Charity accounts – Telling your story

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The charity sector in this country is renowned for its robust and distinctive system of accounting and regulation, which sets it apart from charitable organisations around the world. With a long history of philanthropy and a deep-rooted commitment to transparency and accountability, the UK has developed a comprehensive framework that ensures the effective governance and financial management of charities operating within its borders.

As well as a wide range of stakeholders, greater public interest must be addressed in the financial statements, alongside Annual Return information to the Charity Commission. Charities have more obligation to disclose transparently, as they are set up for public, not private benefit.

Finances are important, but are only part of the story of what makes a charity successful.

Charity accounts on an accruals basis must follow the Statement of Recommended Practice (the SORP). Small non-corporate charities (<£250k income) have the choice to instead prepare receipts and payment accounts alongside a Trustees Report.

What’s in your story?

One of the areas that separate particularly smaller charities from other entities of the same size is their Trustees’ Report.

Read our article on how to write a Trustees’ Report here.

As accountants we like to get excited by the numbers. However, at Burton Sweet we are passionate about the concept of telling the story of your charity. Annually, the Trustees’ Report is one of your opportunities to do this.

In the Trustees Report the story starts, runs through the accounts and is hopefully seen in action in the real world (and the numbers!).

  1. The start of the story is the charity’s purposes (or in old terminology, the objects), the legal basis on which the charity is formed, e.g. what it’s set up to do.
  2. Within those purposes, there are a number of activities that the charity carries out. These represent how best the charity decides to pursue its purposes.
  3. Those activities are directed towards a set of beneficiaries. These beneficiaries often have a specific characteristics, whether they live in a specific area, are a certain age, or are earning a certain amount. They should experience the positive outcomes the charity was established to deliver. Charities should clearly communicate the impact their work is having on their beneficiaries.
  4. The income that the charity has received from an activity and the expenditure that has been spent on carrying out the activity. The funds the charity holds or sets aside for an activity.

Telling your story well means covering all these points above. The report needs to be balanced, so sufficient space is given to each activity.

The Trustees’ Report should be harmonious with the numbers. There shouldn’t be areas of the data that are surprising based on the story in the Trustees’ Report. Similarly, there shouldn’t be areas of the narrative that are surprising based on the numbers.

Can we assist you?

We will be continuing to explore other unique areas of charity accounts in the future, so look out for our articles in our regular newsletter

If you would like to discuss with one of our team how to tell your charity’s story well, or indeed how the numbers can better continue the story. Then do get in touch with us. We want to assist you, so you can deliver effectively for the communities you serve and show the good you do.

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