you are struggling with or would like some advice on, our specialist advisors to the Not for Profit sector are able to draw on a vast wealth of experience and expertise encompassing the full range of Not for Profit organisations including education institutes, grant making bodies, religious organisations and a wide array of charitable focuses.

If you have any questions about the issues raised in this report or would like to discuss your accounting and business advisory needs with one of our sector specialists, please email Hannah Farmborough or call on 0207 429 4147.

 

Charities have to go a long way to become fully accountable!

A recent report produced by Charity Finance Magazine on the top 100 charities’ trustees reports and accounts looked into how well the charity sector is doing at being transparent when producing its annual accounts.

When compiling trustees’ reports it is paramount that all charities focus on their strategy and how they plan to deliver it. As SORP beds in, it is more important than ever for charities to rewrite their trustee reports to ensure they are inline with the SORP guidance on financial accounting and reporting. Most charities tend to struggle to write about what they do and how they demonstrate they do it. The new regime requires charities to be more accountable for their actions and to report on the activities and projects they have undertaken during the period and explain why such activities and projects were chosen, and in turn to look at the outcome of the activities and projects and how they are measured.

When a charity compiles their report they should be forward planning, as this will ensure the report is to the point, relevant and covers all aspects of the charity’s work. It will also help to show what is important to the service the charity provides and why it’s important. The report should also cover the charity’s achievements and future plans.

The report also found 66% of the charities failed to explain how they measure the success of their chosen strategy, even though they were reporting under the new SORP regime. It is imperative that when a charity is setting out its strategy, they do so in a way that the reader understands; it needs to be clear why the strategy has been chosen and why it is the best way to achieve their objects. The report must detail how the strategy will be measured.

As you would expect, the report showed that all the charities reviewed had a risk statement and details of key controls in place. However, the report found 29% of charities failed to explain how the identified risks are managed and where possible, mitigated against. The key risks in any charity which merit the time, expertise and input from trustees should be no more than a handful. Due to the significant interest in reserves by donors, there is a need to show transparency and openness. All the charities reviewed had a reserves policy and over 90% explained what their reserves or free reserves were at the end of the year. However, 80% of charities reviewed failed to explain the aspects of risk that informed the reserves calculation and 28% failed to compare target reserves with the actual reserves at the end of year.

With charities needing to build public trust, there is a need now more than ever to be open and transparent in all aspects of their work and what they do, this is particularly important when it comes to what they are spending their money on. The report found 25% of the charities reviewed failed to report on their remuneration arrangements, with a further 25% failing to disclose the names of their senior management team.

The new trustees report requirements give charities an opportunity to tell the story of the organisation over the reporting period, as well as what their plans for the future are. The Charity Commission have stated the report should provide a balanced picture; not just successes and what the charity has done well during the period, but the report should also comment on what didn’t go so well and what the charity has learned from it.

When competition for funding is at an all time high and charities are looking for ways to diversify their income, the trustees report is a chance to provide funders with additional information that does not get covered in a tender document, it is an opportunity to show what distinguishes your charity  from similar organisations and what makes your charity unique.

If you have any queries or would like us to review your trustees report to ensure it is compliant, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with a member of our Not for Profit team.

This article originally appeared on the blog of our member firm, Broomfield & Alexander.

Charities – are they now ‘in business’?

The question is asked as a consequence of the ruling handed down by the Court of Appeal in the case of Longridge on the Thames (Longridge). This case predominantly concerned whether Longridge, as a charity, was not making supplies by way of business and was therefore able to receive zero rated construction services.

In an unfortunate turn of events, the Court of Appeal has agreed with HMRC that the supplies made by Longridge were an “economic activity” (EU speak for a supply by way of business) and denied their entitlement to zero rating relief. In doing so, the Court of Appeal has cast doubt on the validity of the long held “Fisher tests” for determining whether an activity is undertaken by way of business, which may also encourage HMRC to view the line of cases going back to Yarborough and St Pauls as being superseded by this decision.

The consequences for charities could be far reaching. If something which is currently treated as non-business needs to be re-assessed with the potential that it now becomes a business activity, this will impact on the zero rating relief available to charities. This could be a double edged sword as such activities might be exempt from VAT, which would deny the ability to recover VAT, or standard rated which may require increases in price.

Longridge could appeal this decision to the Supreme Court. It is unlikely they will, but it is not beyond the realms of possibility that the Supreme Court would overturn this decision.

It is hoped that HMRC will issue some guidance as to how they intend to apply this decision, if only to provide some degree of certainty in what is now some very uncertain times.

If you have any queries or would like to talk to us about the implications, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with a member of our Not for Profit team.

This article originally appeared on the blog of our member firm, Moore & Smalley.

