The vast majority of charity accounts are “a complete waste of time” as they are unintelligible to most donors, a consultant has said.
Speaking at the Honorary Treasurers Forum last week, Joe Saxton, founder of research consultancy nfpSynergy, said a two-page summary that takes less than 30 seconds to read was needed to suit modern day donors.
He said: “I have a basic thesis about charity accounts which is that they are almost exclusively a complete waste of time and effort.
“I struggle the think of a single document in human history into which so much energy is put, so much poring over every comma, every figure, every dot and curl, to be so little looked at when you finally sign them off at your trustee board.
“Charity accounts are there to represent the state of your charity but for the average donor, they are utterly unintelligible. They take more and more time and energy to produce and I sometimes think you get more people proof-reading the annual report than actually read it when it’s done.”
Saxton suggested that charities should produce a two-page summary of the key information from their accounts produced in a “good-looking format”.
He said the charity sector should learn from online review sites such as TripAdvisor and that modern day donors would expect a similarly easy way to compare different charities.
“But we as a sector haven’t worked out the standards that we would allow people to make a simple and easy judgement,” he added.
“Anything that takes more than 30 seconds in today’s world is for most people too long.”
However, a member of the audience suggested that it was unlikely the average “£20 donor” would want to look at any form of accounts summary.
‘Fork in the road’
At the same event, Caron Bradshaw, chief executive of the Charity Finance Group, urged caution over Saxton’s suggested changes.
She argued that the Charities SORP, which dictates the rules for charities filing accounts, had driven up levels of transparency and governance in the sector.
A consultation on how the SORP is reviewed has just closed and Bradshaw said “we are simply at a fork in the road and we need to now decide which way we go”.
But she warned: “The narrative without the numbers is as useless as the numbers without the narrative. We have to bridge those things together and I think that is something we really need to focus on.”
She added: “We should not try and force one thing that was born for a principle purpose so perversely down another route that it no longer serves its original purpose. What will then happen is the Financial Reporting Council, in my view, will take it completely away and we will be in a worse position.”
Bradshaw said her organisation would like to see the introduction of an international accounting standard for charities but said it was unlikely this would come to fruition in the near future.