Too many of the country's best-known charities are not properly explaining their activities and expenditure in their annual reports and accounts concludes a watchdog report published today.
The Charity Commission study, Transparency and Accountability, examines the 2003 annual reports and accounts of 200 of the largest charities in England and Wales. All charities in the report had an expenditure of £10m or more per year making a combined annual expenditure of £7bn. This represents one fifth of the sector's total outgoings.
Key findings of the report include:
* while nearly two thirds of the sample (126 of the 200) explained their achievements in good detail that was easy to find, the remaining third 'sold themselves short' - including 13 who said nothing at all;
* almost half (92 of the 200) of charities using volunteers did not comment on their contribution as required, with many others providing only minimal details;
* the 73 charities relying mainly on government funding were among the least transparent in the sample;
* the 12 international aid charities in the sample were the best performing category for explaining their activities and expenditure, followed by social services and relief (44 of the 200);
* the least transparent charities in the study operated in culture, sports and recreation, health and medical, housing and community.
Commission researchers worked on the principle that donors and any interested party should be able to easily obtain a complete picture of a charity's financial position and performance, deployment of its resources, structure, policies, priorities and achievements. The report emphasises that meeting the legal accounting requirements (SORP) is not enough to ensure accountability if the reporting is unclear. However, the study concludes that in some cases even the legal requirements are not being met by major charities. Speaking before the report's publication, Chief Charity Commissioner John Stoker, said:
"Our evidence is that the general standard of performance is not satisfactory among the largest charities. While there are some very good examples, too many charities in our study did not meet even the basic requirements. We hope that all charities will read the report and respond constructively. It's the large charities in particular who should be leading the way."
The study included an independent telephone survey by Martin Hamblin GFK of 1,000 members of the public which found that more than 70% of people believe it is important that charities provide information about their administration and fundraising costs, their achievements and the nature of their activities.
Stephen Ainger, Chief Executive of the Charities Aid Foundation and sponsor of the Charities' Online Accounts Awards, said:
"It is vital that charities provide crystal clear information about their objectives, activities, use of their funds and impact. If we are to retain the trust and confidence of donors, whether individuals or companies, the charity sector must be raising its game and providing the range of information that donors are likely to demand."
The report follows the publication in May of a draft Charities Bill which includes a proposal to give the Charity Commission the statutory objective of enhancing the accountability of charities to donors, service users and the general public. The draft Bill follows a Cabinet Office report which stated that 'easy access to accurate and relevant information about charities is essential for real accountability, and for trust and confidence in charities' - a conclusion fully backed by the Charity Commission.
Charity accountability is also expected to increase after the implementation of the Standard Information Return (SIR) and a new government-backed website, Guidestar, which will be based on the American site http://www.guidestar.org Ease of understanding and a clear indication of the relationship between objectives and achievements are two key principles of SIRs and key data will be displayed on both the Charity Commission and Guidestar websites.
The annual accounts for the largest 300 charities in England and Wales can now be viewed on the Charity Commission website, together with top line figures for all charities with an annual income/expenditure above £10,000. All charities are legally required to complete annual accounts and make them available to the public on request, for a reasonable administration fee. Charity files can also be viewed at any of the four Charity Commission offices with prior notice.
RS8 Transparency and Accountability will be available from Wednesday 30 June at http://www.charitycommission.gov.uk/enhancingcharities/thematic.asp#3 Previous regulatory reports examining trusteeship, commercial partnerships, membership and other topics are also available.
Ends
Notes to Editors
1. The Charity Commission is the organisation responsible for the statutory regulation of charities in England and Wales.
2. The data used in RS8 Transparency and Accountability was derived from a review of 200 annual reports, financial statements and the annual reviews of larger charities with a 31 March 2003 year-end. In addition an independent research company interviewed 1000 members of the public to canvass their views on the level and type of information that charities make available to their stakeholders.
3. Further information about the Charity Commission can be found at http://www.charitycommission.gov.uk or through its contact centre 0870 333 0123.
http://www.charitycommmission.gov.uk