The Impact of Brexit Upon Charities

The UK exit from the EU has caused the third sector short-term uncertainty. We would hope that there is a silver lining to this and in looking beyond the immediate concerns, we should see a level of opportunity for the Third Sector in which charities across the UK will be present, as always, to bring people together and tackle the challenges that will undoubtedly occur in the medium-long term.

We will have to wait and see, however, as the vote to leave could impact upon tax breaks received by charities, funding issues for those who receive EU monies and we are likely to see a demand on services increase.

Prior to the EU Referendum result there was research published by the Stronger in Europe campaign that suggested that charities could lose more than £200m in EU funding if Britain were to vote to leave. Unfortunately, even though we now know the result we are no clearer as to knowing whether this type of funding will stop or continue and it may not be for a period of time that we know for definite. Clearly, the reduction of any EU funding would be detrimental for many UK charities and put added pressure on their services at a time when the need may well be greatest and fundraising opportunities reduced.

We have seen the markets rise and fall over the last few weeks with the uncertainty around the vote, and the subsequent result, and this could potentially lead to a period of recession, again right now who knows. As we saw in the recent recession, this could in turn lead to a greater demand on the services provided to those who are at a disadvantage during this period.

Tax Implications

The vote to leave the EU should allow the government to set its own VAT and tax rules that could potentially benefit charities, for example by replacing exempt supplies with zero-rated supplies therefore unlocking VAT recovery on costs. This change and many others that could be made are reliant however on the Government potentially losing out financially in order that charities can gain.

Charities will have to consider the possibility of losing out on tax-relieved donations from EU-resident donors.

Conclusion

In the short term we may see little change as life continues as normal for many charities. As charitable organisations approach grant funding deadlines however, many will have to have considered new sources of funding to continue to offer their services to those in need.

The recession of a few years ago saw charities become more professional organisations, leaner and more capable of adapting to change and so whatever the medium-long term challenges, we should hopefully see UK charities embrace these, work towards solutions and ultimate growth.

We will be considering the implications of change as the known factors develop further and will keep in touch, providing help and assistance where we can.

If you have any queries about the issues raised in this article or to be put in contact with one of the members of our Not for Profit team, please contact Hannah Farmborough or call on 0207 429 4147.

This article originally appeared on the blog of our member firm, Broomfield & Alexander.

Commercial Activities and Academies

The Charity Commission has recently issued an alert for charities advising on commercial partnerships and agreements with charities and their trading subsidiaries. To some extent, this already applies to academies where they have outsourced their catering contracts on a profit share basis.

Given changes in funding, it is likely that this will become even more relevant for academies as they consider other sources of income generation. These could result in the creation of trading subsidiaries or agreements with other commercial partnerships, for example, engaging an outside entity to operate the sports facilities or nurseries, or using professional firms to assist in drafting grant applications for capital or other funding where fees are linked to the success of the bid. The alert emphasises the risk that such arrangements can affect public trust and confidence and damage the academy’s reputation.

It is recommended that Governors:

  • Be aware of any agreements or partnerships between the academy and a commercial organisation. It would be useful if the academy held a list of all such agreements with dates set for any renewals or review. Ensuring that Governors have sufficient notice of review dates will mean that effective decisions can be made based on sufficient and appropriate information.
  • Ensure such arrangements are clearly agreed in writing, conform to legal requirements relating to commercial participators where these apply and seek and consider professional advice where appropriate to ensure the academy is protected. Engaging in trading activities as part of income generation will have tax and VAT implications for the academy. Professional advice should be obtained at an early stage to ensure that these are considered before any activity is undertaken.
  • Have appropriate processes for oversight and control of commercial partnerships and be able to demonstrate these are in place and effective. This is likely to take the form of regular reporting and review of performance to ensure that it is in line with the requirements included in the original agreement and that the agreement continues to be in the best interest of the academy.
  • Ensure that the commercial organisation will confirm to the requirements of other regulators. The academy has significant responsibilities regarding safeguarding. It will need to ensure that any commercial agreement does not compromise these requirements.
  • Carry out appropriate checks on a commercial organisation before entering into an agreement and identify and manage any conflicts of interest. For agreements entered into through a tender process, the review and selection of entities invited to tender will need to be considered to ensure that sufficient care has been taken. Where a commercial partnership is considered, professional advice should be sought in order to undertake a more detailed due diligence exercise.
  • Be clear that any partnership is in the best interests of the academy and have appropriate processes to review partnerships to ensure they remain in the best interests of the academy throughout their duration. This requirement effectively calls for regular and continuous review of performance.
  • Consider the risks and benefits to the academy’s name and reputation of a commercial partnership and ensure that the academy’s name and assets are valued and protected.
  • Make sure that where products or services are sold through or in the name of the academy, the nature of the commercial partnership and the fee or commission received by the academy is clear and transparent.

