http://www.mercerhole.co.uk/firm/partners Up to the minute news and comment from Mercer & Hole's Charities and Not-for-Profit department. en louisegiles@mercerhole.co.uk Copyright 2010 2010-08-26T15:37:16+00:00 http://www.mercerhole.co.uk/news/people-entry/Confidence-in-charities/ http://www.mercerhole.co.uk/news/people-entry/Confidence-in-charities/ A recent survey by the Charity Commission (CC) has found levels of public trusts and confidence in charities has not increased since 2008. The CC asked 1,150 adults to rate their trust in a range of organisations from 1 (no trust at all) to 10 (complete trust). The mean result was 6.6 for charities, the same as in 2008. Interestingly, the survey also found that the impact of the CC is perceived as very limited with 86% of respondents saying they had not noticed positive effects of the Charity Commission’s work while 95% said they had not noticed negative effects of the Charity Commissions work. The results suggest that charities will need to become more transparent in reporting how donations reach the end cause in order to increase public confidence. For more information on this survey and other charity news go to www.charity-commission.gov.uk. Louise Giles is a charities expert and a manager at Mercer & Hole. If you would like to discuss the contents of this post with Louise you can call her on 01727 869141. 2010-08-26T15:37:16+00:00 http://www.mercerhole.co.uk/news/people-entry/Review-of-public-benefit-for-fee-paying-schools/ http://www.mercerhole.co.uk/news/people-entry/Review-of-public-benefit-for-fee-paying-schools/ A review, focusing on how fee-paying schools should provide sufficient public benefit to justify having charitable status, is to be undertaken following a successful application for a judicial review by the Independent Schools Council. A group of senior judges will examine the Charity Commission’s guidance, available at http://www.charity-commission.gov.uk on public benefit to decide whether or not commission rulings on how fee-paying schools should meet the requirements are lawful. The ISC believes the guidance places too much emphasis on the provision of bursaries, and that it is not consistent with charity case law. Read more about why the ISC believes Independent Schools are charities on their website www.isc.co.uk. Louise Giles is a charities expert and a manager at Mercer & Hole. If you would like to discuss the contents of this post with Louise you can call her on 01727 869141. 2010-08-26T15:35:57+00:00 http://www.mercerhole.co.uk/news/people-entry/One-in-three-charities-have-no-reserves/ http://www.mercerhole.co.uk/news/people-entry/One-in-three-charities-have-no-reserves/ The National Council for Voluntary Organisations (NCVO) has recently published research which suggests one in three charities have no reserves. This would mean that any cuts to funding would threaten the survival of many organisations. It was also found that levels of reserves differed depending on the type of organisation. Housing Associations held the largest reserves (typically 20 months worth of expenditure), whilst playgroups and nurseries held the least (only 1.4 months worth of expenditure). As the recession has progressed, many charities have found that their services are more in demand than ever and it is therefore critical that voluntary organisations and charities properly prepare and plan for cuts to ensure they retain their ability to support those in need. For more information and advice see the NCVO website at www.ncvo-vol.org.uk. Louise Giles is a charities expert and a manager at Mercer & Hole. If you would like to discuss the contents of this post with Louise you can call her on 01727 869141. 2010-08-26T15:33:12+00:00 http://www.mercerhole.co.uk/news/people-entry/Public-benefit-assessments-on-sports-and-recreation-charities/ http://www.mercerhole.co.uk/news/people-entry/Public-benefit-assessments-on-sports-and-recreation-charities/ Following a discovery by the Charity Commission that 35% of sports and recreation charities were unaware of the public benefit requirement, it is set to carry out four public benefit assessments on this sector of charities. The four sports and recreation charities chosen have been named as Wigan Leisure & Culture Trust, the Tintagel Memorial Playing Fields Association, Birmingham City FC Football in the Community and the Radlett Lawn Tennis & Squash Club. They will all have to show they have charitable purposes and operate for the public benefit, as required by the Charities Act 2006. The tests are intended to help raise awareness and understanding of public benefit. For more information on charities and the public benefit requirement please go to www.charity-commission.gov.uk. Louise Giles is a charities expert and a manager at Mercer & Hole. If you would like to discuss the contents of this post with Louise you can call her on 01727 869141. 