New template to make charity annual reports easier for the public to understand

07 Oct 2019 News

If charities change the way that they compile their annual report to focus more on the impact they are making it could improve public trust, says Kate Sayer as she unveils a new template for annual reports in partnership with Charity Finance. 

“Charity trustees produce annual reports, which are an important way for charities to communicate to their stakeholders. However, many people find these reports dull and uninformative,” says Sayer, an honorary visiting fellow at Cass Business School.

“Poor reporting puts people off supporting a charity and harms its reputation. It would be better if all charities were more transparent about failings and problems, as otherwise the few who do report with full transparency can be – and often are picked out – for public criticism.

“We need to change the norm for reporting so that this is closer to public expectations. This would hopefully improve the perception of charity by the general public and, over time, would increase public trust and confidence,” she said.

Sayer consulted students on the Cass charity master’s course about how best to present trustees’ annual reports, and together they have come up with a template for charity trustees, which has been published today by Civil Society Media's Charity Finance magazine as part of Charity Finance Week.

She said: “The focus of the report should be on the difference the charity makes; charities exist to fulfil a charitable objective and the finances enable those objectives to be met.” 

Sayer posited four key areas of a report, and advice for their presentation.

Section 1: Purpose and impact 

“Charities are set up for a purpose; explaining the history may be helpful but it is more important to explain why the charity is still relevant today. Some charities may find it helpful to set out the context, for example a long-standing problem that needs new solutions,” she explained.

This might include explaining a theory of change or strategy, and also how the charity gathers evidence of outcomes. This can include unforeseen outcomes and lessons learned as part of the process of increasing openness and transparency.

Section 2: Values and ways of working

This section describes how the charity operates and ensures its services reach those in greatest need. 

“Charities can describe how they engage with stakeholders and provide a balanced summary of feedback, explaining where more needs to be done. The remuneration policy should be included here,” Sayer said.

Section 3: Operating model and risks 

This should describe the processes in place and the way that the plans for activities are linked to funding. This includes how the charity uses volunteers, grants, fundraises and works with partners.

“Inherent risks, such as dependence on key funders, rationale for reserves policy and future outlook should be discussed here, as well as external risks and uncertainties.”

Section 4. Governance and decision-making 

This should account for how trustees provide oversight and “obtain assurance on service quality, the observance of the charity’s values, and compliance with standards and regulations”. 

Presentation

Sayer also puts forward key aspects that might be used in presenting trustee's annual reports.

  • Charities should be allowed to refer to information on the charity’s website.
  • A summary may be placed at the front of the report.
  • Legal and administrative information should be put at the back.
  • Some reporting requirements that are for regulators, such as the statement that the charity has complied with public benefit requirements, could be moved to the annual report to the regulator.
Download a PDF of the template annual report

 

For the duration of Charity Finance Week, Kate Sayer's article from the latest issue of the magazine is free to read online 

For more news, interviews, opinion and analysis about charities and the voluntary sector sign up to receive the Civil Society News daily bulletin here

 

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