13th July 2021
Charities that make grants tend to have similar characteristics, such as grant-making being a material part of total charitable expenditure, and large investment portfolios or investment properties held to generate income to fund charitable activities. We have put together a list of some of the key disclosures required for these specific areas to help management and trustees when preparing the financial statements.
A reconciliation needs to be included in the notes to the accounts which includes the following information:
- Total amount of grants paid, analysed by grants to individuals and grants to institutions
- An analysis of the total grants by nature, activity or project being supported
- The amount of support costs allocated to grant-making activities
Analysis of grants made to institutions:
If grants made to institutions are material in the context of the charity’s total charitable expenditure, then additional disclosure should be included for all material grants made (note that grants to individuals are not subject to this clause). The following should be included in the financial statements:
- The name of each institution in receipt of each material grant
- The total value of grants made to each institution in receipt of material grants. If an institution has received multiple grants for different projects or in relation to different departments, the grants must be treated as made to the same institution for this purpose.
- A charity may choose to disclose the full list of institutional grant recipients to give wider transparency over their grant-making. However if only recipients of material grants have been disclosed, then a reconciliation is required between the total material grants made to institutions and the total grants to institutions made in the year to ensure it is aligned with the expenditure analysis.
The purpose of this disclosure is to give the reader of the accounts a better understanding of the range of institutions the charity has supported in the year. This information can either be disclosed in the notes to the accounts, the Trustees’ Report or as an alternative, if the charity already provides this information on its website, a link to the webpage can be included in the accounts instead. This information must be included for both the financial year and prior year as a comparative.
Where grant-making forms a material part of an organisation’s charitable activities, the Trustees’ Report must explain the charity’s grant-making policy and how its grant-making activities contribute to the achievement of its aims and objectives.
For charities that have listed investment portfolios, held with an investment manager or managed directly, an analysis of investments held by the charity should be included in the notes to the accounts. At a minimum, the analysis should include the following:
- Cash and cash equivalents
- Listed investments
- Investment properties
- Loans to group undertakings
- Equity investment in group undertakings
- Social investments
Some charities hold their investments in property that is rented out to fund its charitable activities. Where an investment property is held at fair value in the financial statements, the following disclosures are required in the notes to the accounts:
- The methods and significant assumptions applied in determining the fair value of the property
- The extent to which the fair value has been based on a valuation carried out by an independent qualified valuer, this should include details regarding the date of the last valuation and the name of the valuer. If a professional valuation has not been carried out, this should also be disclosed.