The Charities (Amendment) Bill is at Committee stage

The Charities (Amendment) Bill is currently at Committee stage in the Assembly and we gave oral evidence today to the Committee for Communities on certain aspects of the Bill and on the changes that the Department has outlined in its consultation report.

We outlined broadly similar comments as we had done in our consultation response to the Department but with recognition of what the Department is proposing in its consultation report. Charities (Amendment) Bill Consultation Report

In summary, we agree that the Charity Commission should be able to issue official warnings to charities and/or Trustees but are concerned that they would be made public. We also asked that further consultation be provided when the regulations are drafted for the changes to the accounts and reporting requirements. We also asked that the thresholds for audit; receipts and payments accounts; and independent examination be increased in future regulations.

Our detailed oral evidence to the Committee for Communities is provided below but in summary we agree with:

• the strengthened regulatory powers to remove trustees who have resigned;

• the power for the Commission to issue directions for actions not to be taken

• automatic disqualification for officers, agents and employees but with some concerns on employees

• easing of reporting requirements for charities under £20,000 income

• introduction of a format for content of Receipts and Payments accounts but concerned that it needs to be simple

• dispensation for charities experiencing a spike at the £250,000 income threshold but would like to see a second year provided.

We also asked for clarity between that which is provided for in the Bill and the Department’s intentions outlined in the consultation report.

Oral evidence to Communities Committee on Charities Amendment Bill

NICVA is grateful to the Committee for the opportunity to provide comment on the Charities (Amendment) Bill including the changes that the Department has outlined in its consultation report.

NICVA acknowledges the work of Department officials who have considered the feedback in the consultation responses but we need to see intentions from the consultation report translated into wording in the Bill so there is no confusion in the future.

NICVA welcomes most of the proposals but with some concerns or recommendations for further consultation in relation to the proposals for the accounts.

With regard to information sharing powers of the Commission, we agree with the amendment to clarify that public body includes bodies discharging functions of a public nature and regulatory functions in relation to charities or fundraising.

Regarding Official Warnings – We agree that the Commission should be able to issue official warnings to charities or their trustees where there has been misconduct, mismanagement or a breach of trust or duty. Issuing an official warning might help to make the Trustees take notice if they hadn’t previously and could prevent a full investigation by the Charity Commission. We welcome that there will be safeguards including prior notice and an opportunity for the charity to respond so that the Commission could then vary or withdraw the warning. We are concerned however that they are to be published in the public domain as this could cause reputational damage to the charity.

Even if the Commission then withdraws the warning, it has still been in the public domain and the reputational damage may still be done! We have seen in recent years how some media outlets jump on a bad news story about a charity, they are unlikely to do a good news story on the same charity should the Commission publish a withdrawal notice. This negative media can have a damaging effect on the whole charity sector.

Power to remove trustees following an inquiry

NICVA agrees that the Commission should have the power to remove a trustee for misconduct from a charity even if they have resigned so that they can be officially removed as a trustee and entered into the register of removed trustees. This will then prevent them from serving as a Trustee with another charity.

NICVA agrees that the Commission, when it has instituted an inquiry, should be able to issue a direction to a charity for specified action not to be taken where such actions are considered likely to constitute misconduct or mismanagement in the administration of a charity. This would then complement the Commission’s power to direct that specific actions be taken by the trustees.

It is proposed that automatic disqualification be extended to officers, agents or employees from acting as a charity trustee if they have been removed by the Commission. NICVA has concerns around this being extended to employees who may have acted under duress by a CEO or Officer of the Board.

Easing of reporting requirements for charities under £20k

NICVA welcomes that very small charities under the £20K reporting threshold would not be required to carry out an independent examination of their accounts.

Proposed changes would also allow for template reporting If the charity has annual income under £20k. NICVA agrees that the template reporting may be useful for some charities but not all.

We need to recognise that not everyone has the digital capabilities to complete the annual reporting online. NICVA suggests that the new template be available for download so that charities can complete it, and that there is the option to upload it or information can be inputted digitally

Prescribing the format and content of Receipts and Payments accounts

NICVA agrees in principle that the Department should be able to make new regulations to specify the minimum content requirements for receipts and payments accounts. However we would urge the Department to ensure that the new regulations would not create something which is onerous for small charities, it needs to be simple. For example, charities shouldn’t need to have to pay for an accounting professional to prepare the R& P accounts. We need to be mindful that a charity is still small if it is under £250,000 income, it is very small if it is under £20K.

Dispensation

NICVA welcomes that a dispensation be available to charities from the requirement to prepare accruals accounts where a charity exceeds the £250,000 threshold due to an exceptional spike in income. We believe that the word ‘exceptional’ should be replaced with ‘unusual’ as ‘exceptional’ may prove to be a very high bar as is the cas with the Audit Exemption currently.

We particularly welcome the move to allow Trustees to be permitted to continue to prepare receipts and payments accounts if they go over this income threshold which should make it easier than waiting on the Charity Commission to grant the permission. The wording in the Bill however is confusing as it refers to the Commission granting the dispensation. The spike in income is only permissible for one year, it would be preferable to allow a dispensation for a second year but with the requirement then for the Commission to grant the dispensation. This way there wouldn’t be the same time pressures with getting the permission from the Commission.

We would ask that any necessary amendments also ensure that the Independent Examiner permitted to undertake an Examination up to the £250,000 threshold can continue to do so with the spike in income accounts.

While the Audit threshold is not directly within the scope of this Bill, we are encouraged that the Department is currently engaging with stakeholders on the implications of increasing the audit threshold for both individual charities and group accounts. We met with Department officials on Friday to discuss our rationale for these changes. We would also welcome a commitment from the Department to increase the threshold for the preparation of accruals accounts from £250,000 to £500,000, and to raise the threshold for independent examination so that it is aligned with those operating in other UK jurisdictions.

NICVA believes that there must be further consultation when the regulations are drafted for the proposed new format for both the template reporting and for the content of Receipts and Payments accounts so that trustees of small charities can test it to ensure it is not over complicated for a non-financial person. In addition, the consultation could include proposals for threshold changes for the preparation of accounts and type of independent examination.

We’re currently being told that changes to thresholds can be made by future regulations, but we would like to see the onus put on the Department so that they policy changes in the future doesn’t divert from this work.

we agree that the Charity Commission should be able to issue official warnings to charities and/or Trustees but are concerned that they would be made

public. We also asked that further consultation be provided when the regulations are drafted for the changes to the accounts and reporting requirements. We also asked that the thresholds for audit; receipts and payments accounts; and independent examination be increased in future regulations.