You’d be surprised if the Land Registry asked you to report the colour of your staircase carpet or Companies House demanded you tell them the number of sausages your business made.

One expects the keeper of a register to, well, maintain the register. Yet this concept does not apply to charities nor to the ever-increasing volume of information you’re required to furnish in your Annual Return.

Sir John Stebbings, Law Society President in 1980 famously said ‘behind every charity you’ll find a solicitor, helping out’ so it’s worth alerting practitioners to the emerging problems.

For those 169,000 charities under the Charity Commission purview, annual accounts are filed (tiddlers are not obliged to). The required data here is tiered as to content and scrutiny. Large charities must disclose more and need an audit; smaller ones report less and may just need external ‘examination’.

Your accounts’ content is driven by 200 or so pages of the Statement of Recommended Practice (SORP) which intelligently, sometimes flexibly, sets out principles and required content. Any member of the public can access filed charity accounts, so the accounts are the obvious carrier for data.

You might think this should be the route for public information. From time to time, the Charity Commission float what extra they wish to see in the obligatory ARs (annual returns) your charity must complete and file, and put their thinking out for ‘consultation’. The commission’s willingness to adapt AR content to the views of consultees has been undetectable in the past so their recent consultation paper (for which the response window has now shut) shows the inflexible direction of travel.

The modest benefactor problem

Donations by a trustee are to be disclosed. This may sound innocent, but consider the realities. Fledgling charities can only get started with support from their trustees – indeed these will be the mainspring of its foundation. Lawyers regularly encounter – even in these days of strident self-promotion, those who do not trumpet their generosity or who positively wish to conceal it.

The Charities Aid Foundation, a long-time leader in charity donation support, has an anonymous donor facility whereby a donation through their machinery is remains anonymous.

Reticence applies in small communities, a sense of avoiding boasting, fending off a string of applications from other causes, or for protecting household and family security. To compel a charity – as the new proposals do – to name a trustee donor and the quantum of support seems discourteous in the extreme, but more importantly, risks either the withdrawal of funding or the loss of a committed trustee – who, if no longer a trustee may have their reticence respected.

What does the SORP currently require? See 9.18; any trustee (or ‘connected party’) donation that is unconditional and not tied to an activity-altering condition is not disclosed. Thus, the trustees’ chair may contribute to, indeed fully pay for, the new cricket pavilion since the charity has this as an aim.

But if his money is conditional on being always allowed to open the batting, it is disclosable under the SORP already. The SORP principle is infinitely preferable and should not be widened by the backdoor.

Trustee donations are often a rescue package of last resort; the officeholders put in their own cash to save the good work. You’d be crazy to signal publicly to prospective funders the operation’s temporary distress; it would scare them off.

There has also sprung up a nasty habit from agitating interests to hound named donors in an attempt to starve a charity of the funds to pursue its ends. One can expect only negative results from this proposal.

Know-how and engagement; in arts and cultural charities generous supporters find themselves offered trusteeships. Some like to have some input into programmes, some have valuable contacts and insights. But they rarely wish the scale of their tangible support to be made public.

From whom else, indeed, are you to draw trustees in specialist fields, such as a cello academy if not from those who know all about the instrument and have the leisure (and means) to contribute. For all these considerations, forcing the disclosure of trustee donations is a terrible step. (The mechanism calls for disclosure of ‘connected parties’ total donations exceeding 25 per cent: the current stance is that the answer will not be published.) 

And the justification? This is the insulting premise that such donations ‘can indicate a conflict of interest’. Many struggling charities would give their right arm to have such generous ‘conflicted’ trustees.

Constitutions and members

The idea behind doubling the questions in the AR – from 36 to 52 for many, or 16 to 32 for the rest – is to assist in compliance. The commission’s own statutory compliance has failed for many years to observe its own legal duty to have the constitution of each registered entity available to the public. It might first put its own house in order.

Useful questions will be added about a charity’s ‘members’ and their rights. This confused situation is not helped by the constitutions not being publicly available. Many of these – and all the current ‘model’ constitutions offered – permit bodies to set differing classes of member with differing rights, which compounds the muddle. Indeed, I confidently predict that the next ‘member’ charity that consults you will be unable to point to a current register of members, let alone registers clearly distinguishing between categories.

Not so with ‘volunteers’, the number of which a registrant must now provide. Quite who are ‘volunteers’ properly so-called in the charities I’m in, I could not say. (The term is not defined in the Glossary). Nearly everyone stacks and unstacks the chairs, makes the refreshments and generally chips in. Are these all volunteers and are you really supposed to keep a meticulous tally?

I can see scope for considerable personal upset if a charity declares nil or just a few ‘volunteers’ – the regulars will rightly be offended. Quite what regulatory utility providing a number serves is unfathomable.

'At risk'

A requirement to declare if you work with persons ‘at risk’ may have administrators scratching their heads. We all have a fair idea of what’s behind this but the definition used is far too wide. If you consider your target group has ‘needs’ for care and support, then they’re ‘at risk’ – so an obesity or stammering counselling entity must so declare itself, it would seem.

Donation routing

Your treasurer will be required to report ‘overseas income’, distinguishing between 9 or more routes and categorising donor types. Accuracy will be impossible for many donations, especially those received through the growing number of platforms and from an increasingly mobile demographic.

Even attributing a country identifier to the originating bank may be tricky. Think of the UK-based but overseas regulated banks. A donation via Handelsbanken may come from Manchester or Malmö, who can say and where is the donating customer based?

Data use

Regular compliance and filing duties now need a clear head. Annual Report, Accounts, Annual Return and deadlines (Charity Commission 10 months, but Companies House 9 months), ‘audit’ or ‘examination, present each registrant with its own matrix.

Doubling the number of ill-defined and complex questions makes extra work, not helped by the knowledge that the commission does not propose to publish some of the information demanded. ‘Many unhappy returns’ indeed.

Keith Wallace is a consultant at Reed Smith reedsmith.com

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