Mandatory Public Benefit Reporting as a Basis for Charity Accountability: Findings from England and Wales

Abstract

Charitable status is inherently linked in many jurisdictions with the requirement that an entity must be established for public benefit. But, until recently the public benefit principle had relatively little impact on the operations of most established charities. However, in England and Wales, reforms linked to the Charities Act 2006 led to a new requirement for public benefit reporting in the trustees' annual report (TAR) of every registered charity. This new narrative reporting requirement had the potential to affect the understanding of accountability by charities. The paper investigates the impact of that requirement through a study of over 1400 sets of charity reports and accounts and subsequent qualitative work with trustees and others involved in preparing TARs.

Accountability and not‐for‐profit organisations: Implications for developing international financial reporting standards

“…Table , panel C shows that three quarters of the NPOs represented by our survey respondents had income of less than £3m. This is consistent with the profile of the NPO/charity sector generally, which is populated mainly by small organisations (Cordery, ; Morgan & Fletcher, ). It may be that, in our sample, the perceptions of those involved in financial reporting of smaller NPOs are significantly different from those involved with big NPOs, and further statistical analysis would be required to test this.…”

“…For any such development, it may be tempting to prioritise the views of trustees/board members over other stakeholders, given their instrumentality in driving NPO reporting quality (Coule, ; Morgan & Fletcher, ). However, the trustee group in our research showed significant differences in their thinking compared with other groups.…”

Private Schools and the Provision of ‘Public Benefit’

“…The schools, which are listed anonymously in Table 1 with their characteristics, were recruited through personal and professional contacts and via a private school membership organisation. We also consulted the school trustees' annual reports to the Charity Commission: as with all charities, these contain some limited narrative reporting on public benefit activities (Morgan and Fletcher, 2013). To obtain the perspectives of other key stakeholders, we interviewed headteachers of four state schools (also listed in the table) and, for an informed sector perspective, the directors of two private school associations.…”

Understanding Information Exchanges and Reporting by Grantmaking Foundations

“…Reporting takes many forms presently. New mandatory mechanisms to enhance accountability appear in other countries, for example, public benefit reporting in the trustees' annual report in England and Wales (Morgan & Fletcher, 2013).…”