The trustees annual report can often feel somewhat daunting. However, at its core, it serves a vital purpose; to ensure a charity is accountable to its stakeholders for the stewardship and management of the funds it holds. The Charities SORP, section 1.1 states the following:

“The primary purpose of the trustees’ annual report (the report) is to ensure that the charity is publicly accountable to its stakeholders for the stewardship and management of the funds it holds on trust. The trustees should consider the information needs of the primary users of their report. These may vary from charity to charity but will normally include funders, donors, financial supporters, service users and other beneficiaries”. 

To put it simply: What’s your story?

If I was to take a step back and summarise the above, it would be “what’s your story?”. Too often, we get lost in the detail – focusing on what we must, should or may include – but forget that each charity has a true purpose, which was strategically implemented to create an impact. That impact is always more than just financial. 
With your core purpose and audience in mind, it’s time to dive into the detail. Whether your charity is large or small, section 1.14 of the Charities SORP requires the following key areas are covered:

  • objectives and activities
  • achievements and performance
  • financial review
  • structure, governance and management
  • reference and administrative details
  • exemptions from disclosure
  • funds held as custodian trustee on behalf of others.

Section 1.15 of the SORP provides some flexibility in how you present the information: “The headings used in the report may be amended to fit the preferences of the charity provided the information required by this module is clearly presented in the report.”

If you are a larger charity, section 1.34 of the SORP calls for additional information to ensure greater public accountability and stewardship.

Now that you have the skeleton, it’s time to bring it to life! Each heading requires context, and this is where your charity’s story can shine. Where you can, weave in real life case studies that showcase your purpose, implementation and the tangible impact you’ve made. 

There are two key headings I’d like to touch upon: ‘achievement and performance’ and ‘financial review’ – as these areas are where your charity’s progress and effectiveness can truly come to light.

Achievements and performance

Charities make a conscious effort to better our societies, but they often shy away from highlighting the profound impact they’ve had on their beneficiaries. On the opposite end of the spectrum, where activity hasn’t gone as expected or there has been overspend, there is often a noticeable lack of detail about the plans in place to return to more stable ground.

A balanced and transparent approach is key. Celebrate the good with real life examples, but also explain the challenges and outline plans in place to return to growth. 

Financial performance 

You have the numbers and now it’s time to tell the story behind them. This should be a combination of risk management, financial review and an evaluation of your charity’s reserves. 

  • Risk management - Address any macro or microeconomic events, strategic or operational risks, and how you plan to mitigate them. If you hold material financial investments, be sure to explain the investment policy and objectives set. ESG factors would be a perfect fit here. Future events may also play a part. Perhaps there has been a change in policy or strategic direction or tailoring of core charitable activities. Discuss these in your annual report to avoid later surprises. 
  • The financial review - With your numbers finalised, now it’s time to explain your charity’s funding sources and any material liabilities or obligations. If your charity has investments, detail the impact of these in relation to ESG factors. 
  • Charity reserves - Start by stating the total funds the charity holds at the end of the reporting period, followed by a breakdown of designated funds. Whether reserves are restricted or unrestricted, ensure the amount is correctly disclosed and recognised. Compare the reserves held at year end to your reserves policy. The reserves policy should be tailored to your charity’s requirements so there is no right or wrong answer here - as long as it sufficiently covers the future activities of the charity, that should be enough. We have covered the topic of how much you should hold in reserves in detail in another blog, which you can view here.

In summary

The trustees’ annual report is far more than a compliance exercise—it’s a reflection of your charity’s journey, impact and commitment to transparency. While it may feel overwhelming, especially with the detailed requirements outlined in the Charities SORP, it’s also an opportunity to share your story, celebrate successes and openly address challenges. 

If you would like to discuss any of the issues raised in this blog, please contact your usual UHY charity adviser or get in touch using the contact form below.

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