Key Changes

As in previous years, the Annual Return for 2007 must be completed by all charities with an income and/or expenditure of £10,000 and above¹.

The type of form to be completed will depend upon the charity’s income threshold in the 2007 financial year.

Threshold Current income	Basic Register information	Serious Incident reporting	Financial activity data	SIR
< £10k *		X	X	X
£10k - £25k		X	X	X
£25k - £500k			X	X
£500k - £1m				X
>£1m+

* Charities under the £10,000 threshold will be asked to complete an Annual Information Update form which requests basic Register information.

Much of the content of AR07 is consistent with the current Return but changes have been made in order to:

• improve the integrity of the information on the public Register of Charities;
• support improved public access to information;
• improve the value and timeliness of the Annual Return's contribution to monitoring;
• reduce the administrative burden on charities and the Commission.

Balancing our duty to enhance the accountability of charities to donors, beneficiaries and the general public with the Government’s administrative burden reduction project and simplification plans, we propose to:

• eliminate Part B monitoring questions (currently applicable to charities with income in excess of £250,000);
• require charities with income over £500,000 to provide additional financial details in Part B.

Summary of Key Changes

1. For the very biggest charities (the top 6% in income terms) we are seeking additional financial information in order to:

• improve the range of information we can make available on the public Register of Charities and in particular to create a simple profile of financial activity;
• improve the search and research capability of the public Register of Charities;
• enable us to replace Part B (monitoring) questions with advice and links tailored to the circumstances of individual charities (see below);
• enable us to better analyse and understand the sector;
• improve our ability to identify potential financial causes for concern.

2. We are asking larger charities to estimate the number of UK volunteers available for part or full time use by the charity at its financial year end date.

This information is not currently collected by the Commission. Volunteers represent a substantial resource, and are a potential risk, but no information is currently collected about the scale of volunteering and its significance to individual charities. To inform our understanding of the sector and to provide the public with basic information about levels of volunteering we have proposed that a simple estimate be provided. We recognise that this information may not be readily available to all and will take careful account of feedback on this point.

3. We propose to remove the series of monitoring questions asked at Part B in 2006.

4. To encourage take-up of our online submission service, we propose to invite all charities to complete their Annual Return online.
If issued by email, the invitation will take charities straight to the secure online service link. If issued by letter, the invitation will advise of the relevant website link. If charities still wish to complete a paper form they will be asked to telephone our Annual Return ordering service. The automated service will ask charities for their charity number and to select the appropriate form according to their income and/or expenditure threshold. (Full instructions will be issued as part of the initial invite letter.)

5. We intend to create a new Part B which contains links to advice on key topics tailored to each charity’s individual circumstances.
For charities using the online Return the advice and links will be “created” as Part A is completed. For example, a charity that reports income from fundraising will be offered links in Part B to the latest advice we offer on that topic. We think that this approach will allow us to reach more charities with more relevant information whilst avoiding delays and eliminating questions that are often only relevant to a minority. The paper copy of the Return will not have the flexibility of the online version but will still direct users to advice relevant to their circumstances. A tailored online links page, accessible by password, will still be created following our receipt of paper copy Returns.

6. We expect charities, as a matter of good practice, to inform the Commission if an incident arises that results in a significant loss of funds or a significant risk to a charity’s beneficiaries, resources or reputation. We plan to use the Annual Return to ensure that charities with an income over £25,000 have reported all such incidents.

7. There are no proposed changes to the Summary Information Return (SIR) at Part C, however, to avoid duplication, wherever possible we will pre-populate financial information based on earlier entries in the form.

Feedback suggests that charities completing the SIR would prefer to submit its content after submission of Parts A & B. (This is based on the SIR being a narrative report which requires agreement and circulation among trustees, whereas Part A & B are simple information updates.) We propose to allow greater flexibility in how charities complete their SIR. They will have the option to complete and submit the SIR separately in electronic form, which can be edited prior to submission or in paper copy. (Charities will still be required to complete the SIR as part of their overall Annual Return submission and will not be deemed fully compliant with their reporting requirements until they have done so.)

A review of the SIR will be undertaken later in 2007.

Annual Return forms

To view copies of the proposed Annual Return forms and associated guidance notes, please click the appropriate income band in the table below. The Return you will see is the paper version. The online version will have the same content but will be more compact with drop down menus for options and links from each question to the relevant guidance note.

Income:

£10k - £25k	Annual Return 2007	Guidance Notes
£25k - £500k	Annual Return 2007	Guidance Notes
£500k - £1m	Annual Return 2007	Guidance Notes
£1m+*	Annual Return 2007	Guidance Notes

* The Summary Information Return does not form part of this consultation so the sample Annual Return is identical to that for the income band below.

See our 'Initial Assessment' of the impact of the proposed changes to the Annual Return.

End notes

1. The Charities Act 2006, when implemented, will see the requirement to complete an Annual Return based on income only.