Treasurers’ Day 2010: Hot Topics

1. Treasurers’ Day 2010: Hot Topics Ed Marsh Director of Charity Services Burton Sweet

2. Agenda Public Accountability reminders Public Benefit Gift Aid developments Governance: Conflicts of Interest

3. Public Accountability reminders

4. New challenges Registration Information publicly available for free Accountability failures now highlighted No longer exempt from a Trustees’ annual report Numbers are not enough anymore! This MUST become a redundant phrase: “We leave the accounts stuff to the Treasurer”

5. Public Benefit

6. Public Benefit - what hasn’t changed? A charity must provide public benefit appropriate to its charitable purposes… …to the public (or a section of it)

7. Public Benefit - what has changed? ‘Level playing field’ Law imposes new obligations on the Charity Commission to monitor and ensure compliance… to issue guidance Charities have new obligations to report on PB in Trustees’ annual report to ‘have regard’ to the CC’s guidance (including sub-sector guidance)

8. Public Benefit principles PUBLIC BENEFIT • appropriate beneficiaries to purpose • no unreasonable restrictions (e.g. geography, fees) • people “in poverty” not excluded • private benefits incidental • identifiable and clear what they are • related to your purpose • balanced against any detriment or harm

9. Public Benefit reporting • Smaller charities (below audit threshold) • “A brief summary of the main activities undertaken in order to carry out the charity’s purposes (objects) for the public benefit” • Link activities to purposes (objects) to explain how they have been carried out for public benefit • A statement as to whether the trustees have complied with their duty under section 4 of the Charities Act 2006 to have due regard to public benefit guidance published by the Charity Commission

10. Objectives and Activities • Summary of the objects of the charity set out in its governing document; E.g. “to advance the Christian faith…”

11. Objectives and Activities • Summary of main activities undertaken for the public benefit in relation to those objects. Examples of activities: • Global Partnership (overseas mission); • City and Community Outreach (local care for the poor and evangelism); • Gathered Church (services, events, groups etc); • Children and Youth; • Student ministry; • Pastoral Care; • Teaching and Discipleship (e.g. Alpha, Bible study notes).

12. Objectives and Activities • What were the benefits? • E.g. • “Our three Parent and Toddler groups offer friendship and opportunities to support and share in the challenges of parenting. These events also provide a helpful stepping stone into getting involved in church life and in coming to faith in Jesus” • Who was able to benefit? • E.g. • “The church offers a range of services during the week that are open to all members of the public and which many people of different ages and backgrounds and with different preferences find beneficial and fulfilling. A few examples are:…”

13. Achievements and Performance • Summary of the main achievements of the charity during the year resulting from activities E.g. • “Our morning services were attended by around 400 adults and 150 children” • “We instigated once a month slots in our morning service to share news of particular global partners, to pray for them and to take an offering for their work. These offerings raised £15,816 in the period” • “Our church delivered around 3,000 community newsletters in the neighbourhood during the year. These contained articles and real-life stories to help demonstrate that the Christian faith is exciting, life-changing and available to all”.

14. Public Benefit - final comments Are you clear which activities are furthering your purposes and which are ‘fundraising’ activities? The answer to this could impact: • Your accounts • Your Trustees’ report and PB reporting • Your tax exempt status (potentially)

15. Gift Aid Developments

16. Gift Aid – what does the future hold? • Reminder of current situation • Tax relief for charities £100 gift, relief of £25 (20/80) • Transitional relief £3.21 • Tax relief for donors £125 x 20% = £25 • Process for claiming • What are the problems? • Higher rate relief Original income £166.67; Gov’t keep £16.67 • Unclaimed Gift Aid by charities (c. £700m p.a.?)

17. Gift Aid – what does the future hold? Proposals from the sector Opt-out Gift Aid system Full recovery of higher rate tax paid (tick-box?) Composite rate (30%? 37%?) What will happen? Think about encouraging payroll giving for your higher taxpayers Ensure higher rate tax payers are well informed

18. Gift Aid – what does the future hold? Definite changes to be aware of: End of transitional relief 5 April 2011 e.g. £100k GA donations - fall of £3.2k

19. Gift Aid – what does the future hold? Definite changes to be aware of: Time limits for making claims: For non-company charities: UNTIL 31 MARCH 2010 - no later than 5 years after the 31 January following the end of the tax year to which the claim relates; (6 April 2004) AFTER 31 MARCH 2010 - no later than 4 years after the tax year to which the claim relates (6 April 2005)

20. How is your knowledge of Gift Aid? www.hmrc.gov.uk

21. How is your knowledge of Gift Aid? www.stewardship.org.uk

22. Beware - Substantial donors! Transactions between a charity and a substantial donor (or connected person) may be treated as non-charitable expenditure Broadly, subs donor defined as individual or company giving donations >£25k a year or >£100,000 over 6 years Connected person is spouse, relative, spouse of a relative, relative of a spouse!

23. Beware - Substantial donors! Transactions caught: Property transactions (sale or letting) Provision of services Financial assistance Remuneration to a substantial donor

24. Beware - Substantial donors! Penalty: Lose tax relief on an amount of income equivalent to the transaction made. And the good news for a church in risk of being in this position?

25. Conflicts of Interest

26. What’s the problem? COI: Any situation in which a trustees’ personal or other interests arise simultaneously with those of the charity The problems: By law, Trustees must not benefit from their position without explicit authority Appearances / reputation Doesn’t necessarily mean integrity of individual is being called into question…

27. Examples Payment to Trustee for providing services; Award of contract to person/organisation linked to Trustee; Use of Trustee’s property by charity; Employment of spouse or other relative; Trustee is a key beneficiary or as a representative Trustee (a tough one!)

28. Action needed Identify and communicate conflict Does the conflict raise a legal issue? Can we manage the conflict? (policy?) Is the arrangement really in the best interests of the charity?

29. Conflicts of Interest policy Could include: Register of Interests (regularly updated) Removal of Trustee from decision making process Regular review arrangements to ensure they remain in the best interests of the charity Rigorous recording of discussions and decisions made

30. Financial Statements Disclosure Trustee benefits should be disclosed in the accounts, including name, description and amount!

31. Questions? Ed Marsh  BSc (Hons) ACADChA Director of Charity Services ed.marsh@burton-sweet.co.uk 0117 973 8441   www.burton-sweet.co.uk