29 January 2020
Charities are required to include a significant amount of information in their trustees’ reports within the annual report. Even small charities have to include a lot of detail, far more than much larger commercial organisations. This is undoubtedly a good thing; charities are public benefit entities and it is important that stakeholders are provided with relevant and up to date information.
It is important to remember that the trustees’ report is a chance to tell a story of what has happened over the past year and to help readers of the accounts really understand why the charity has spent money in the way it has. The report is a vital part of getting your message out there and demonstrating that you are both accountable and transparent.
Remember, too, that a good report can help potential funders and donors understand what your charity is doing and how their contribution could help the charity achieve its objectives.
Our top tips for your report
- The trustees are ultimately responsible for preparing the trustees’ report and signing it off as part of their overall approval of the financial statements. The CEO and other senior staff may be involved in the process, but it is important that trustees are involved at an early stage and that writing the narrative is not left until after the rest of the accounts have been prepared and, for larger charities, audited.
- It is easy to get into the habit of concentrating on certain sections of the report that will need to be written from scratch each year, such as achievements and performance in that year, or how the activities in the year have been carried out to meet the charity’s objects. It is worth thoroughly reviewing all sections of the report and, from time to time, starting from scratch with a blank piece of paper can be a useful way of freshening the report up.
- Think carefully about your key messages. Using up to five or six short statements summarising what you want readers to notice and remember can ensure the message you are trying to convey gets across. Pre-empt the ‘so what?’ question and make it clear what the benefits are to the reader by clearly explaining what was done, what was achieved, and what impact was made.
- In the reserves policy or financial review, be clear on the level of completely ‘free’ reserves the charity is holding. Free reserves exclude all restricted funds, designated funds and tangible fixed assets used to carry out the charity’s activities, such as land and buildings (see also our blog from July 2019 about charity reserves).
- Try to be creative and use pictures, charts, etc. to break up the narrative.
- Do not be afraid to say something didn’t go to plan. Explaining the lessons learned and how these will help the charity in the future can be a useful way to engage with the public.
- Larger charities may wish to consider using a designer so that the report captures people’s attention, increasing the chance of it being read.
- Remember to circulate the annual report to relevant parties. Do not just think of the annual report as something that needs to be completed once a year and filed with the Charity Commission (and Companies House if relevant). Think about the distribution list and send out the annual report with pride, safe in the knowledge that it gives a positive impression of your organisation.
Where we are auditors or independent examiners to a charity, we naturally review their trustees’ report for compliance with the minimum requirements.
If you would like to discuss how you can improve the content or style of your charity’s trustees’ report then please contact me or your local UHY charity adviser.
