Charity Commission warns charities to use annual reports to build public trust

24 October 2018

Charities have been warned by the Charity Commission for England and Wales to use their annual reports and accounts to communicate their charitable purpose effectively and build public trust through greater transparency. It comes after the commission published a monitoring exercise that revealed charities are submitting annual reports and accounts that do not meet the required standards.

Charity annual report

26% of charities with an income over £25,000 failed to provide reports and accounts that met the commission's basic benchmark. Common reasons included missing documents, inadequate information and accounts that did not balance. 36% reports and accounts from charities with an income of less than £25,000 were inadequate.
Public benefit reporting (the requirement for trustees to explain how they have fulfilled their charitable purposes) was also inadequate. Although there was an improvement in public benefit reporting compared with a similar monitoring exercise carried out in 2017, almost half of the reports and accounts examined by the commission did not demonstrate a clear understanding of this requirement.
Usually, this was because the annual report did not include an adequate description of the charity’s activities. In other cases, it was because the report did not make clear who was benefitting from the activities. 
Nigel Davies, head of accountancy services at the Charity Commission, warned that trustees’ annual reports and accounts must not be regarded as merely a box-ticking exercise. They provide an opportunity for charities to demonstrate to supporters, funders and the public that they are delivering on their core purpose. Mr Davies said: “the public no longer give charities the benefit of the doubt; they want evidence that charities make a difference when sing their money. Public reporting is an opportunity for charities to tell their story and explain to the public what they do and how they use charitable funds.”
Read more about the Charity Commission’s findings.
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