Charities Alert - Crowe Horwath International

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Charities Alert - Crowe Horwath International

Issue 06/2012

November/December 2012

Charities

Alert

Inside this issue

Sector news

UK Giving Report reveals fall in

charitable donations

CC News

Launch of ‘Back Britain’s Charities

campaign

Consultation on the Register of

Charities

Too many charity trustees still do

not understand their duties

Taxation

Are you ready for Charities Online:

Gift Aid?

The Small Charitable Donations Bill

Screenshot guides for charities’ forms

now available

‘Feed in tariffs’ and renewable energy

Guidance and

technical

Charitable Incorporated Organisations

(CIOs)

Guidance for new trustees


Charities Alert Issue 06/2012

We hope that the fall in

giving shown in our survey is

a temporary decline and not

the start of a damaging trend.

Sector news

UK Giving Report

reveals fall in

charitable donations

The National Council for Voluntary Organisations (NCVO)

and the Charities Aid Foundation (CAF) have released UK

Giving 2011/2, the eighth in their series of surveys about the

charitable giving habits of the UK public. The information is

drawn from a survey of over 3,000 people over the age of 16.

The survey shows that donations have fallen by 20% in real

terms in 2011/12 - the largest annual fall since the survey

began eight years ago - as individuals have reduced both the

frequency and value of their donations during the year.

It is a particularly difficult time for small and medium sized

charities which might not hold reserves and are therefore

more likely to be disproportionately affected by reductions in

giving.

Other key findings include:







estimated total donations to charity fell by £1.7 billion in

cash terms and £2.3 billion in real terms, to £9.3 billion

a 3% fall in the proportion of people donating to

charitable causes in a typical month from 58% to 55%

the median amount given per donor in a typical month

was £10, down from £11 in 2010/11

religious causes received the largest average donations;

however, the most popular causes among donors were

medical research, hospitals and hospices and children

and young people

58% of women surveyed donate to a charity in a typical

month, compared with 52% of men

cash remained the most popular form of giving (over

50%) in 2011/12. Direct debit accounted for 31% of the

total amount donated, an increase of 6% from 2010/11.

John Low, chief executive of CAF commented:

“We hope that the fall in giving shown in our survey is a

temporary decline and not the start of a damaging trend.”

The full report is available to download along with the

summary of findings.

CC News

The latest Charity Commission newsletter is now available.

Issues covered include an update on Charitable Incorporated

Organisations, feedback on the Commission’s casework,

common concerns about fundraising, the audio broadcast on

preventing fraud in charities and filing charity accounts online

on time.

Launch of ‘Back Britain’s

Charities’ campaign

In addition to the UK Giving Survey, CAF has also released

a report reviewing the accounts of small and medium

sized charities with income of up to £1 million, which are

filed with the Charity Commission. The report shows that

these charities reported total losses of £306 million in 2011,

compared to a reported overall loss of £20 million in 2010

and a surplus of £325 million in 2007.

A further survey backed by CAF and based on interviews

of 252 charity workers shows that one in six workers are

concerned that their organisations may face closure due to

cuts in public spending and a fall in donations. Nearly half of

those interviewed commented that they were spending their

reserves and there were also concerns about the need to cut

back on services and jobs.

Against this backdrop CAF and NCVO have launched the

‘Back Britain’s Charities’ campaign which is calling for:






people to support charities through regular giving,

regardless of how much time or money they can give

government to modernise and promote Gift Aid and

Payroll Giving to make donations go further

government to ensure that public bodies do not cut

funding for charities disproportionately when making

spending reductions

businesses to support charities either through donations

or through practical means

charities to work together with government to improve

fundraising and enhance impact, so that every pound

given goes further towards helping beneficiaries.

Consultation on the

Register of Charities

Last May, the Charity Commission published a consultation,

‘Register of Charities: a review of information collected

from charities’, where it sought opinion on the information

collected when a charity is registered, and the information

submitted subsequently through the Annual Return and

update process.

Based on the responses received some small amendments

will be made to the 2013 Annual Return to promote

transparency and accountability.

The Commission will also be conducting a more fundamental

review of the information collected in the Annual Returns,

which will potentially affect future content. This review will

take into account the findings from the above consultation,

the wider recommendations made by Lord Hodgson’s recent

review and the results from planned focus groups about

charity information with members of the public.

