UK Charity Commission Annual Report 2022-23

On 10 July 2023, the Charity Commission published its annual report and accounts for the period 1 April 2022 to 31 March 2023 (the 'Report'). The Report covers a review of the Commission's performance, an analysis of relevant legal developments, and a financial and accountability report, as well as forewords from Commission Chair Orlando Fraser and Chief Executive Helen Stephenson CBE.

Forewords from Commission Chair and Chief Executive

Charity Commission Chair Orlando Fraser notes in his foreword to the Report that he is committed to "leading an expert Commission that is fair, balanced and independent" and as such has worked – and will continue to work – to embed these principles in the Commission's operations. Fraser explained that the Commission's new strategic plan is currently in development, and will reflect these themes. Another theme that will be captured in the new strategic plan is the ongoing impact of the cost of living crisis on the sector, and Fraser refers to his personal priority of encouraging more philanthropy in the UK among high net worth individuals as he believes "it is incumbent on those with means and privilege to support their communities, and those within them whose lives have not been so lucky".  Fraser praises the "resilience and ingenuity" of charity trustees for steering their charities through the difficult financial times, whilst reiterating that now more than ever, demonstrating careful financial stewardship of charity resources is of central importance.

Fraser also addresses the topic of charities and political campaigning, noting the launch of the new "five minute" guidance for trustees last year and his various comments (including via a blog post) on how charities can balance campaigning within the legal limits in place, reiterating that "charities should not speak out on issues beyond their purposes". The Report later refers to the Commission having seen "inflammatory rhetoric" from charities, which "risks undermining public trust in the sector".

Helen Stephenson CBE, Chief Executive, also reflects in her foreword to the Report on the impact of the cost of living crisis on charities and their beneficiaries across England and Wales. Stephenson notes that the Commission has made it a priority to assist charities in coping with the crisis, giving the example of updated guidance released aimed at supporting trustees in "navigating the decisions they may face during periods of financial pressure and uncertainty".

Stephenson also highlights the Revitalising Trusts programme, which has this year assisted charities to use or pass on assets previously lying dormant totalling over £100 million. In addition, Stephenson refers to the roll-out of the new My Charity Commission Account service which Stephenson pictures as the "front door for trustees into the Commission" for charities.

Performance Report 

The performance section of the Report highlights some key statistics.  Unsurprisingly against a backdrop of the cost of living crisis, the Commission reported a decrease in both charity income and charity spending in 2022-23 (sector income at £83.8 billion – down from £88 billion; and charity spending decreasing from £85 billion to just over £80 billion).

Applications to register as a charity also decreased, and just under one thousand more charities were removed from the register in 2022-2023; however, the number of charities on the register overall increased slightly. The Commission reports that on average, fewer than half (48%) of applications to register as a charity were successful, which is down from 52% in 2021-22.

In terms of regulatory issues, the Commission:

• concluded 5,726 regulatory action cases (up from 5324) and 68 statutory inquiries (an increase from 45 in 2021-22); and
• reported a decrease in the number of serious incident reports for the third year in a row, with 2,969 new serious incident reports being assessed by the Commission in 2022-23.

The Commission has continued to work with whistleblowing charity Protect (which provides a confidential whistleblowing helpline giving support and guidance) and in 2022-23 the Commission received 327 whistleblowing reports  -  an increase on the 281 reports in 2021-22.

Legal and financial developments 

The Report includes information on some of the main legal developments (including challenges, statutory inquiries, and case studies) that have impacted the Commission's legal framework, including the High Court decision in Butler Sloss & Ors relating to trustee investment powers (see here for Withers' analysis of the case), the Commission's successful legal action against the Frank Wingett Cancer Relief Fund, resulting in the Charity having to pay back over £100,000 in donations, and the inquiry into homelessness charity the Ashley Foundation (which we reviewed in a previous e-alert here).

The Commission notes that new and improved guidance is in the pipeline, notably the investment guidance (a redesign of CC14) due to be published in summer 2023, and feedback on the consultation on the draft social media guidance for charities.

The Report provides a detailed account of the Commission's financial position, noting in particular that the Commission underspent by £0.259m, or 0.8% of annual budget (up from £0.14m in 2021-22). However, the Report states that political and financial uncertainty in the UK (including the inflation in operating costs) as well as a "turbulent" recruitment market has made 2022-23 an "inherently challenging operating environment", including for the Commission.

Click here to read the full report.