CFG broadly welcomes SORP proposals but membership body points to areas of concern for micro and small charities.
Charity Finance Group (CFG) has submitted its response to the consultation on the Charities Statement of Recommended Practice (SORP).
In its response, the membership body, which represents more than 1450 charities, welcomes the SORP-making body’s proposal to introduce three separate tiers.
However, it has stated that the thresholds are not set at the right level and are ‘too onerous for smaller charities’. To resolve this, CFG has suggested the development of a separate SORP for micro-tier charities which contains ‘must’ recommendations only.
The membership body points to inconsistencies between different reporting requirements, with proposed SORP levels at odds with the financial thresholds for audit and independent examination.
CFG is calling on the SORP-making body to increase the level for Tier 2 to bring it into line with the Audit Threshold following the results of the DCMS consultation on financial thresholds.
CFG’s members also raised concerns about the range of Tier 2 which, if implemented as proposed, will mean that charities with incomes between £500,000 and £15m will be expected to adhere to the same set of requirements.
Richard Sagar, Head of Policy at CFG, comments: “We welcome the introduction of tiering to deliver a SORP that is usable for all charities. However, the proposed tiers are problematic, and CFG’s members and other charities are right to raise this.
“The charities that could fall within Tier 2 will range from those with incomes of £500,000 up to incomes of £15m. There are vast differences in terms of organisational complexity, business models, and resources for charities across that wide range. In essence, those smaller charities within Tier 2 will likely find it very difficult, and costly, to meet the Tier 2 requirements.”
Richard continues: “We’ve been very clear in our response where we believe the requirements will disproportionately impact small and micro charities. One overseas charity with an income of £1m told us that they were worried about the time and cost of calculating the contribution of volunteers based overseas. This is just one example of where the new SORP could create additional pressures on those charities with the fewest resources.
“On the whole, we welcome many of the proposals set out in the SORP-making body’s consultation. However, we would urge a rethink in those areas that will increase the administrative burdens on charities, particularly our micro and small charities which are the backbone of the charity sector.”
Editor’s notes
About CFG
CFG is the charity and membership organisation that supports other charitable organisations to make the biggest difference possible. We do this by helping them to make their money and resources go further, by putting financial leadership at the heart of their decision-making. Since CFG was founded in 1987, we have evolved to welcome all finance professionals working for charitable and social change organisations. We also welcome non-finance professionals who recognise that we deliver greater impact when we are financially confident, trustworthy and dynamic. Today, CFG’s vibrant community manages around one third of the UK’s entire charity sector income. We are a diverse and inclusive community of people who are passionate about delivering impact through financial leadership. Together, we lead the way for charity finance.
