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Communicated Accountability by Faith-Based Charity Organisations

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Abstract

The issue of communicated accountability is particularly important in Faith-Based Charity Organisations as the donated funds and use of those funds are often meant to fulfil religious obligations for the well-being of society. Integrating Stewart’s (1984) ladder of accountability with the Statement of Recommended Practice guidance for charities, this paper examines communicated accountability practices of Muslim and Christian Charity Organisations in England and Wales. Our content analysis results indicate communicated accountability to be generally limited, focusing on providing basic descriptive information rather than judgement-based information. Our interviews with trustees and preparers of Trustee Annual Reports in Muslim Charity Organisations identified the reasons being due to high donor trust and consequently weak demand by stakeholders for the latter type of information, as well as internal organisational issues related to the organisational structure and culture, lack of internal professional expertise and high accountability cost.

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Notes

  1. These scandals include the collapse of two major charity organisations, Breast Cancer Relief and Moonbeams in 2003 (BBC 2003). More recently, concerns have been raised over financial irregularities within Awema, a race relations charity (BBC 2012).

  2. For example, in December 2011, a Christian pastor was found guilty of swindling £2.6 million from the public through a charity which was used to directly fund his lavish lifestyle (Camber and Evans 2011). More recently, a treasurer for two Christian charities was jailed for 5 years for embezzling £500,000 through an elaborate scheme involving gift aid (Robbins 2012).

  3. It is important to make the distinction between FBCOs and religious organisations as not all of the former can be considered as religious organisations and vice versa. This distinction depends on their willingness to be registered with the Charity Commission.

  4. The Office of the Scottish Charity Regulator [OSCR] is responsible for the monitoring of charities in Scotland and the Charity Commission for Northern Ireland monitors charities in that region. Each body has slightly different rules which it requires registered charities to follow.

  5. Guidestar is an independent charity set up in 2003 to enable charities to disseminate accountability information via the internet.

  6. A request was made to the Charity Commission of England and Wales for a list of information they hold on Muslim and Christian religious charities such as the name of the charity organisations, their objectives, their income, and their registration date. The list was correct as at November 2009. Since the number of Muslim charities is much lower than Christian charities, a sample from the former population was drawn first and then matched with Christian charities.

  7. Under the England and Wales regulations, all charities that have an income above £25,000 must submit their annual reports to the Charity Commission for publication online. However, only charities with an income over £100,000 are required to produce SORP compliant reports. Connolly and Hyndman (2000) found there to be a lagged effect on the implementation of regulation in the case of previous SORPs, therefore TARs for the year ending 2008 were chosen for investigation (i.e., 3 years following the implementation of SORP 2005).

  8. Size of the charity was captured using the income of the charity as proxy; £100,000–£499,999 (small), £500,000–£1 m (medium) and £1 m + (large) (Crawford et al. 2009).

  9. The SORP (2005) goes someway in ensuring that charities provide information which fulfils the criteria of consistency and comparability, as all charities need to follow the same framework each year when preparing the annual reports and accounts. By assessing the relevance, reliability, and timeliness of TARs, this study attempts to analyse the quality of accounting information being provided by faith-based charities as required by the Charity Commission.

  10. The Charities Act (2006) requires an audit if the income of the charity is £500,000 or above, an independent examination by a qualified examiner if the income is between £250,000 and £500,000, and an independent examination but not necessarily by a qualified examiner, for income less than £250,000.

  11. Not all charities could be evaluated on this aspect as some charities (the majority of which are small MCOs) did not submit a complete TAR and only submitted the legal information required by the SORP. Hence, these charities were discounted when analysing the relevance of the reports (see column 1C of Table 3).

  12. The findings are not presented in the table.

Abbreviations

CCO:

Christian Charity Organisation

MCO:

Muslim Charity Organisation

FBCO:

Faith-Based Charity Organisation

SORP:

Statement of Recommended Practice

TAR:

Trustees Annual Report

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Author information

Authors and Affiliations

  1. University of Hull Business School, Hull, HU6 7RX, UK

    Sofia Yasmin

  2. School of Management and Languages, Heriot-Watt University, Edinburgh, EH14 4AS, UK

    Roszaini Haniffa

  3. Adam Smith Business School, University of Glasgow, Glasgow, G12 8QQ, UK

    Mohammad Hudaib

Authors
  1. Sofia Yasmin
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  2. Roszaini Haniffa
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  3. Mohammad Hudaib
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Corresponding author

Correspondence to Roszaini Haniffa.

Appendices

Appendix 1

See appendix Table 6.

Table 6 Prior research on communicated accountability within UK charity organisations
Full size table

Appendix 2: Final disclosure checklist based on SORP (2005)

Items are either (M) mandatory or (R) recommended by SORP (2005).

Theme A: Details of trustees, advisors, and administration

  1. 1.

    Registered name of charity (M)

  2. 2.

    Charity registration number/company reg. number (M)

  3. 3.

    Address of principal office/registered office (M)

  4. 4.

    Names of all trustees at date of report (M)

  5. 5.

    Name of chief executive (R)

  6. 6.

    Name and address of auditors/independent examiner (R)

  7. 7.

    Name and address of bankers (R)

  8. 8.

    Name and address of solicitors (R)

  9. 9.

    Name and Address of any other principle advisor (R)

  10. 10.

    Reasons for non-disclosure provided (R)

Theme B: Information of structure, governance and management

  1. 1.

    Nature of governing document (M)

  2. 2.

    How charity is constituted (M)

  3. 3.

    Methods for recruitment and appointment of trustees (M)

  4. 4.

    Details of constitutional provisions relating to appointments (M)

  5. 5.

    Explanation of other bodies authorised to appoint trustees (M)

  6. 6.

    Procedure for induction and training of trustees (R)

  7. 7.

    Organizational structure of charity (R)

  8. 8.

    Relationship with other affiliated charities (R)

  9. 9.

    Relationship between charity and any subsidiaries/collaborators (R)

  10. 10.

    Statement of risk assessment (R)

Theme C: Outline its objectives and mission

  1. 1.

    Summary of objectives of charity (M)

  2. 2.

    Aims of charity and how it seeks to make a difference (R)

  3. 3.

    Explanation of charities strategies for achieving objectives (R)

  4. 4.

    Explanation of how these activities benefit the public (R)

  5. 5.

    Statement on grant-making policies (if app) (R)

  6. 6.

    Detailed role of volunteers (R)

Theme D: Information on achievements and performance

  1. 1.

    Review of charitable activities undertaken (M)

  2. 2.

    Summary of measures used to assess performance (R)

  3. 3.

    Details of performance against fundraising activities (if app) (R)

  4. 4.

    Explanation of impact on future income generation (R)

  5. 5.

    Details of material investments held (R)

Theme E: The financial review

  1. 1.

    Policy on reserves (M)

  2. 2.

    Details of any deficits (M)

  3. 3.

    Principal funding sources (R)

  4. 4.

    How expenditure has helped charity meet objectives (R)

  5. 5.

    Investment policy and objectives including social, ethical and environmental considerations (if app) (R)

Theme F: Plans for future period

  1. 1.

    Future plans and objectives (R)

  2. 2.

    Details of planned activities (R)

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Yasmin, S., Haniffa, R. & Hudaib, M. Communicated Accountability by Faith-Based Charity Organisations. J Bus Ethics 122, 103–123 (2014). https://doi.org/10.1007/s10551-013-1759-2

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