The review will also consider whether the Summary

Information Return will be retained, following mixed feedback

on this during the consultation.


Charities Alert Issue 06/2012

This report makes clear that trustees

can make a difference by taking

what are often simple and obvious

steps to protect their charity’s money,

property and beneficiaries.

Too many charity

trustees still do

not understand

their duties

The Charity Commission has released

a summary of the latest findings from

its charity investigations during 2011/12.

Over half of the investigations reported

involve basic failures of trusteeship.

Charities Back on Track 2011/12

reveals that 73 out of the Commission’s

85 investigations involved concerns

about poor governance or poor

trusteeship, including breaches of the

governing document, unmanaged

conflicts of interest and concerns over

fundraising governance.

Taxation

Are you ready for

Charities Online:

Gift Aid?

The Commission’s serious case work

focused on issues relating to fraud

and financial crime. Concerns about

financial abuse accounted for a third of

serious incident reports and over half

of whistleblowing reports.

The report highlights three areas

that are seen to pose the greatest risk

to charities:




fraud and financial crime

the abuse of vulnerable

beneficiaries

terrorism.

For the first time, a case study was

also included, highlighting a charity’s

positive response to a serious incident.

Michelle Russell, Head of the Charity

Commission’s Investigation and

Enforcement team commented:

“Most of our case work this year

involves serious concerns around

trustees’ lack of awareness, or failure

to comply with their duties and

responsibilities towards their charities.

Some of our casework could have

been avoided had trustees taken

more effective steps to fulfil their

responsibilities. This report makes clear

that trustees can make a difference

by taking what are often simple and

obvious steps to protect their charity’s

money, property and beneficiaries.”

Readers may be interested in a

seminar we are holding on Tuesday

15 January 2013 at our London office

which will provide an essential update

for trustees on their responsibilities.

Further details are available by visiting

our website.

In April 2013 HM Revenue & Customs (HMRC) will be launching a new service

for charities and Community Amateur Sports Clubs to claim Gift Aid. Charities

Online: Gift Aid will replace the current R68(i) Gift Aid and tax repayments claim

form and will allow electronic claims to be submitted online. New forms will also

be introduced to replace the existing ChA1 HMRC charity application form, ChV1

charities variations form and the CASC (A1) registration form.

Under the new scheme there will be three ways to reclaim tax payments:

Claim online: There will be a new online form which will include mandatory boxes

requiring completion. The form will self-validate to ensure that information has been

correctly entered, then the system will automatically submit the form to HMRC.

Donor details can be attached on a separate spreadsheet.

Claim using external software: Some charities may already use software to

record donation details and to help produce and send returns to HMRC – or may

wish to do so in the future. In such cases charities will either need to amend their

own software or enquire with their software provider to ensure that the software is

compatible with the Charities Online service.

Claim using a paper form: A new paper form, ChR1, will be introduced for those

charities which do not wish to or cannot submit electronically. As the completed

forms will be scanned on receipt by HMRC, individuals will not be able to use

existing R68(i) forms or photocopies of the new paper form.

Switching to the new forms and means of submission will create additional work for

charities and it is important that organisations are prepared and ready for the change.

The most significant changes to be aware of are:





the minimum information required on the current Gift Aid declaration forms will

also need to be included as part of a claim once Charities Online is introduced

organisations will need to provide HMRC with each donor’s first name or

initials, last name, house name/number and postcode as a minimum

donor details will either need to be handwritten on the paper form or attached

as a spreadsheet to the online form

donor details on the spreadsheet will have to be set out in a prescribed format

to allow the information to be scanned correctly onto HMRC’s system.

Letters have already been issued to the largest Gift Aid claimants informing them of

the changes and further letters will be sent to other claimants in February

and March 2013. These will let charities know when the new online systems will

start to operate and how soon charities need to start using one of the three new

claim methods.


Charities Alert Issue 06/2012

The Small Charitable Donations Bill

We have discussed the introduction of the Small Charities

Donations Bill in previous Charity Alerts. The Bill aims

to provide ‘Gift Aid’ style top-ups on small cash donations

(including cash collections) without the need to obtain a

signed declaration or collect details from donors. The top-up

will be limited to £1,250.

