When the Charities SORP (2005) was published many moons ago, there was a seismic shift in charity accounting. Rather than simply presenting numbers on a page, the onus instead was to report by the activities that the charity undertook. The idea was that the accounts should tell a story; from the Trustees’ Report telling the readers what the charity had done, then flowing through to the income and expenditure by activity presented in the Statement of Financial Activities (SOFA), with further detail being given in the notes.
There are reporting requirements that need to be met when drafting the Trustees’ Report but the beauty of charity reporting is that you can use it as an opportunity to really get your message across and you are able to include as much information as you like (although be sensible). Bear in mind that you also have a duty to ensure that the information you reflect in the Trustee’s Report represents a fair and balanced view so, as tempting as it is, don’t just report what went well – consider what didn’t work quite so well and what lessons have been learnt from them.
Personally, I really enjoy discussing with my clients how to improve their Trustees’ Report and helping them to get the best from it. Below I’ve put together some of my top tips that you might find helpful to consider when drafting your charity’s Trustees’ Report.
Who’s likely to read it?
Take a few minutes to really think about who might be looking at your accounts. Potential donors? Grant funders? Potential beneficiaries? Do you often need to send your accounts in support of grant funding applications? Then consider what information you think they might be looking for and what information can you provide them with.
Teamwork makes the dream work
Quite often drafting the Trustees’ Report ends up being tasked to the Chief Executive or the Treasurer. Yes, the Trustees’ Report is ultimately the responsibility of the trustees but asking members of the senior management team who deal with specific areas can bring a real warmth and insight into the charity, including the little things that make a big difference to the charity’s beneficiaries that others higher up the organisation might not see. The danger here is that the report could end up resembling a patchwork quilt and so it’s important to have someone with overall responsibility for pulling it all together and that the level of information for each activity is consistent.
Are you on message?
If your charity has a communications team, it’s a good idea to involve them in the process as well to ensure consistency between the Trustees’ Report and any other output about the charity’s activities they might provide input on.
Use a checklist
Reporting requirements change, so it is useful to use a checklist to make sure you have hit the requirements you need to include before you send it to your accountant or auditor for review. Your local UHY charity expert will be more than happy to provide you with the requirements.
In 20 years of auditing, I can count on one hand the amount of times I’ve received the Trustees’ Report before we have started our audit work, and I’ve run out of fingers and toes for the number of times I’ve been chasing the Trustees’ Report well after the audit work has finished. Writing the Trustees’ Report is a much easier process if it is done shortly after the year end, rather than part-way into the new financial year and you are trying to remember what happened (especially if you have a goldfish memory like me!). This can make it much easier to draft the achievements and performance section at the very least.
Sometimes less is more
Take a step back and consider whether the level of information is really relevant. It’s a balancing act but if people have taken the time to search out and start reading your charities accounts, you don’t want to make them think it might have been easier to read War and Peace instead.
Your charity evolves year on year with what it does, and so should your Trustees’ Report. Consider what you reported in last year’s “Plans for the Future” section and make this the starting point for talking about your achievements. This is what we said we would do, have we achieved it? If not, why not? Did something come up that meant it has had to be put on the back-burner, or is it no longer viable? Sometimes you may end up carrying out activities that you didn’t expect to undertake – it’s all part of life. This starting point however creates a link between past reports and the trustees’ report for the current year.
Some charities produce a separate impact report. Others don’t. When talking about what your charity has done in the year, consider what is the impact and outcome of that activity. What difference has your charity’s activities made to the lives of the beneficiaries? Again, there’s lots of useful information out there and the Charity Comms website is a good starting point with four key tips for reporting impact in charity communications. (Top tips for reporting your charity’s impact | CharityComms)
Would you want to read it?
When you have finished drafting the report, put it down and come back to it a day later and pick it up again. Does it look visually appealing enough that you would want to read it? If you think it looks rather long and wordy, consider removing some text and including visual representation such as graphs or pictures instead.
In the UK there are around 2 million people living with sight loss and the RNIB estimate this could rise to as many as 4.1 million by 2050. Consider writing the report in a text font and size that is easy for everyone to read. The UK Association for Accessible Formats (UKAAF) provides useful information about how to make documents accessible to all (www.ukaaf.org)
The next step
If you would like some help bringing your Trustees’ Report to life, contact your local UHY Charity expert – we’d love to help.