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Gareth Jones: The divisive issue we're all talking about

04 Mar 2019 Voices

We live in turbulent times. We have found ourselves split into opposing camps, divided by a complex issue and without an obvious compromise solution. One way or another, a sizeable number of people are going to be unhappy with our future course.

I’m referring, of course, to the debate around the future of the Charities SORP.

On one side are those who believe that annual reports and accounts should be more focused on readability and public benefit and less on income and expenditure, and that the composition of the SORP Committee should be adjusted to reflect this.

On the other are those who argue that the Charities SORP is fundamentally an accounting document, and that any attempt to broaden it will increase charities’ admin burden and ultimately be ineffective.

Understanding your objects

Concerns about the administrative burden of producing annual reports and accounts have some justification, particularly for charities at the smaller end of the spectrum. Yet while this needs to be watched, it is vital that charities consider, understand and communicate the way that they achieve their charitable objectives.

I would hope that this focus on how charities create change could be achieved predominantly by refocusing the way that existing information is presented, rather than by adding complicated new metrics. But even if the administration burden does increase, surely the work that goes into thinking this through will be beneficial to the charities themselves as much as anyone?

There remains a problem of compliance. No matter what the Charities SORP asks for, there will be a temptation to respond with boilerplate text which doesn’t fully enlighten the reader.

But the SORP shouldn’t abdicate responsibility for what really matters. It can still play an important role in nudging charities in the right direction, and additional best practice guidance could nudge charities even further, while providing the most willing impact reporters with inspiration.

Notably, the example reports on the Charities SORP website all have a long way to go in being truly engaging documents for a lay reader.

Personnel

What then of the SORP Committee? There is no doubt that its current composition is dominated by financial specialists. And rightly, given how much of its work is technical in nature. It’s a tough ask to expect anyone not of a finance background to sit through discussion of, for example, the recent issues around Gift Aid payments from trading subsidiaries.

But this does mean the committee is not equipped with expertise in communications. Could a sub-committee fulfil this purpose? Well the problem there is that decision-making would still go through the main committee, which, like it or not, means decisions would still be filtered through their world view.

It is for this reason that I believe the SORP Committee should be reconstituted with a broad-based membership, and the technical side handled by a sub-committee reporting to it. No doubt the technical committee will end up doing much more work than the parent committee, but that's fine.

It's good to talk

Anyway, that’s just my two penn’orth – these are complex issues and there are good arguments on both sides. The most important thing is that they are being talked about.

Unlike the current state of the UK’s politics, it feels like there is a real chance of progressing the Charities SORP for the better.

Gareth Jones is editor of Charity Finance

 

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