Gareth G. Morgan

The use of charity accounts for researching the performance of voluntary organisations

The published accounts of charities offer a fruitful data source for voluntary sector researchers. This paper presents a critique of some of the risks associated with charity accounts data. It argues that without proper consideration of these risks, research using charity accounts may offer less certainty than is often assumed. It nevertheless highlights ways in which charity accounts can be used with a reasonable level of confidence. Finally, the paper discusses more broadly the central purpose of charity financial reporting and the extent to which this may or may not align with the needs of researchers.

The use of charitable status as a basis forregulation of nonprofit accounting

In the UK, much regulation of nonprofit organisations (NPOs) is linked to charitable status – but a charity is not a legal form: many types of organisation can be recognised as charities if they meet certain tests, and not all NPOs are charities. Recent legislation has introduced changes to the definition of charity, and significant changes in the regulation of charities, especially on accounting issues, were implemented in England and Wales in 1996 with updates in 2000, 2005, 2008 and 2009. A different charity accounting regime applies in Scotland, and new proposals were recently enacted in Northern Ireland. Yet the UK has no specific accounting framework for those NPOs that are not charities: everything hinges on the issue of charitable status. Drawing on legislative analysis, existing literature and fieldwork, this paper asks how far the various charity reforms implemented over the period 1996–2009 have led to an effective basis for the regulation of NPO accounting in the UK.

Public benefit and charitable status: assessing a 20-year process of reforming the primary legal framework for voluntary activity in the UK

Charitable status is self-evidently a key framework for a great deal of voluntary activity in the United Kingdom (UK) and in an increasing number of overseas jurisdictions. This article offers a critical review of the processes involved in revising the definition of ‘charity’ in the UK over the last 20 years, with specific attention to the principle of public benefit. It considers particularly the impact of the Deakin (1996) Commission and the subsequent reform of charity law enacted for England and Wales in the Charities Act 2006, plus the parallel changes in Scotland and Northern Ireland. The aim is not to offer a detailed legal analysis, but more to consider how these changes to the definition of ‘charity’ impact on voluntary activity more widely.

Purposes, activities and beneficiaries: Assessing the use of accounting narratives as indicators of third sector performance

Purpose – The purpose of this paper is to outline a method developed for analysis of narrative reporting by charities concerning the carrying out of their aims for public benefit (as required by charity law). It seeks to assess the effectiveness of the method as a means of measuring performance of third sector organisations (TSOs). Findings – The method presented was used for qualitative reviewing and scoring of 1,400 sets of charity reports and accounts from England and Wales on 22 variables, with most variables involving an assessment of narratives on a five-point quality score. Various methods of standardising the scoring between different reviewers and different types of charities are considered. Research limitations/implications - The limitations and uncertainties in converting a qualitative assessment of a narrative into a numerical score are discussed. Practical implications - The method is likely to be of value for other studies of narrative reporting in financial statements, especially in relation to fulfilment by TSOs of the purposes for which they were established. Originality/value – The paper contributes both to the understanding of narrative reporting by TSOs and to the development of methodological approaches for such analysis.

ITEM : a strategic approach to information systems in voluntary organizations

Abstract Voluntary and community organizations raise many special issues for the implementation of computer-based information systems, in terms of organizational culture, low budgets, use of volunteer personnel, diffuse objectives, and other factors. For these reasons, development of information systems strategies in this sector is far from straightforward. Research is described which led to the development of a method known as ITEM, by which a small voluntary body can determine and implement an information systems strategy appropriate to its needs. The ITEM approach is outlined, and preliminary experience of its use is reported.

Churches and charity regulation: 1993–2009

This article explores the impact of charity law and regulation on churches in the period 1993–2009 in the jurisdictions of England and Wales, Scotland, and Northern Ireland. In the past, churches have often escaped the full requirements of charity regulation on issues such as registration, reporting, and accountability to regulators. Many of these exemptions have been removed as a result of modernization of charity law throughout the UK, and the implications of these changes are explored both normatively and qualitatively.

The role of independent examiners in the accountability of UK charities

External assurances on published accounts are central to the accountability of charities in the UK. Larger charities (generally those with over £500,000 income) are required to have a professional audit, while smaller charities are allowed an independent examination. An assessment of this regime is offered, drawing on direct analysis of the regulatory framework and investigating the independent examiner as a new form of professional practitioner.

New development: Churches and charity accounting

This article outlines the impact of the charity accounting regime on churches in the various legal jurisdictions of the UK. While churches have charitable status throughout the UK, historically they have not necessarily had to follow the normal requirements for charity financial reporting. But churches are now starting to submit accounts to regulators like other charities and the impact of this is considered.

The development of incorporated structures for charities: A 100-year comparison of England and New Zealand:

This article contrasts the emergence of two specific incorporated structures for non-profit organizations which came into being more than a century apart. We compare the ability for charities to form as “incorporated societies” under the New Zealand Incorporated Societies Act 1908 (effective from 1909), and to form as “charitable incorporated organizations” (CIOs), which were enacted in England and Wales under the Charities Act 2006 (effective from 2013). The article emphasizes the need for charitable non-profit organizations to incorporate for effective operation. This issue is rarely discussed, but the chosen legal form brings specific financial accounting obligations, affecting organizations’ accountability to third parties. Taking a comparative international history approach and drawing on a range of sources, we explore the socio-legal processes which led to the relevant legislation in each country. In particular, this diffusion study investigates why a specific corporate form for charitable non-profit organizations came into effect more than 100 years later in England as compared to New Zealand, with “place” emerging as the most significant comparative dimension.

Charitable Incorporated Organisations: An Analysis of the Three UK Jurisdictions

Abstract The specific legal forms available for charitable organisations have received much less attention by scholars as compared to work on the definition of charity, the boundaries of charitable status and the duties of charity trustees. Under each of the three UK jurisdictions, it could be argued that all charitable property is held on trust (in the sense that it is held for interests of the charity’s beneficiaries) but many charities are no longer formed using the structure of a trust. Charitable organisations can have many possible structures including charitable trusts, charitable associations, charitable companies and now charitable incorporated organisations (CIOs). Until recently the UK lacked any specific legal form for charities. The CIO was created to remedy this: a corporate body with limited liability, formed purely by registration with the appropriate charity regulator. Since 2008 it has been enshrined in statute in all three UK jurisdictions, though implementation dates only from 2011 in Scotland and from 2013 in England and Wales. The focus of this paper is a comparison of the CIO form in the three UK charity law jurisdictions. It analyses the frameworks for CIOs established in England and Wales, Scottish CIOs (SCIOs) and the (yet to be implemented) CIOs in Northern Ireland. It concludes that whilst the CIO concept is effectively reflected in all three jurisdictions, the differences between these three types of CIOs are much more than just those needed to comply with the different regimes of charity regulation – the differences raise important choices for those seeking to establish new charities operating UK-wide.