May Policy Update

Welcome to your monthly roundup of key policy updates and developments from across the charity sector. In this edition, we cover the latest on the Civil Society Covenant, the SORP consultation, proposed changes to charity law thresholds, and a reminder about the upcoming Spending Review. 

The Civil Society Covenant 

A new joint report from NCVO and ACEVO sets out findings from the Civil Society Covenant engagement exercise, which took place in 2024 and invited civil society organisations to help shape a new partnership between government and the sector.  

The findings from the report show the need for better communication, long-term funding, and a clearer understanding of civil society within government. Recommendations include:  appointing senior leads for civil society in every department, embedding civil society engagement in local governance, amending restrictive legislation, and establishing ongoing oversight and review. 

The report highlights that while many civil society organisations feel disempowered or face barriers such as bureaucratic processes and lack of trust, there is broad support for the Covenant’s draft principles, particularly where they are linked to concrete action and accountability. Read the full report here. 

Statement of Recommended Practice (SORP) consultation  

A new SORP consultation, running until Friday 20 June, proposes significant changes to reporting requirements for charities. With these changes being set to take place in January 2026, there is a limited preparation time for trustees, finance teams, and auditors, especially considering the complexities involved in charity reporting. 

A key part of the proposal is the introduction of a tiered reporting system based on charity income: Tier 1 for charities with income up to £500,000, Tier 2 for those between £500,001 and £15 million, and Tier 3 for those exceeding £15 million. Each tier builds upon the previous one, with higher tiers requiring more detailed disclosures.  

Additionally, the changes will mean that trustees will need to include information on volunteering, impact, and sustainability in their annual reports. These proposed changes raise questions about their impact on reporting quality, the additional time and cost burdens on charities, and the support needed for trustees, particularly those in smaller organisations. 

Tell them how these changes will impact your charity. Have your say here. 

Charity Law Thresholds are under review 

The Department for Culture, Media and Sport (DCMS) has launched a consultation on raising key financial thresholds in charity law, with responses due by Wednesday 12 June. These thresholds – covering registration, reporting, fundraising, and other regulatory triggers – have remained largely unchanged despite years of inflation. The consultation is rooted in the Law Commission’s 2017 recommendation that these figures be reviewed and adjusted every ten years to remain proportionate and effective. 

The proposals span five main categories: from raising the £5,000 income threshold for registration, to updating limits that trigger accrual accounting and full audit requirements, which is currently set at £250,000. Additionally, there are questions around fundraising thresholds, such as when someone is classed as a ‘professional fundraiser’, and technical thresholds amended under the Charities Act 2022.  

This is an opportunity for charities to shape a more equitable regulatory framework, so your feedback is crucial. Learn more here and have your say here. 

Don’t miss the upcoming Spending Review 

This is your reminder that the Government’s Spending Review will take place on Wednesday 11 June, and you can watch it unfold on YouTube, the HMT webpage, BBC iplayer, and also parliament website. 

Back at the start of the year, the Treasury asked for submissions from stakeholders on spending priorities. DSC’s extensive response urged the Government to ensure real terms increases to the Charity Commission budget, provide further emergency financial support to stabilise councils, allow the National Lottery Community Fund (TNLCF) to implement its new strategy and much more. You can view our full response here. 

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