Policy, campaigns & research

Transparency of company giving falls victim to ‘cutting red tape’

In 2013 the last Government amended the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations, removing the obligation for companies to provide key information in their reports about their charitable donations.

For many years we have researched and published The Guide to UK Company Giving, which examines the cash and in-kind giving of 400 companies which give the most to charitable causes in the UK. Evidence gathered during our latest research shows that these changes have made the charitable activity of leading companies significantly less transparent. 41% of companies in the sample did not declare their total charitable cash donations, despite evidence that donations and other charitable activity occurred.

Why does this matter? Companies only contribute about 2% of charities income, and not having this data makes it even more difficult to establish their total charitable contributions (estimated to be £700 million annually). It also makes individual companies’ donations less transparent to shareholders and the general public, and it makes it harder for charities seeking to build relationships with company donors to identify the right companies to approach. If this situation continues unaddressed, charities will have more difficulty securing much-needed support from companies in the future – despite the fact that we know Government is keen to build these kinds of relationships.

The Government’s assertion that these (not very burdensome) requirements were about cutting ‘red tape’ for business just doesn’t hold water. It’s a symbolic effort with a very negative downside. It’s letting companies get away with secrecy about what causes they give to and how much. Reinstating the regulations would be in the public interest and the interest of charities. Bizarrely, you’d think socially responsible companies should want this information in the public domain anyway. It’s kind of a no brainer.

In advance of the summer budget, we wrote to the Chancellor George Osborne and the Business Secretary Sajid Javid demanding that recent regulatory changes on company reporting of donations be reversed. So far we’ve been met with a wall of boiler-plate from junior ministers, who claim that binning this minimal regulatory requirement “contributed to saving UK business £1.2bn per annum.” Seriously?

We’ll keep asking the new government to reverse the legislative changes made in 2013, and to once again require companies to declare their total charitable cash donations and a breakdown of charitable activity in their reports and accounts.

If you agree that this information is important for charities, companies and the public interest, why not write to the Business Secretary. Or email us at policy@dsc.org.uk with your thoughts.