Small Charities, Big Problems

Like many small charities, we have always tried to maintain high standards of transparencey and accountability. For example, we have always had our accounts fully audited, even though the figures involved did not oblige us to an audit as such. We have dutifully worked out policies and statements covering issues that really do not affect us. For example, we have no employees, but we do have a policy regarding equal opportunities for employees as required by the Charity Commission. We have no chaplain or direct contact with children/vulnerable adults, but we have a detailed Safeguarding Policy, pay an annual sum to the CSAS, and attend training days. Currently, we are trying to obtain a Legal Entity Identifier code (£115 + VAT, then £70 + VAT for each year) in order to satisfy the latest legal requirements for any charity with investments (we have some Unit Trusts, but I think we’d need a lot more to indulge in money-laundering!). The trouble is, small charities cannot call on an endless army of experts to deal with these matters for them. They have to deal with them themselves and they can become big problems.

Britain, quite rightly in my view, expects a great deal from charities, big or small. After all, the tax concessions on donations are a valuable part of most charities’ income. But I think it should also be recognized that the state gains a great deal from charities, too. They often step in where the state cannot or does not and provide services and help to those in need. Many of these are small, local concerns or, like ourselves, small but with an outreach that extends more widely because of the opportunities offered by the internet and modern communication systems. It is easy to complain of the burden of administration or the difficulties that compliance presents, but we do sometimes wonder whether small charities are made to pay for the negligences and sometimes downright questionable activities of some of the larger ones. On paper Kids’ Company sounded admirable, but somehow, despite all the regulations, was grossly mismanaged.

I’d like to put in a plea for small charities and a simplification of the processes we have to go through in order to ensure that we are honest stewards. For example, when we took out the bank loan that made the purchase of this house possible, we had to incorporate our charity, which adds another level of complexity to compliance; and we’re stuck with it. There is now the opportunity for smaller entities to register as a Charitable Incorporated Organisation (it didn’t exist when we opted for incorporation) but some of those who have done so report that they still find compliance a headache. The language used by the Charity Commission isn’t always as clear as it might be, and although one does one’s best to keep up with all the inevitable changes, it can be a daunting task.

I think Britain’s charities are valuable and, on the whole, well-run and responsible. We spend much less on administration than most because we do the majority of the work ourselves, and I would guess that is true of many other smaller charities. We have sound religious reasons for wanting to maintain the utmost integrity in what we do and how we do it; others would say that, although they have no religious motivation, they too want to be as upright as possible. Please, dear Charity Commissioners, don’t squeeze us out because we can’t keep up with all your latest ideas for improving regulation of the sector as a whole.

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7 thoughts on “Small Charities, Big Problems”

  1. In some cases it may be that the tax benefits from gift aid are outweighed by the time and costs associated with compliance as a registered charity. I help run a very small non registered charity and the trouble we had just opening a bank account was immense – and we have just £3000!

    • I sympathize. I remember Michael King telling me that if one’s activities are charitable in law, one has a duty to register. I have often wondered about that.

  2. Hear, hear.

    I have been treasurer for several small charities in the past and know how difficult it is to comply with the financial governance rules.

    I don’t have any answers, because in my current situation, our charity is a legal entity, governed not just by the Charity Commission rules, but the compliance rules put in place by the Church of England. All of the policies that you describe, are legally bound up in the Church as part of Establishment, with General Synod involved.

    While they are trying to simplify things, they come up against the Charity Commission and have extensive discussions on the way forward. But as a national institution, governance is central to all that is done, and it can become a burden for the volunteers filling the appointments, our PCC is effectively the council for Charitable Purposes, and bears corporate and individual responsibility for our actions. We can be held liable in person for the actions of others, even if we are not aware of them. We take this seriously, as you do, and observe the rules in the letter, not the spirit of the law. And how hard this can be.

    So, yes, Charity Commission please make life a bit easier for those small charities who struggle to meet your continuous innovation in corporate governance.

  3. Amen . As a small church we too find the compliance and regulations burdensome whilst understanding the reasons behind them . Oh for a simple free helpline that uses no gobbledygook and is patient with the small charities !
    pray on !

  4. Definitely a mixed blessing.
    As you point out there are so many regulations to follow.
    One that’s coming into play soon is GDPR – if you hold any information about people – even a simple email list, then you have to do it properly.
    About to sign up with the fundraising regulator. This exists because of the bad fund raising behaviour of some charities. This will cost us £50 a year, but demonstrates that we are responsible.

    On the other hand, there are businesses that give a helping hand for free.
    As a trustee I have arranged over the last six months: Free web hosting -34sp.com, on-line document storage box.com, on line giving / gift aid claim -totalgiving.com, VoIP phone / fax -Voicehost.co.uk, automated email address import -zapier.com, free banking -The Co-operative Bank.

    I agree with the earlier comment about banking.
    After 6 months of trying, we have not yet succeeded in getting 2 new trustees added to an account and they still send all correspondence to a deceased trustee.
    (Fortunately it’s not his home address as that would be more distressing).

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