The Department for Communities launched a public consultation on 20 May 2024 to explore the implementation of a £20,000 registration threshold below which charities in Northern Ireland would not be required to register with the Charity Commission or provide an annual report and accounts for publication on its website.
The consultation will take views on the resultant regulatory framework for those charities falling below the threshold and choosing not to register. It is also seeking views on the future threshold for reporting easements proposed for small charities.
Please see the following link to the full consultation which includes relevant information and example case studies to explain rationale for some of the questions. A pdf of the consultation document is attached which may be easier to refer to in the first instance. NICVA's answers to the questions are laid out below.
Background
NICVA and other representatives of the sector have long called for a charity registration threshold so that small charities should not have to register with the Charity Commission.
The Charities Act (NI) 2022 included the power for the Department for Communities to introduce a threshold by further regulations in the future however there was no timetable for this.
NICVA’s Executive Committee, along with Volunteer Now and The Fermanagh Trust, wrote to the Minister for Communities, Deirdre Hargey in October 2022 requesting that a £20,000 threshold be introduced. The Minister responded by instructing the Department to set up a working group to develop policy and begin to draft legislation that would see the introduction of a £20,000 threshold.
NICVA is the umbrella representative organisation for the voluntary and community sector in Northern Ireland with a membership of over 1,200 organisations.
NICVA’s response is based on its role as the representative body for the voluntary and community sector in Northern Ireland. Comments are based on practice and informed by previous charity regulation consultations as well as years of experience as a Charity Commission helper group: from helping charities through the charity registration process, working with charities ‘in-default’ on the charity register and advising on complying with charity regulation.
Questions from online consultation questionnaire including NICVA's response
Please note that questions in section 1 must be completed, all other questions in other sections are optional so if you don’t want to answer any you can skip to the next section.
Introduction
1. Are you completing this questionnaire as an individual/member of the public, a charity/charity trustee or other organisation?
- Individual/Member of the public
- X Charity/Charity trustee
- Other organisation
1a. What is your name?
Denise Copeland
1b. I consent to DfC publishing my name or organisation name in the consultation response document:
- X Yes
- No
1c. What is your charity's / organisation’s name?
Northern Ireland Council for Voluntary Action (NICVA)
1d. What is your email address? (You will automatically receive an acknowledgement email when you submit your response.)
Please note that the following question only appears if you answered ‘charity’ in Q1 it will not appear as an option if you chose ‘other organisation’ So if you are a voluntary organisation which the law currently recognises as a charity but you don’t see it as a charity, you will need to answer charity in Q1 in order to answer the next two questions.
Q2a. Does your charity typically have an annual income under £20k?
- Yes
- X No
Please note that the following question will only appear if you answer Yes to Q2a.
2c. If your charity is not currently registered, but falls below £20k annual income, would you still seek to be registered?
- Yes
- No
Please explain your response
The threshold
3. Do you believe the registration threshold should be either: (choose one response only)
- £20k, income only? Or
- X £20k income, and assets based
Please state your reasons
We believe that the charity registration threshold should be income and assets based as the Commission could lose oversight of a charity’s assets if the threshold was income only. The examples cited in the consultation document demonstrate that there are some charities with low income but with substantial assets. The Commission needs to be able to protect these charitable assets.
NICVA warmly welcomes the introduction of a charity registration threshold for charities in NI. We welcome that a charity that falls below the set threshold would be able to remove itself from the charity register if it no longer wishes to be a ‘registered’ charity. We welcome also that charities under the threshold that wish to remain on the Charity Register will be permitted to do so as there are also small organisations that see themselves as charities.
Since the enactment of the Charities Act (NI) 2008, we have identified that a charity registration threshold was needed so that very small charities are not required to register, and we have highlighted this many times to the Department over the years. The need for a charity registration threshold was called for by support networks, umbrella bodies who work with small organisations and others at the engagement meetings held by the panel for the independent review of charity regulation in 2021.
NICVA notes from its own experience in helping and advising organisations with the charity registration process, that there has been resistance from smaller organisations about having to register. For example, organisations that meet the charity definition, but which don’t identify as being charities and never sought charity tax status with HMRC such as small historical societies, environmental groups, community and sporting organisations, do not all want to be registered or benefit from being a registered charity.
Without a charity registration threshold, there is a real danger that existing small organisations are going to wind up rather than having to register and/or report annually to the Commission. Trustees of some smaller organisations have told us, and other helper groups, that they find the regulations overwhelming. Very small organisations do not have the benefit of staff to help them and many of the small charities that NICVA worked with who were ‘in default’ on the Charity Register have older Trustees who sometimes find the process of reporting online quite daunting or difficult.
NICVA is also concerned that the lack of a charity registration threshold is discouraging new organisations from forming as it is quite easy to meet the current definition of charity in N.Ireland. The lack of a threshold could also encourage some groups from not formalising and therefore not adhering to good governance practices.