Where the academy has established a trading subsidiary, the Governors are expected to monitor the risks to the academy’s name and reputation of commercial partnerships and agreements with the trading subsidiary as part of their on-going monitoring of its performance.

As academies continue to receive reducing funding allocations, the requirement to increase income generation is likely to increase the number of commercial arrangements and potential partnerships. As a general principle, Governors should ensure that any commercial partnership or agreement is in the best interest of the academy. They should be regularly reviewed to ensure that they are performing as expected. Although there is an element of risk, there is also the potential for the improved performance of the academy.

If you would like to discuss any of the issues raised in this article, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with your local representative.

Source: This article originally appeared on the blog of our member firm, Moore & Smalley

New Gift Aid declarations – charities and CASCs can use up their old stock

HMRC have published new Gift Aid declarations for one-off donations, multiple donations and sponsored events.

Declarations already in place do not need to be updated. However, at that time HMRC advised that any declaration issued after 6 April 2016 must be in the new format.

Since then, HMRC have confirmed that charities and CASCs holding stocks of printed materials which were ordered and printed before 21 October 2015 can use up their current stock before implementing the new declaration.

HMRC have given no clear indication of how charities should demonstrate that their stock predates October 2015, but we suggest that charities retain all related records for as long as the old declarations are being used.

If you would like more information on the topic, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with your local representative.

 

Mandate fraud: charities should remain vigilant to the continuing threat

The Charity Commission is urging charities to remain vigilant to the continuing threat of mandate fraud and the changing tactics that fraudsters are using to target charities.  This type of fraud occurs when a fraudster tricks a victim into changing bank details in order to divert legitimate payments intended for a genuine organisation (e.g. a charity supplier) to bank accounts instead controlled by fraudsters. This often involves the fraudster impersonating an organisation representative, either by email, direct mail or telephone communication. The fraudster may also use headed paper and/or the company logo to lend credibility and to gain the charity’s trust.

In recent months, the Commission has become aware of mandate fraud attempts where the fraudster has been able to use the email address of a regular contact at the legitimate organisation to deceive charities into changing change bank details.

The Commission recommends that trustees and charity professionals spend a few moments familiarising themselves with the Metropolitan Police’s mandate fraud advice and ensure that their charity has robust authorisation and monitoring procedures in place for changing bank details and managing payments. The advice is clear – any request to change bank account details is an unusual occurrence and should be treated with suspicion.

The Commission recommends as a minimum, charities should:

  • remain vigilant to the continuing risk of mandate fraud and raise awareness amongst those staff and volunteers with responsibility for charity finances – download the campaign posters produced by the Metropolitan Police
  • be suspicious of any change of bank detail requests until independently verified
  • check and verify all requests for change of bank details using contact information held separately by the charity
  • never rely solely on contact information provided in any form of external communication that requests a change of bank details
  • check that a sample of payments has been received by the legitimate organisation after the change of bank details has been actioned
  • do not rely solely on the organisation to inform your charity that legitimate payments have not been received – by then it may be too late to recover the money.

If you suspect you or your charity may have fallen victim to mandate fraud, you should report it to Action Fraud immediately.

Charity Fundraising

Charity fundraisers are pretty busy just now, as always. This is typically a time for generosity and the need, in this country and internationally, remains great and varied.

When it comes to fundraising methods and practices we know it isn’t simply “the ends justify the means”. The public response to the recent exposure of some poor fundraising practices cannot be ignored.

The guidance from the Charity Commission sets out six key principles for trustees:

  1. Plan effectively – be directly involved in setting and monitoring your charity’s overall approach to fundraising.
  2. Supervise your fundraisers – oversee the fundraising others carry out for your charity, and satisfy yourself it is in the charity’s best interests.
  3. Protect your charity’s reputation, money and other assets – manage your charity’s assets and resources, meeting legal duties to act in its best interests and protect it from inappropriate risk.
  4. Comply with specific fundraising rules – different aspects of fundraising such as managing donor data or using a commercial partner involve different legal requirements, and you must make sure you have enough information to ensure your charity complies.
  5. Follow the recognised professional standards for fundraising – the Code of Fundraising Practice outlines the standards designed to ensure that fundraising is open, honest and respectful.
  6. Be open and accountable – comply with the relevant accounting and reporting requirements, but also demonstrate that your charity is well run and effective and handle any complaints properly.

It can seem that the regulations surrounding fund raising are onerous. Sadly however, public perception of how charities operate in this area has been damaged and so it is essential to demonstrate that your charity does not condone the ‘hard sell’ approach which has hit the headlines. If you can get your fund raising right, then those that give to your charity will be proud to do so and will be adding extremely valuable additional money to your  funds.

News source: Charity Commission

If you would like to speak about this issue further with a member of our team, please contact Hannah Farmborough or call on 0207 429 4147 to be put in contact with your local representative.