Much has been made of the new financial reporting requirements contained in the new Statement of Recommended Practice (SORP) for charities, but alongside that comes enhanced reporting requirements in the narrative which accompanies those financial figures – the Trustees’ Report.
As with the financial reporting, the level of detail required depends on the size of your charity (measured by income and/or assets). For smaller charities, the requirements are relatively modest, and probably not much more detailed than most would have been including in their Trustees’ Report anyway.
It is when we get to Tier Two – charities with an income above £500,000 – that the difference really starts to be felt. Here the SORP stipulates that charities must report on a variety of objectives and activities, achievements and performance.
One of the big changes is a requirement to report in detail on ‘the impact the charity has made and consider the long-term effect of its activities on individual beneficiaries and on society as a whole’ – in other words not just what you have done as a charity, but the effect your activity has had both on individuals and the wider world.
Many charities undertake their Trustees’ Report after the reporting period has ended, and often only as the deadline for submission is looming. This can mean that you are reporting on activity and impact which is up to 21 months old, and few of us have good enough memories to recall in detail what happened in that timescale.
This is why Trustees’ Reports often suffer from ‘recency bias’, with what happened at the end of the reporting period disproportionately featured.
The solution to this is to regard writing the Trustees’ Report as an ongoing task throughout the year, doing it little and often while it is still fresh in the mind.
This is actually easier than it might appear. Most charities will be producing regular reports for their Board or management team; by slightly restructuring these so that they meet the SORP reporting requirements on an ongoing basis, they can easily form the basis of the annual report at the end of the year.
The key thing here is to ensure that Board and/or management reports throughout the year include details about activities, achievements, performance and impact which the SORP calls for in Trustees’ Reports.
Another tip is to collect testimonials from beneficiaries throughout the year. These can be very powerful and incontrovertible evidence of the impact of your charity’s activities, in a format which will always carry more weight than even the best written report.
The Charity Commission has issued a useful guidance document about the preparation of Trustees’ Reports, which can be found at: www.gov.uk/guidance/prepare-a-charity-trustees-annual-report