This is a guidance note to help you report on the requirements in the Charities Act 2016. The act applies to accounting periods that begin on or after 1 November 2016.
We work with the Charity Commission for England and Wales to raise awareness of these requirements. The Charity Commission has guidance for all sections of the Charities Act 2016 on their website.
Sections 13 and 14 of the Charities Act 2016 apply to fundraising. There are three main duties:
- Charities must report extra information in their agreements with professional fundraisers/commercial participators.
- Charities must report extra information about how they comply with voluntary regulation, which is included in some charities’ annual reports.
- The government must use their reserve powers to consider introducing statutory regulation if the system of voluntary regulation fails.
Which organisations need to report?
Large charities whose accounts need to be audited under section 11 of the Charities Act 2011 must meet these requirements.
We also encourage other charities to follow this guidance. The Charity Commission CC20 guidance asks that trustees make sure their charity’s fundraising meets the standards in the Code of Fundraising Practice, and complies with the law. Good reporting, and registration with the Fundraising Regulator, is a way to demonstrate this.
When do these reporting requirements apply?
When charities report on financial periods that begin after 1 November 2016. For example this would affect charities with a year end of December 2017 or March 2018. The annual reports for these periods should meet the requirements of the act.
What do charities need to do?
Charities that need to have their financial statements audited must include a statement on each of the following points, in their trustees’ annual report:
- The charity's approach to its own fundraising activities and any fundraising activities done on its behalf. In particular, by a professional fundraiser or commercial participator.
- If the charity or someone acting on its behalf was signed up to a voluntary fundraising regulation scheme or standard. If so, what scheme or standard.
- If the charity failed to comply with the scheme or standard mentioned above.
- If the charity monitored fundraising activities done on its behalf. If so, how did it monitor these activities.
- The number of complaints received by the charity or anyone working on its behalf, about fundraising activities done by itself or someone on its behalf.
- What the charity has done to protect vulnerable people and the wider public from certain behaviour during (or in connection to) fundraising activities. Behaviour includes:
- unreasonable intrusion on a person’s privacy
- unreasonably persistent methods to receive a donation
- undue pressure on a person to give a donation (of money or other property)
What can charities expect from the Charity Commission?
Charities that don’t comply with these reporting requirements are of interest to the Charity Commission. The Commission has found a high level of public concern about charity fundraising practices, and expects trustees to follow the CC20 guidance. Fundraising must be clearly explained, and must comply with accounting and reporting requirements. If complaints are made to the Commission, it can consider using its powers for individual cases that cause regulatory concern.
What is the role of auditors and independent examiners?
Auditors and independent examiners read the trustees’ annual report in order to report on whether the information is inconsistent with the charity’s financial statements. They also have a discretionary right to report anything that may be of interest to charity regulator, even if the issue is not one of material significance.
Failure to comply with the requirement of Charities Act outlined above may be a matter of concern to auditors and independent examiners.
We encourage all charities to register with us to support voluntary fundraising regulation, and commit to the standards in the Code of Fundraising Practice. If you’re registered with us, you can say so in your annual report. This will demonstrate your commitment to good fundraising, and will therefore help to maintain trust and support from your donors and the public.