On 28 March 2025, the update to the Statement of Recommended Practice (SORP) for Charities was released for consultation by the SORP Committee. What I found most illuminating was at the beginning of the trustees’ report module – 1.28 – there was emphasis on the following: The trustees are required to answer the question – “in what way has the charity’s work made a difference to the circumstances of its beneficiaries?” and have we “provided any wider benefits to society as a whole?”.
It is easy to treat the statutory accounts as a compliance document and to “tick the boxes”; however, more funders are using them to inform decisions. The reasons for this are:
- For commissioners of services such as local authorities, the statutory accounts come with evidence that they are accurate and can be relied upon. Local authorities are looking at more than just price and are interested in ensuring a cultural fit. Increased competition and the recent Procurement Act mean that it is more difficult for charities to secure and retain contracts leading to the need for innovation in messaging.
- Foundations and trusts are seeing numbers of applications for funding well in excess of the available resources. Nervousness over the markets also leads to reduced budgets and increased competition for funding. Charities are needing to diversify their income and where that includes looking to foundations and trusts for funding, reputation is key. Promoting the impact of the work of the charity becomes a way to win the hearts and minds of future donors.
- The public create loyalties to charities but these loyalties are built up through engagement and a following through social media and newsfeeds. Information comes from a variety of sources and this includes statutory reporting that is much more widely available.
Three tiers
The new SORP is looking to see enhancement to disclosures in a tiered way with smaller charities (under £500,000 of income) having relatively few changes, but tier three (income over £15m) having more enhanced disclosures of impact and sustainability. The SORP makes it clear that while the reporting tiers guide compliance requirements, all charities are encouraged to go beyond the minimum disclosures. The intended audience for the statutory accounts should also drive the content and presentation of the trustees’ report. Engagement with this group (be it donors, commissioners, beneficiaries, local community or regulators) will help to define what impact, inclusivity and sustainability means to them, and therefore to you.
The SORP takes effect for accounting periods beginning 1 January 2026, therefore this financial year is the perfect time to set priorities for 2026-27 and determine how to capture the necessary data. It is also time to consider how best to use your key communication channels to report on progress throughout the year. Although most of the required disclosures for tier three charities will already be in the accounts for those charities who have income over £36m, charities with income between £15m and £36m are now going to be “encouraged” to report more thoroughly on sustainability. Some examples of what might be useful to report on might include:
- Environmental sustainability
– Energy-efficiency rating for housing stock.
– Head-office carbon footprint.
– Wider environmental considerations such as travel, supply chain, staff initiatives.
- Social and governance
– Engagement with the community (meetings with local groups, local government and other key stakeholders).
– Board diversity (defining what this means for you).
– Staff welfare.
– Compliance and business ethics.
It is very interesting that the SORP is challenging trustees to report openly and transparently on how the charity does business and not just what is the business of the charity. Although the SORP suggests and encourages the additional disclosures, I do believe that they are intended to represent best practice. In reality, funders and other stakeholders increasingly expect to see this information presented proactively and informatively (ie through comparisons, objectives and charts). I am a strong believer that the content required for the existing and additional statutory accounts disclosures already exists or is easily derived from your existing systems. The trustees’ challenge is to determine what to report on, and how to report it to enable the key stakeholders to conclude that the charity is the one they want to support.
Adam Halsey is a partner and head of care, community and housing at HaysMac
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