Following lobbying by the charity sector, the government

has announced that certain concessions will be made to the

scheme, including increasing the amount of relief that will

need to be ‘matched’ by formal Gift Aid claims. The eligibility

requirements have also been relaxed so charities only need

to have made successful Gift Aid declarations in two out

of the previous four tax years, rather than three out of the

previous seven.

Screenshot guides for charities’

forms now available

HMRC has recently launched new guides to assist users

in completing some of its more popular forms. The guides

include screenshots, showing the layout of the form and

explanatory text outlining the information required for certain

boxes.

The forms currently covered are:




Form R68 – Gift Aid and tax repayment claims

Form ChV1 – Charities variation form

Form CASC(A1) – Community Amateur Sports Club

(CASC) registration form.

‘Feed in tariffs’ and renewable energy

Many charities may be tempted to install renewable energy

equipment such as solar panels or wind turbines on their

property. Surplus electricity generated can be sold back to the

National Grid in return for a feed in tariff.

There are a number of direct tax issues, essentially

concerning whether such receipts are taxable or can fall

within some of the charitable tax exemptions. Recent

discussions with HMRC suggest that, while the position

needs to be reviewed on a case by case basis, under most

commercial scenarios the tariff is likely to be treated as

taxable. Charities could consider using a trading subsidiary

to generate the electricity and Gift Aid the profits back, but

there are indirect taxes, rates and land law issues that will

still need to be addressed.

This is our last edition of Charities Alert for 2012.

We would like to take this opportunity to wish

all our readers a very Happy Christmas and best

wishes for 2013.

We hope you find Charities Alert of interest. If you have questions about any of the topics covered, please

contact Pesh Framjee, Head of our Not for Profit group, or Sally Kirby, Editor of Charities Alert.

Office locations and contacts:

Cheltenham – Mike Hall

01242 234421

London – Pesh Framjee

020 7842 7100

Guidance and technical

Charitable Incorporated

Organisations (CIOs)

The provisions for setting up Charitable Incorporated

Organisations (CIOs) are now in place, as we highlighted in

our May edition of Charities Alert. The Charity Commission

began accepting online applications from new charities with

an income over £5,000 for registration as a CIO from 10

December 2012. The CIOs will be able to join the Register of

Charities from 3 January 2013.

The timetable for existing unincorporated charities to apply for

CIO registration remains unchanged from the details provided

in our last Charities Alert.

Guidance for new trustees

The Charity Commission has published two new online

tools for newly appointed trustees. An online Trustees’

Handbook aims to help charities to manage a smooth

handover between departing and newly appointed trustees.

It is particularly aimed at organisations where there might

be a high turnover of trustees, such as parent teacher

associations and community groups.

The handbook includes:




an explanation for new trustees of their duties

and responsibilities and how to make use of the

Commission’s online services and guidelines

a checklist of documents a new trustee can expect

to receive from their charity or can locate on the

Commission’s website, such as the charity’s

governing document, latest accounts and Charity

Commission guidance

an explanation of the basic principles of online reporting

and accounting.

In conjunction with the school governor recruitment

charity SGOSS (School Governors One-Stop Shop) and

the Department for Education, the Commission has also

produced an introduction to charity law for governors of

academies, and foundation and voluntary schools. The

guidance helps them to understand their responsibilities as

trustees, and where they can find further information.

Sam Younger, chief executive of the Charity Commission said:

“These new guides will help trustees get to grips with their

role and help charities develop their inductions for new

members. These packs are not exhaustive…but they do

serve as starting points for inexperienced trustees.”

Manchester – Vicky Szulist

0161 214 7500

Kent – Ian Weekes

Maidstone

01622 767676

Tunbridge Wells

01892 700200

Midlands – Helen Drew

0121 543 1900

Thames Valley – Alastair Lyon

0118 959 7222

Crowe Clark Whitehill LLP is a member of Crowe Horwath International, a Swiss verein (Crowe Horwath). Each member firm of Crowe Horwath is a separate and independent legal

entity. Crowe Clark Whitehill LLP and its affiliates are not responsible or liable for any acts or omissions of Crowe Horwath or any other member of Crowe Horwath and specifically

disclaim any and all responsibility or liability for acts or omissions of Crowe Horwath or any other Crowe Horwath member. © 2012 Crowe Clark Whitehill LLP

This information is published without the responsibility on our part for loss occasioned to any person acting or refraining from acting as a result of any information published herein.

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