A report commissioned by the Charity Finance Directors' Group (CFDG) has highlighted the gap between the theory and practice of impact reporting in the UK charity sector. 

Impact Reporting in the UK Charity Sector is based on a CFDG member survey, an external reporting review and focus groups. It was conducted by two students from Cass Business School and overseen by Paul Breckell, chair of the CFDG impact reporting steering group. 

Output - Products, services or facilities that result from an organisation's or project's activities Outcome - The changes, benefits, learning or other effects that result from what the project or organisation makes, offers or provides Impact - Broader or longer-term effects of a project's or organisation's outputs, outcomes and activities

The study found that while 52 per cent of the 164 CFDG members surveyed advised that they were collecting output, outcomes and impact, only 8 per cent of the 75 charities externally reviewed were found to report impact, while 68 per cent were reporting output and outcomes.  

The quality of reporting was also significantly varied. Only 23 per cent of survey respondents and 6 per cent of external charities reviewed published a stand-alone impact report.

Caron Bradshaw, CFDG chief executive, said that charities need to find "creative ways" of demonstrating the value of the activities undertaken. But, she warned, it is important that impact reporting does not become "a compliance stick to beat charities." 

"Many organisations recognise the importance of monitoring and demonstrating impact, but there are several barriers to putting this in practice. It needs to be recognised that one size does not fit all," she said. 

Only 5 per cent of survey respondents believed that the cost of impact reporting outweighed the benefits while 65 per cent believed the opposite. Despite this, cost was cited by 71 per cent as a barrier to undertaking outcome and impact reporting.

Kate Harrison and Nicola Robert who conducted the research commented that: "This project has highlighted the gap between theory and practice in the sector when it comes to impact and reporting."

Paul Breckell added: "It is essential that charities look carefully at their approach to performance reporting. One of the many roles of the contemporary finance director is to be engaged with the external communication of performance."

The report is launched just days after New Philanthropy Capital released its report which concluded that charities need to  foster ‘impact networks,’ to deliver effective outcomes for beneficiaries.