While NICVA appreciates that some funders use the charity register to see if potential grantees are uptodate with their accounts and reports on the register, we would hope that funders would not continue to require small charitable organisations to continue to register if it is no longer a legal requirement to do so. Funders could ask for simple income and expenditure accounts of the organisation directly.
There is an illusion that charity registration equals compliance with charity regulation and that the Charity Commission ensures that all registered charities are fully compliant. The Charity Commission does not however review all of the accounts and reports submitted, it simply does not have the resources and is unlikely to ever have the resources to do this. In the last business year (2019-20) when the Commission was permitted to check accounts and reports, it was only able to check 19% of all sets of accounts and reports submitted to the Commission.
3) i. What level do you believe the asset threshold should be set at?
Answer: £100,000
Please provide your reasons
It is important that the asset threshold is set at such a level that would capture a lot of the assets owned by charitable organisations in the community. When thinking about buildings, these could be valued very differently depending where they are located, rural vs urban, so agreeing a figure that suits all would be important.
In proposing an asset threshold of £100,000, we wanted to capture buildings that wouldn’t necessarily be very high in monetary value eg an old village hall, but that could potentially have significant value in terms of being an important community space.
We didn’t want to set it lower than £100,000 in case there are charities who own different pieces of equipment that collectively could push them over a threshold.
An asset threshold of £100,000 would also seem reasonable for those charities with investments.
We recognise that in the setting of an asset threshold, detailed guidance will need to be produced as there are various examples of types of ownership of assets within the sector from corporate trustees and holding trustees to mortgages.
Deregistration
4. If accounts for the last full financial year have not been filed with the Commission at the point at which the charity applies to deregister, what evidence, if any, should the charity be required to provide to the Commission to prove that it is a charity that would be entitled to deregister? (Please select one response only)
- X Yes, the charity should be required to provide evidence to the Commission that its income falls below the threshold
- No evidence, except a letter from the charity’s Chair stating that they are below the threshold
- No view
4i If answered Yes above, please select below:
- The last full year’s accounts that have been compiled, where available
- A full year’s bank statements from all the charity’s bank accounts
- An auditor’s or independent examiner’s report for the previous year
- No evidence other than completing a form issued by the Commission
- X Other
If you answered 'other' please explain your answer
Complete a form issued by the Commission and include a full year’s bank statements and balances from fundraising platforms.
NICVA believes that it would be important that the Commission would create the form as it would know best what content to include on it. We believe that it would be prudent to also ask for the bank statements as this would not necessarily require any additional work for the charity. A form on its own does not provide any evidence of income, if the charity has a bank account and/or an online fundraising account then it should show evidence of the balance and last year’s transactions. Not all online fundraising platforms are the same and some platforms will hold the money until someone moves it to the bank account.
Charities which experience a ‘spike’ in income which may take them above any threshold
5. After the threshold is introduced, how should a spike in a charity’s income, which takes it over the threshold in a particular year, be dealt with? (Please select one only)
- Apply for registration even though it might return to previous ‘below threshold levels’ in subsequent years and would have to apply for deregistration if it did not want to remain registered?
- Only apply to register with the Commission if it is over the threshold by a % of its income in that particular year?
- X Trustees monitor income for the next 2 years after the first spike and if remaining above the income threshold in both subsequent years must apply for registration with the Commission?
- Other?
Please explain your answer
It is good that the Department recognises that there may be charities whose income fluctuates above and below the threshold in a year or more. It would create an unnecessary amount of work to make a charity which had a spike in its income in a given year to then have to register with the Commission and then deregister the following year if its income was reduced again.
We think it would be best for the Trustees to have to monitor the income for the next 2 years after the spike. We also believe that there should be a special case for charities in a 3rd year also where they can demonstrate that the income is designated for a particular purpose and is going to be spent in that 3rd year and so would be below the threshold by the end of the 3rd year.
Powers of and services provided by the Commission
6. Do you believe that the Commission should retain the same powers to act for the protection of charities and provide the same services to charities that are not registered by virtue of the threshold?
- X Yes
- No
- No view
If you have answered NO, please explain why
It is important that the Commission would retain the same powers over those charities under the threshold that are not registered. The Commission can provide permissions in certain circumstances to aid the better administration of charities. We would not want to see unregistered charities being at a disadvantage because of deregistration. The Commission can also investigate concerns into charities and the public and other registered charities need the Commission to be able to carry out this function for the protection of all charities.
Determination of jurisdiction
7. Should the Commission have the power to either: (Tick one box only)
- X Order any documents from any organisation in order to determine charitable status and jurisdiction? or
- Make the organisation apply for registration to determine jurisdiction, as is the case in England and Wales?
Please explain your answer
We believe the Commission should have the power to order any documents from any organisation in order to determine charitable status and jurisdiction as this is wider than making it simply apply for registration. It may also be quicker for the Commission to make a determination by ordering a wider selection of documents rather than those which would be submitted at registration. Also, the charity commission’s registration process is designed to register charities and staff will helpfully tell you what you need to change in order to proceed through the process, they will not tell you what you need to change in order to clarify that you are not a charity. Best for both parties if they don’t have to go through the registration process.
