Telling your story well: misconceptions, pitfalls and lessons for smaller charities

The Charity Commission’s Nigel Davies looks at how smaller charities can tell their story well in their trustees’ annual reports and accounts

 

Your trustees’ annual report and accounts say a lot about your charity. Written in the right spirit they are an opportunity to tell funders, donors, beneficiaries and others about what your charity is set up to do, what it achieved in the year, who you helped and how you helped them. We publish the reports and accounts of those registered charities with an income of over £25,000 online.

Common misconceptions:

No-one reads the report and accounts

It may be true no-one asks you for them directly but with the internet, they no longer need to do that. Annually we get 14m views of the register pages with 1m views of charity financial details and about 350,000 downloads of individual accounts. The Commission’s accountants also view the reports and accounts of about 1,000 charities each year.

They are only for the regulator

If this is your view you are unlikely to be reporting well. The public has a legal right to ask you to provide the last set of reports and accounts. It is about the stewardship of public money. Our polling of the public consistently shows one of the most significant drivers in public confidence is knowing how charities spend their money.

They are of no use to the charity itself

The report and accounts are not intended for internal management purposes. You can always provide the highlights for your AGM and those who are keen can then look further. The best charities make their reports and accounts available to their members, supporters, donors and beneficiaries on request at the AGM or online.

They are boring

Although the minimum contents of the trustees’ annual report are set it is your report to write. The accounts, especially SORP accounts, may be more rigid in their content but how you highlight key facts and figures in the report is in your gift.

 

Common pitfalls:

Get the basics right

Of charities with an income over £25,000 a quarter still don’t get the basics right. This rises to half for charities with incomes under £25,000. The basics include disclosing your charity’s purposes, reserves policy, public benefit, and ensuring the accounts add up.

File early, and definitely on time!

We find there is an association between late filing and underlying more serious governance issues in a charity.

Arrange the external scrutiny with sufficient time

Your independent examiner or auditor needs time to undertake their work. Those charities required to file with us have ten months to file after their year-end. Close off the year-end promptly and arrange the external scrutiny in good time.

Don’t assume the regulator won’t ask for them

Our work with smaller charities indicates that some are not preparing the required report and accounts. We do ask for them and so can the press and public.

 

Lessons:

Put the story part up front

The report should tell your charity’s story so start with it and then put the more administrative or unchanged information towards the back.

Think about your external audience

Think about what picture the report and accounts paint of your charity. Consider using graphics, pictures, and stories alongside the explanatory text and numbers.

Report on public benefit

Having read our guidance, your charity’s annual report is required to: explain what the charity is there to achieve (its purposes), explain what the charity has done during the year to carry out those purposes (its activities), and explain who benefits from the charity’s activities (the public benefit).

Write your own report

It is the trustees’ report and your independent examiner or auditor cannot write it for you. It is all too obvious when they do, as the text is largely unchanged from year to year, vague, and rather uninformative.

Tell the public how you spent your charity’s money

By doing this, you are playing your part in maintaining public trust and confidence in charities.

 

Further insights and support

This article draws on our annual reviews of random samples of charity accounts. To find out more about getting the basics right, including reporting well on public benefit do read these reports which are free to download:

For the required contents of the trustees’ annual report, filing and accounts scrutiny and preparation requirements read CC15d: Charity Reporting and Accounting: http://bit.ly/2f8rYqU
For public benefit reporting read our guidance: Public benefit: reporting (PB3): http://bit.ly/2gcVkIl
The Commission also publishes complete account template packs for charities that are designed for use by smaller charities

 

Nigel Davies, Head of Accountancy Services, Charity Commission

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