A recent report by the charity commission has declared that charities are not doing enough to demonstrate their public benefit or explain how they spend their money.
The commission scrutinised a random sample of 105 charity accounts submissions, including their annual reports, and assessed these against public expectations and public benefit reporting requirements.
It found that just 70% of trustees’ annual reports and accounts in the Public Reporting Review met the commission’s basic benchmark of user requirements, compared with 74% the previous year. This is the third consecutive year that a fall in quality has been reported.
The quality benchmark was based on recent research into trust in charities which found that “ensuring a reasonable proportion of donations make it to the end cause” and “making a positive difference to the cause they work for” were the most important factors driving public trust and confidence in charities.
The commission said the main reason why submissions did not meet the benchmark was due to failure to evidence that their accounts had been subject to “independent scrutiny by an auditor or independent examiner, as required by law”, and/ or “not providing meaningful information about their charity’s purposes or the activities carried out to achieve those purposes”.
The review also found 52% of trustees’ annual reports met the public benefit reporting requirements. Although this was a 1% increase on last year the commission said that trustees are still “falling short” on the requirements to explain activities undertaken by the charity to further its purposes for the public benefit, and to provide a “public benefit statement”.
Nigel Davies, head of accountancy services at the Charity Commission said: “The public want and deserve to know how charities spend their money so this deterioration in the quality of accounts is of serious concern. The trustees’ annual report and accounts are a key way to build confidence among supporters, so many charities are clearly missing an opportunity.
The full statement can be found here www.gov.uk/government/news/regulator-finds-quality-and-transparency-in-charity-accounts-has-fallen