More than half of charities do not meet requirements to report on their public benefit, according to new research from the regulator.
The Charity Commission has today published the results of a study of 107 charities’ accounts, finding 54 per cent did not meet the public benefit reporting requirement.
Of those falling short, 13 failed the requirement as they did not describe the difference their charity had made. Twenty-one charities did not include the statement that they had complied with the public benefit requirements and read Charity Commission guidance, and 24 charities did not meet either requirement.
The commission also examined whether the charities’ accounts met basic user needs. The test was based on criteria including whether the annual report explained the activities the charity had carried out during the year to meet its purposes, and whether the accounts had been appropriately scrutinised in an audit or independent examination.
The study found 75 per cent of the accounts were of acceptable quality in meeting the basic needs of readers. There were some areas of particular strength, the commission said, such as all charities that required an audit having filed an audit report.
However, the commission said 25 per cent of those reviewed did not meet the basic standard, for example because the accounts were inconsistent or not transparent.
Charity Commission head of accountancy services Nigel Davies said many charities do a great job of explaining how their work benefits the public. However, he said too many charities are missing an opportunity to tell the public why their work matters and the difference it makes.
“We know from wider research how important it is for donors and supporters to know how charities are spending their money,” Davies said. “Your report and accounts say a lot about your charity’s attitude to accountability and transparency and so don’t miss out on this opportunity. The easiest way to improve the quality of your accounts and report is to use our templates; we know the charities that do use our templates produce accounts of much better quality.”