Since the introduction of the Charities Act 2006, a charity must now continue to meet the public benefit requirement throughout its life. Charities do not have the right to “opt out” if the trustees consider their responsibilities to meet the public benefit requirement to be too demanding.

One of the ways in which a charity must now demonstrate that its purposes are for the public benefit is through the Trustees’ Annual Report. All registered charities must prepare a Trustees’ Annual Report and those with a gross income which exceeds £10,000 must file their Trustees’ Annual Reports with the Charity Commission.
The basic contents of the Annual Report are mandatory, although smaller charities (not subject to statutory audit) are not required to provide as much information as larger charities which are legally required to have an audit.

A Trustees’ Annual Report covering any period starting on or after 1 April 2008 must include:

  •  A report of those activities undertaken by a charity to further its charitable purposes for the public benefit.
  •  A statement by the charity trustees as to whether they have complied with the duty in section 4 of the Charities Act 2006 to have due regard to the public benefit guidance published by the Charity Commission.

The Charity Commission considers the information provided in the Trustees’ Annual Reports about public benefit to be a useful first step in showing whether a charity’s purposes are for the public benefit, and that those purposes are being carried out. In assessing the public benefit of individual charities, the Charity Commission has stated that it will also:

  •  Carry out public benefit research studies (showing the extent to which different types of charity are fulfilling the public benefit requirement).
  •  Work with professional and umbrella bodies (especially in relation to particular charity sub-sectors).
  •  Carry out detailed assessments of individual charities.
In its publication Charity Reporting and Accounting: The essentials (CC1 5a) the Charity Commission asserts that the Trustees’ Annual Report is an “important milestone in a charity’s life”. It also states that the Trustees’ Annual Report is “a chance to take stock of how the year compared to the trustees’ plans and aspirations, a time to celebrate successes and achievements, and to reflect on difficulties and challenges. The Annual Report is also an opportunity to highlight the main activities or significant activities undertaken in order to carry out the charity’s purposes for the public benefit. The report’s audience is not just trustees and members, funders, donors and beneficiaries, but also the wider public who have an interest in what charities do and what they achieve.”

The publication goes on to state, “The Annual Report need not be lengthy. A good Annual Report explains the charity’s aims and how it is going about achieving them. It meets all the legal requirements and provides a balanced view of the charity’s structure, aims, objectives, activities and performance. Importantly, it brings the charity to life and for those charities that rely on voluntary income as their primary source of funding provides donors with the opportunity to understand how their money was spent and the difference it has made.”

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