The Charity sector: Thinking back and looking forward
As another year draws to a close we prepare ourselves for what looks set to be a rather turbulent and unpredictable 2019. Politically, economically, socially and technologically, the year ahead already looks like one that will feature some significant changes. We look at what the coming twelve months may hold in store for the charity sector.
We must first look back at last year’s predictions and see how far from the mark these fell.
Local councils have come under further financial pressure in the last year and following the devolution of powers from government, we wondered if the discretionary rates relief offered to charities might start to disappear. This appears not to have become a widespread issue currently, but we are beginning to see some instances of this throughout the sector.
Charity Commission fee
With the Charity Commission being tasked to raise additional funds for charities we expected some progress towards an annual fee being charged to charities. Fortunately this hasn’t been introduced, but this remains very much on the cards and it would come as a surprise if we didn’t see something announced in the next twelve months.
2018 has highlighted a number of failings in the sector, but as bad news fuels the media, the significant amount of positive work sometimes goes unnoticed. The sector continues to support its beneficiaries in ever difficult circumstances and should be celebrated for its hard work and resilience.
At the time of writing this article it’s rather difficult to predict with any certainty what the impact will be on the charity sector. Clearly government’s focus sits with trying to negotiate a deal that has the best outcome for the UK, as well as a bit of in-fighting as they work through this process. The sector needs these negotiations to be dealt with as swiftly and cleanly as possible to allow the government to then address the subsequent issues for the charity sector such as funding, in particular the replacement for EU funding, tax reforms and overseas operations.
Recent statements from political commentators and economists have continued to predict that the economy, at both a business and individual level, will be worse off. This tends to suggest, therefore, that beneficiaries will be in a worse position and as a result we could see charity’s services in greater demand.
Making Tax Digital
In this uncertain time, we at least have one certainty next year which is of course Making Tax Digital for VAT. Charities that are VAT registered will be required to keep records digitally and use software to submit their VAT returns from 1 April 2019, although HMRC have said there will be a “soft landing” for this. HMRC’s continued drive towards digitalisation could see further developments with Gift Aid claims, a possible future target for becoming digital.
You’ll have seen various mentions of this on our website in recent months and the arguments to introduce this technology into more businesses and institutions continue to gather momentum. We certainly don’t expect a Venezuelan-style national cryptocurrency to be introduced, but there could be some changes in how business, charities and individuals transact with one another.
This year saw the introduction of online filing for Company accounts which brings this practice into the 21st century, but the Charity Commission are still lagging behind. They have been tasked to find a way, along with Companies House, for charity accounts to be filed online, so expect progress on this front in the coming year.
Collaboration and mergers
We’ve seen more charities considering mergers and working collaboratively this year, but 2019 is likely to see a continued drive towards charities working together and pooling resources as funding becomes even tighter for some organisations. This also provides an opportunity to deliver a more effective and efficient level of service to beneficiaries.
It would be very easy to have a doom and gloom outlook for the coming year, there are a lot of unknowns and with uncertainty often comes worry and concerns, but there is some certainty that we can remain positive about. In spite of everything else that may be happening in the political background, charities will continue to have a positive impact on their beneficiaries and local communities, delivering services at a time when they are most needed. Whatever challenges the sector faces, charities almost always demonstrate a resilience and determination to find a way that allows them to carry on the incredible work they do.
Our gift to you
We have a series of upcoming Governance training events and charity seminars being held in 2019, these events are free to attend and are aimed at Trustees, Governors, Accounting Officers, CFOs and SLT’s. For more information on dates, locations and how to book click here.
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