Improving your Trustees' Annual Report
Every charity is required to compile a Trustees’ Annual Report for inclusion with their accounts for submission to the Charity Commission, and if the charity is a limited by guarantee company, to the Registrar of Companies.
The form and content of such a report is set out in the Statement of Recommended Practice “Accounting and Reporting by Charities” (SORP 2015) in addition to the Charities (Reports and Accounts) Regulations 2008 and the Companies Act 2006, where applicable.
Whilst a number of the headings which form part of the requirement contain information that could be regarded as statutory in nature, many of the headings under which the trustees have to report provide an opportunity for trustees to tell a story about what the charity has been doing over the last year, highlight its successes and set out its plans for the future.
Many people find annual reports dull and informative and charities need to change the way they compile their annual report and focus on the impact they are making if they are to improve public trust.
So, what makes a good trustees’ report?
To begin with you should identify who your key audience is likely to be. This is likely to be influenced by how the charity is funded and the beneficiaries. If the charity is funded by the general public then the style and language of the report may be different to charities funded through contracts and grants where a more corporate style may be appropriate.
A guide to some of the key elements of a report is set out below:
Objects of the charity
What does the charity do and how? This is likely to start with the objects as set out in the rules or Articles of Association of the charity but go on to explain in more detail what activities it carries out to achieve those objects.
You should set out the key achievements measured against the objectives set. Statistics are an important way to demonstrate the performance of your charity, for example, the number of people the charity has provided help to, or the number of recipients and value of grant awards. This could also be better demonstrated by the use of graphs rather than tables of raw data.
The best annual reports pay as much attention to non-financial data as they do financial data and make the appropriate links and connections between the two. A more ‘human’ angle could involve providing case studies involving the people that have been supported including good quality photographs of some of the individuals involved.
As well as providing statistics, it is crucial that the impact of the services provided is demonstrated. Claims you make about the impact you have made should be backed up by supportive evidence. For example, ‘as a result of the training provided, 154 individuals have now secured full time employment’.
You should include in detail the impact that volunteers have on the outcomes of the charity. This could include a view from one or more volunteers as well as estimating the monetary value of the benefits they have provided.
Plans for future periods
How will this year’s activities translate into the plans for future years? How will funding be affected by future plans? What other challenges lie ahead for the charity and how does the charity plan to overcome them?
As well as thinking about the content of the report you should also think about how it may be published. Whilst it may be necessary to include a “hard copy” report as part of your financial statements you may also require this to be available on your website, which provides further opportunity for interactive elements such as links to videos. In addition, consider whether this allows for the report to be optimised for tablets and mobile phones.
Whilst it is important to tell a story, it is equally important to ensure that your trustees’ report is compliant. In 2019 the Charity Commission criticised the quality of audited charity accounts, stating that only half of the accounts reviewed met their external scrutiny requirements.
For further information please contact a member of our team below.