As a registered charity, it’s your legal duty to comply with the rules and regulations set out by the Charity Commission.
The rules aren’t there to catch you out but to guarantee your trustees’, beneficiaries’ and donors’ finances are safe. If you want to ensure you’re doing everything by the book, this article will help.
Now, not all charities in the UK have to register with the Commission. In England and Wales, you don’t have to register if you:
Once registered, your charity will need to keep strict financial records for six years as well as prepare annual accounts.
You’ll have to ensure that your accounts and books are readily available at all times, should you need to provide proof of your expenditure or undergo an audit.
If your charity goes through any changes, you’ll have to report them to the Commission. These changes could be anything from trustee details to alterations to your governing documents.
At the end of 2022, the Government expanded the list of questions on a charity’s annual return, so it’s always worth checking what you need to disclose.
Prepare for independent examinations or audits
If your charity has a certain annual income, you’ll be liable to undergo an independent examination or audit.
When you do, you’ll have to present a slew of supporting documents to show your finances are being well looked after. This will include any of your previous financial reports, receipts and anything else the Commission asks of you.
Charities with an income between £5,000 and £25,000 must provide a trustees’ annual report on request. Anyone with an income over £10,000 must also submit an annual return to the Commission within ten months of their financial year-end.
Any charity with an annual gross income between £25,000 and £250,000 must have their accounts independently examined or audited every year. The higher your charity’s income, the more in-depth the examination will be. You can find all of the charity reporting thresholds on the Government website.
Assess conflicts of interest
If you want your charity (and, by extension, your trustees) to remain compliant, you have to identify any possible conflicts of interest.
For example, you could be dealing with a conflict of interest if you or any trustees:
- receive a payment from the charity for goods or services, or as an employee
- make a loan to or receive a loan from the charity
- own a business that enters into a contract with the charity
- use the charity’s services
- enter into a financial transaction with the charity.
As well as applying to your trustees, these rules apply to any connected persons. A connected person could be:
- a close relative
- a business partner
- a connected company.
Carefully manage your resources
If your charity receives donations in the form of assets as well as money, you need to manage them responsibly.
Any assets belonging to the charity must be used only to support and carry out the charity’s work and trustees shouldn’t take risks with the assets or the reputation of their charity.
If your charity requires further funding, you and your co-trustees have to ensure that everything is correct and responsibly accounted for. Everything must be in line with your statement of recommended practice (SORP) and governing documents.
As a charity, compliance is key. It’s essential for all involved that you do things by the book. If you need help keeping within the guidelines, we’re happy to support you through it.
We help charities organise and maintain their accounts, keeping the Commission, investors, trustees and the public happy all at the same time.
To find out how we can help with your charity’s compliance, get in touch with a member of the team.