Guest editorial: Small charities tell regulators to keep it simple

Nearly 40%* of small charity respondents struggle with VAT issues and over one third struggle with Gift Aid.  These were just a couple of the gnarly issues to emerge from a survey conducted by the Small Charities Coalition on behalf of HMRC and the Charity Commission earlier this year.

Small charities in general reported good experiences with both bodies - 65% of respondents describe the Commission as ‘useful’, and 83% said their experience of HMRC was satisfactory or better (39% good or excellent).

However, both organisations received criticism in key areas. 

There was low awareness of some of the services available from the Commission, and 47.5% of respondents felt that the information available from HMRC on tax in general was difficult to understand or difficult to apply to their situation.

"This is a complex area and the people who try to deal with it are volunteers and, usually, with no expertise in this field.  A simplified breakdown of the information would be a useful tool."

The most common governance issue for small charities and their relationship with the Commission was amending governance structures (58.5%).

In relation to tax, other than specific difficulties with VAT and Gift Aid, one of the key issues for small charities is recognising the need for professional help but not being able to afford it.  Wider promotion of services such as Community Accounting services could be of benefit to more small charities.

"Potential issues are so complex and trustees of small charities do not have the capacity to be aware of the potential issues?"
    
When we asked respondents what they would like to change, they overwhelmingly asked for simplification of paperwork and rules, and dedicated help. 

Many charities reported difficulties in absorbing and understanding the relevance of complex, detailed information and highlighted the need for a central dedicated contact point for small charities, the need for dedicated areas of the websites, the need for more tax relief and higher thresholds for reporting purposes.

Ideas for what dedicated support might look like included:

• a dedicated area on the website (for both CC and HMRC)
• a dedicated phone line
• a small charities officer in locations
• free training to small charities and new charities starting up
• discussion forums and workshops
• email updates
• step by step guides with all the basics – avoiding lots of cross referenced publications

This theme of ‘simplification’ also came across loud and clear in responses to some more general questions we asked about what would make it easier to run a small charity:

"More awareness of the work we do - and an understanding that some charities only have a couple of people to do all the jobs"

"More straightforward guidance given, template documents issued and regular advice provided (say a monthly news bulletin with real examples and straightforward practical and tailored information)"

There is a definite feeling amongst many small charities that the ‘one size fits all’ approach of the regulators disproportionately hinders their ability to carry out their work, and further illustrates a lack of understanding of the day-to-day reality of the majority of small charities.

Investing time and money in tailoring services to the needs of the vast majority of the organisations who need to use them would pay dividends in better compliance and less confusion, not to say potentially more money in the sector through higher tax reclaim rates.  

Now is the time to be asking for what we need.  It is significant that both the Charity Commission and HMRC have been proactive in seeking the views of small charities through this survey – both organisations plus the Treasury also fielded some ‘weighty’ panel members at a recent Question Time event with small charities, where they heard small charity views straight from the horse’s mouth.

If you would like to know more about the survey results or the work of the Small Charities Coalition please contact Cath Lee, CEO of Small Charities Coalition on 0207 3914812 or cath.lee@smallcharities.org.uk.

The survey was partially completed by 259 and fully completed by 214 respondents.  Read more about the survey and the work of the Small Charities Coalition, at www.smallcharities.org.uk

By Cath Lee, CEO, Small Charities Coalition