Charity trustees are obliged to write annual reports that are then made available through the websites of the Charity Commission, the Charity Commission for Northern Ireland or the Office of the Scottish Charity Regulator, depending on where your charity is based.
Readers frequently complain that these reports are dull and uninformative. The problem is often that someone in the charity has picked up the charity Statement of Recommended Practice and worked methodically through it, assuming that the Sorp is prescriptive about the contents of the narrative report. In fact, the Sorp requires a certain minimum to be included in the annual report, but trustees can choose to say more and they can also choose how they present the information.
Start by thinking about your audience, then write for those people. The annual report is a compliance document, but it is publicly available and will be read by prospective funders, jobseekers and anyone else who is interested. You can always prepare a shorter version in a different style for the website. Some reports read like an update on progress, diving into the middle of things and assuming that you already know the organisation. It is always best to assume that you are writing for someone who does not know your charity.
You can start by explaining the purpose of the charity – a brief history can also work well. It might feel that you are repeating information from last year, but a reader is likely to be unfamiliar with your organisation. From there, the report can naturally lead on to the activities you pursue and an evaluation of their success.
This part of the report works best if you see it as telling your story. There is room in the story for things that did not work so well: you can explain the lessons that have been learned and how they have informed your work. The report is then an honest account and not just a sales brochure.
It is important to tell the story of the numbers as well, but you can weave some of this information into the narrative about the activities. The financial review should explain the financial health of the charity, looking forward and back. Explain the context of the business model and inherent risk so that the reserves policy makes sense. It’s best to avoid the sort of financial commentary that makes dull statements such as "income increased, expenditure increased".
Significant risks can be a helpful way to explain the context for your work and the challenges you face in making a difference. The risks to cover are those arising from an uncertain external environment, such as changes to legislation or funding models. Trustees should be able to describe how they are responding to those risks.
Many people reading a report will be wondering "why should I support this charity?" Explain why your charity was set up, why it is relevant today and what more you need to be able to make a difference.
Kate Sayer is a partner at specialist auditors Sayer Vincent