2010-08-26T15:32:29+00:00 http://www.mercerhole.co.uk/news/people-entry/are-you-making-the-most-of-gift-aid/ http://www.mercerhole.co.uk/news/people-entry/are-you-making-the-most-of-gift-aid/ A recent survey suggests that 4 in 10 charities do not maximise their gift aid claims due to administration and complexity of the rules involved. A survey of 896 charities carried out by a group including the Charity Finance Directors Group (www.cfdg.org.uk), the Charity Tax Group (www.ctrg.org.uk) and the Institute of Fundraising (www.institute-of-fundraising.org.uk) found that 81% of respondents would like to simplify the system by moving to an electronic database for storing Gift Aid declarations instead of the current paper based system and 93% of organisations would like to be able to file claims online. Other ideas for simplification included changes to the current rules on auctions, sponsored events and donations through self-assessment tax returns. If you need advice or guidance on the Gift Aid scheme, please contact us and arrange to speak to one of our charity tax specialists. Louise Giles is a charities expert and a manager at Mercer & Hole. If you would like to discuss the contents of this post with Louise you can call her on 01727 869141. 2010-08-26T09:30:10+00:00 http://www.mercerhole.co.uk/news/people-entry/reporting-of-trustees-expenses-in-annual-accounts-and-controls-over-expense/ http://www.mercerhole.co.uk/news/people-entry/reporting-of-trustees-expenses-in-annual-accounts-and-controls-over-expense/ The Independent Expert Group issued a report on expenses which highlighted the importance of good internal control procedures on the payment of expenses to trustees, staff and volunteers. It also provided a timely reminder of the importance of meeting the Statement of Recommended Practice (SORP) disclosure requirements for trustees’ expenses in the statutory accounts. Items to be included in trustees’ expenses These are refunds to trustees for costs incurred by them personally in order to carry out trustee duties. A refund of properly incurred expenses is not a trustee payment, nor is it a personal benefit. Disclosure in statutory accounts The notes must include the total amount of trustees’ expenses in the year and their nature. If none have been claimed this should be stated. There is no requirement in the SORP to provide details of expenses paid to senior staff. The notes should also include the total number who claimed or incurred expenses during the year. Additional information on trustees’ expenses that can be provided with the statutory reports and accounts Additional information, in excess of that required by the SORP, can be added if the trustees’ consider this to be helpful to readers of the accounts. Controls over the payment of expenses The Charity Commission recommend that there is a written policy for the payment of expenses. This should ensure that a charity only reimburses legitimate expenses properly incurred on its behalf.  The policy should clarify whether the charity pays expenses for travel, hotel, conference, business, training and out of pocket expenses, and if so, on what terms. The policy should also include the requirement to complete expense claims and to provide receipts. There should be controls to check that only appropriate expenses are reimbursed for all trustees, staff, including the CEO, senior management and volunteers. P11ds will have to be completed and filed with HMRC for each staff member earning £8,500 or more. Wendy Bambrick is a charities expert and a senior manager at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Wendy, please contact Wendy on 01727 869141.  2010-07-27T09:50:16+00:00 http://www.mercerhole.co.uk/news/people-entry/potential-good-news-for-charities-vat/ http://www.mercerhole.co.uk/news/people-entry/potential-good-news-for-charities-vat/ David Cameron confirmed during a recent Prime Minister’s Question Time, that he will consult with the Treasury over the additional VAT cost which Charities will suffer when the VAT rate increase takes effect next January. He has suggested that Charities could be treated in the same way as local authorities and Central Government departments. Such bodies are repaid VAT. There has been much lobbying by Charities and related bodies on this issue recently. Whether this will be successful remains to be seen. Jane Stacey is a VAT adviser and a senior manager at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Jane you can call her on 01727 869141.David Cameron confirmed during a recent Prime Minister’s Question Time, that he will consult with the Treasury over the additional VAT cost which Charities will suffer when the VAT rate increase takes effect next January. He has suggested that Charities could be treated in the same way as local authorities and Central Government departments. Such bodies are repaid VAT. There has been much lobbying by Charities and related bodies on this issue recently. Whether this will be successful remains to be seen. Jane Stacey is a VAT adviser and a senior manager at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Jane you can call her on 01727 869141. 