Charity Commission introduces overseas funding declaration for UK charities

The Charity Commission for England and Wales will be introducing a mandatory requirement for all charities to declare income received from overseas, despite strong criticism from charities.

Bond is extremely disappointed that the charity regulator has chosen to move ahead with the proposal, which will have a disproportionate impact on development and humanitarian charities who work internationally and receive support from around the world. It will also make it harder for the UK to hold other governments to account, particularly those using similar checks on civil society to restrict organisations championing democracy and human rights.

The new measure will require charities to list all countries they receive income from, and report all funding from overseas governments, quasi-governmental bodies, charities, non-governmental organisations and civil society groups. Charities with an annual income of more than £25,000 will also be asked to give the total value of donations received from individuals and other institutional donors outside the UK which are more than £25,000. Charities with an annual income of less than £25,000 will be asked to report these donations if they amount to more than 80% of the charity’s gross annual income.

The reporting requirements will be introduced as part of wider changes to the annual return, which will be rolled out in February 2018. Other information that charities will be asked to report on includes the number of staff paid over £60,000 and the use of informal money transfer systems outside of the UK, such as cash couriers and hawala networks.

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The Charity Commission recognises that the overseas funding declaration will place an additional burden on charities and that some will need to make changes to their financial systems to collect the information required. For this reason, they will delay the mandatory reporting of donations from private institutions outside the UK (other than charities and non-governmental organisations) and individual donations for one year.

Under initial proposals, announced in July 2017, charities would have been required to report all donations received from overseas from February 2018, with no minimum reporting threshold.

Mike Wright, Bond’s director of membership and communications, said:

“Some of the proposed changes will help alleviate reporting pressures to a small degree. These minor concessions include delaying the requirement for organisations to report income from some donors and introducing a minimum reporting threshold for individual donations and income from institutional donors that aren’t overseas charities or NGOs. However, the revisions do not go far enough and will still prove unnecessarily burdensome, particularly for small NGOs who have less capacity to record this level of detail around donations.

These new measures will also make it harder for the UK to hold other governments to account, particularly those using similar funding information as a means to restrict civic freedoms by unfairly discrediting NGOs championing democracy and human rights. We urge the Charity Commission to reconsider before the new Annual Return is rolled out next month.”

In many countries around the world, controls on foreign funding are used as a means of restricting basic rights and freedoms. Organisations that depend on donations from overseas are labelled as foreign agents, subject to political interference in their internal affairs, and prevented from speaking out.

The world looks to the UK for leadership on democracy and human rights. Requiring UK charities to declare the funding they receive from overseas sends the wrong message to governments that are using similar measures to clamp down on civil society.