More than half of charities’ accounts do not meet public benefit reporting requirements, analysis carried out by the Charity Commission has indicated.
The regulator said today that as part of its annual scrutiny of charity accounts it analysed a random sample of 107 to see how they reported on the public benefit requirement and whether the accounts met readers’ needs.
This analysis found that 58 – 54 per cent – did not meet the requirements, with 13 charities failing to describe the difference they made, 21 not including a statement confirming their compliance with public benefit requirements and 24 charities doing neither.
But three-quarters of the accounts in the sample were deemed of acceptable quality in meeting the needs of readers, with the remaining quarter seen as "inconsistent" or "not transparent" by the commission.
According to the commission’s guidance Public Benefit: Reporting, a charity’s annual report must explain who benefits from its activities and include a statement by the trustees showing regard for the commission’s public benefit guidance.
Nigel Davies, head of accountancy services at the Charity Commission, said: "Many charities do a great job of explaining how their work benefits the public. But this review indicates that too many charities are missing out on an important opportunity to tell the public why their work matters and what difference they are making.
"We know from wider research how important it is for donors and supporters to know how charities are spending their money. Your report and accounts say a lot about your charity’s attitude to accountability and transparency, so don’t miss out on this opportunity. The easiest way to improve the quality of your accounts and report is to use our templates. We know the charities that do use our templates produce accounts of much better quality."
A further sample of the accounts of 109 charities with incomes of less than £25,000 a year also found that 55 per cent were of acceptable quality, compared with 47 per cent in the previous two years.