The changes that SORP 2015 brought to the Trustees' Report have been bedding in for the last few years. Transparency and balance were the requirements, although achieving that is not as clear as those changes that required a mere disclosure…
How these requirements have been dealt with have varied between charities. Finding the right balance between transparency and a Trustees Report that is long winded, and therefore unlikely to be read or certainly unlikely to highlight the right points, has been difficult.
The Trustees Report provides an amazing opportunity to showcase and celebrate the achievements of the charity; however, it also needs to ensure it ticks the many compliance boxes. As auditors and advisors, we ensure compliance is achieved against the SORP, our disclosure checklist runs to in excess of 45 points that all need to be addressed within the Trustees Report. Complying with these points and then achieving a report that is not too long, brings transparency to the charity’s work, inspires the reader and informs them on the impact made and also the potential failures is quite an achievement.
In 2018 the Charity Commission reported that charities are not doing enough to demonstrate their public benefit or explain how they spend their money, and yet most reports we review will contain pages and pages of detailed information. Something is getting lost in the translation; I can guarantee that there are more than enough words and pages, but those words need to adapt. A blank sheet of paper is needed when writing the report.
The Charity Commission reported that “positive examples of compliance included explaining why the trustees believed that the charity’s activities provided public benefit; explaining who had benefitted from what the charity had done; whether a particular group of beneficiaries or the wider public, and explaining the impact of what the charity had done. such as examples of how the charity’s services had led to improvements in people’s lives”.
These elements are the ‘so what?’ elements. You can report long lists of what you planned to undertake during the year, what you have actually undertaken and next years plans but real transparency comes with disclosing the ‘so what?’, i.e. the difference all this activity actually makes in the wider world. This doesn’t mean more words; it means more thought and revision of how the report is written.
Building the report
Being with a blank page! The starting point can be provided to you by your auditors in the form of their disclosure checklists. This will be a list of the headings and topics you have to cover – the bare compliance. Think of this as the skeleton of the report, you now need to build the body of the report around this skeleton. Some parts will be easy and are merely factual disclosures. Get these done first and tick off some easy wins!
When considering what to write within the rest of the report you must first seek to understand your audience and stakeholders. Outside of statutory compliance, the report provides an opportunity to communicate to funders, service users and the wider world. Consider how easy those potential readers will want to find reading your report and therefore how you communicate your impacts and achievements in a way that engages them. It is worth thinking about the use of graphs or other graphics that can visually demonstrate impact. Case studies can add interest and colour to the report, giving the reader a deeper insight into the difference made. Also think about those readers who like the bigger picture, include a highlights section or a top 10 section. For those readers who like the numbers, linking the impact to the financials will be crucial. You must also ensure that your report is balanced in its reporting, there will always be success and failure in every year, so ensure you are fair in your reporting when considering both elements.
Make it visual
Finally, don’t underestimate the visual importance of the report. In all other forms of communication, you probably spend time and effort making it visually engaging (whether it is a website or blog, for example); it’s worth giving the report similar attention.
The Trustees Report is many charities least favourite part of the year-end process. My advice is to involve others and break it up into sections, those that deliver services can write more passionately about their impact than anyone else. Devolving areas to others can make the task more manageable, as long as someone oversees the whole document for a consistent tone and approach. Otherwise, as Mark Twain once said “If it’s your job to eat a frog, it’s best to do it first thing in the morning. And if it’s your job to eat two frogs, it’s best to eat the biggest one first.”