2010-07-20T14:12:49+00:00 http://www.mercerhole.co.uk/news/people-entry/public-benefit-update/ http://www.mercerhole.co.uk/news/people-entry/public-benefit-update/ On 8 July the Charity Commission released an update on its public benefit work. The work is in relation to charities demonstrating and reporting on the benefit they bring to the public, as set out in the Charities Act 2006. The Commission has published four assessments on arts charities and completed the work in connection with the assessments it carried out in July 2009. The purpose of the assessments is to provide real examples for rest of the charity sector, to help in their awareness of public benefit. Arts Charities With regard to the work on arts charities, four charities were chosen. The Commission found that all four are being administered for public benefit. The Commission believes that this demonstrates that the public benefit principles are flexible enough to apply to four charities who are all very different with regard to profile, size and operation, yet clear enough to distinguish them from organisations that are not charities.  Follow up on July 2009 assessments These assessments were on twelve charities, eight passed but four were not being administered for public benefit. The four were two independent schools, a nursing home and a convalescent hotel. The four have had to develop and submit plans with regard to public benefit. The two schools used a mix of new or additional bursary assistance financed by fundraising, together with educational benefits they provide in the local community. The Commission found that both schools had addressed the issues. The nursing home has also addressed the original findings by developing a clear strategy for providing and publicising the assistance it offers to those who could not otherwise afford to use its services. The hotel faced some significant challenges and is continuing to work on its plan, for which it has been given a four month extension. The Commission now plans to review a small number of sports and recreation charities. These will be the final public benefit assessments. Full details of the assessments can be found at www.charitycommission.gov.uk. Wendy Bambrick is a charities expert and a senior manager at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Wendy you can call her on 01727 869141.  2010-07-13T14:17:20+00:00 http://www.mercerhole.co.uk/news/people-entry/revised-financial-guidance-for-charities/ http://www.mercerhole.co.uk/news/people-entry/revised-financial-guidance-for-charities/ On 8 June 2010, the Charity Commission published four updated sets of financial guidance for charities. They are: Charities and Risk Management (CC26) Financial Difficulties and Insolvency (CC12) Charities and Reserves (CC19) Internal Financial Controls (CC8) The guidance has been updated to reflect new developments and the rather challenging economic climate that charities are now facing. The updates include: New risk grid (CC26). Guidance on controls over Internet banking and safeguards against fraud and financial crime (CC8). Checklist of key questions for trustees to establish their charity’s financial position (CC12). Setting reserves in the context of financial and risk management (CC19). The four documents can be downloaded from www.charitycommission.gov.uk. Wendy Bambrick is a charities expert and a senior manager at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Wendy you can call her on 01727 869141.  2010-07-07T14:50:04+00:00 http://www.mercerhole.co.uk/news/people-entry/how-are-charities-and-the-not-for-profit-sector-affected-by-the-emergency-b/ http://www.mercerhole.co.uk/news/people-entry/how-are-charities-and-the-not-for-profit-sector-affected-by-the-emergency-b/ There are several points coming out of the Budget, some are specific to charities and the not-for-profit (NFP) sector and some affect other sectors as well. In summary: The Budget includes a commitment to continue to work with the sector, including the Gift Aid Forum. The commitment is to improve the system and to encourage more charitable giving. HMRC intends to replace the current rules on substantial charity donors, consultation will be over the summer with full legislation published in the autumn. Alongside the Government’s consultation on the allocation of good causes funding from the National Lottery, the Government will review the current National Lottery taxation arrangements. VAT will be increased from 17.5% to 20% in January 2011. This will increase costs for charities and the NFP sector. The Government has committed to work with sector bodies to assess the feasibility of implementing the EU cost-sharing exemption in VAT. There will be a formal consultation in the autumn. A regional growth fund will be created to help fund regional capital projects over two years. There have been substantial cuts to Government departments budgets (excluding health and aid spending which is protected). However, charities may well find that statutory grants that they have previously received may be cut or withdrawn. This could have a significant effect on some charities. The welfare budget has been cut by £11 billion. This could see hard up, ill and disadvantaged individuals and families turning more and more to charities for assistance. If charities are receiving fewer grants and are finding their services are required more than ever, charities could become stretched financially themselves. Wendy Bambrick is a charities expert and a senior manager at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Wendy you can call her on 01727 869141.  2010-06-29T14:52:07+00:00