8. Should there be any sanction for failing to comply?
- X Yes
- No
- No view
a. What should that sanction be?
- X Dealt with in the same way as failure to comply with other orders of the Commission in line with Section 174 of the 2008 Act. Section 174 allows the Commission on application to the High Court to bring a case for failure or refusal to obey certain orders within the 2008 Act.
- Other?
Visibility required of charities which choose not to register by virtue of the threshold
9. What public visibility should be required of charities falling below the threshold and choosing not to register? (Please select one answer only)
- X They should be required to state their status (i.e. a charity not required to register by virtue of the threshold) on all documentation produced by the charity as per section 19 of the 2008 Act
- They should only be required to state their status on websites or social media
- None
- Other
- No view
Please explain your answer
NICVA believes that it would be helpful if they have to state their status on all public facing communications, however the statement provided above is very wordy and there should be some thought into providing a less wordy statement eg ‘a charity not required to register’ or for those that don’t see themselves as a charity ‘ a voluntary organisation not required to register as a charity’. This statement could then be easily explained on the Commission’s website and also the Fundraising Regulator’s website.
Instruction to change the name of a charity
10. Should the Commission have the power to instruct a charity falling below the registration threshold and choosing not to be registered to change its name?
- X Yes
- No
- No view
Please explain your answer
It is important that the Commission would have this power as it would then protect registered charities’ names from being used by charities or other voluntary organisations who are not required to register by virtue of the threshold.
False statements about the status of a charity
11. Do you believe that a person should be guilty of an offence if they ask for money or other property for the benefit of an organisation by misrepresenting that organisation as a charity exempted from registration by virtue of the threshold, if that organisation is not in fact a charity?
- X Yes
- No
- No view
Please explain your answer
Unfortunately, there will always be fraudsters in society so it is important that there is a deterrent in place for those that would try to misrepresent themselves as a charity exempted from registration. NICVA believes that this is different than a voluntary organisation inadvertently representing themselves as a charity exempted from registration.
11a. Do you believe that a person should be able to offer a defence that they had reasonable grounds to believe that the institution was a charity?
- X Yes
- No
- No view
Please explain your answer
As there is always potential for confusion to arise, it would be good for the Commission to determine if the person was acting in good faith in believing that the institution was a charity. Also an organisation that was never registered as a charity will not know for sure if it is a charity unless it goes forward for registration with the Charity Commission. Quite often in the sector organisations learn from each other and sometimes copy policies, copying fundraising statements could easily happen.
11b. Do you believe that the offence should carry a maximum fine of £5,000 after being prosecuted in a magistrates’ court?
- X Yes
- No
- No view
Please explain your answer
It should be an adequate deterrent.
Annual reporting requirements for charities below the threshold which choose to remain registered or register voluntarily
12. Should the threshold for future template reporting and removal of the independent examination requirement align with the registration threshold of £20k or should the income element be £25k as recommended by the Independent Review? (Select one answer only)
- X Align with registration threshold of £20k
- £25k reporting threshold as recommended by the Independent Review
Please explain your answer
We agree that the reporting threshold should be aligned with a registration threshold of £20k as the figures may appear quite similar and have potential to cause confusion however if a registration threshold of £20k is not introduced then the reporting threshold should revert to £25k.
NICVA welcomes the introduction of a reporting threshold for small registered charities and recognises that those that want to remain as registered charities may benefit from not having to get an independent examination carried out on their annual accounts. We do not fully support however the template reporting that would have to be completed digitally on the Charity Register as it may pose issues for those with no or limited digital skills.
Attendees at our consultation seminar also highlighted that some small organisations are already completing annual accounts on a template from a funder and an umbrella body, introducing a third template would be cumbersome.
We therefore would welcome a proper consultation on the introduction of a reporting threshold, as the practicalities of it haven’t been consulted on. Some small charities may prefer to submit a pdf of their annual accounts and reports as they are currently doing.
12a. Should there be an asset element included in the reporting threshold?
- X Yes
- No
- No view
Please provide your reasons
There is no guarantee that an asset threshold will be included alongside the income threshold for charity registration so it would be important that those charities with small income would have to report if they had assets over an asset threshold.
Q12b. What level do you believe the asset threshold should be set at?
Asset threshold? £100,000 for all assets
Please provide your reasons
NICVA believes that the asset threshold for reporting would probably be best if it is aligned with the asset threshold for charity registration to avoid any confusion.
13. Did you find the consultation document including its background annexes to be useful?
- X Yes
- No
- Did not read them
Please explain your answer
The examples in the body of the consultation were very helpful as were the annexes for more background reading.
The deadline for submitting responses is 11 August 2024
You can submit your response online at Consultation for registration threshold for charities in Northern Ireland - NI Direct - Citizen Space
or email [email protected]
or write to - Registration Threshold Consultation Charities Team,
Voluntary and Community Division,
Department for Communities,
Causeway Exchange,
1-7 Bedford St,
Belfast,
BT2 7EG
