Is it time for a revolution in charity reporting?
Are charity finances meeting the public’s need? This was the big question asked by Joe Saxton, founder of NFP Synergy, when he opened our 2018 Charity Accountants Conference in Birmingham in September.
“Charity Accountants are keepers of the holy grail of financial information, but they need to deliver it in a way that codifies and communicates to the public how charity money is spent.”
His message was clear. There’s an imperative and a real opportunity for charity finance teams to help build trust in their charity and the sector more widely by providing clear, well presented, accessible financial information that demonstrates how charities are spending public money.
Joe highlighted research that showed that one of the main barriers to charitable giving is that people aren’t clear about how donations are spent. The content and presentation of charity financial reports [annual trustees report and accounts] aren’t helping.
He used focus group research to demonstrate what people want from financial reports. The research showed that people simply won’t read long financial reports. They want headline information; they love pie charts with information displayed colourfully, statistics that show impact and in bite sized chunks of information. Less is clearly more. It’s quality over quantity every time and simple and accessible information will get the message home.
He asked the audience of charity finance professionals how many of them would show their families and friends their financial reports to explain what their charity does. Very few hands went up!
Joe highlighted that some of the issues with the SORP could be to blame for the current state of charity financial reports. He said flaws in the SORP include the fact most public facing reporting is excluded from SORP. In the SORP, the regulated decide what regulation they get and that governance at SORP is poor and change with the SORP is what he describes as ‘glacial’.
He highlighted a new report from NFP Synergy which focused on the way in which the Charity Commission’s website publishes charity financial information, which he said isn’t helping the case for transparency. The report, ‘Ten ways the Charity Commission website makes charity finances less transparent’ focuses on the fact charity accounts are all presented in different ways, they are inconsistent, confusing and misleading.
Lastly, he pointed out that the public and MPs and the media think charities spend less on the good causes than they would like to see, so the role of the finance team must be to demonstrate how money is spent and the impact of the spending.
He concluded by telling delegates, “You are the keepers of the holy grail of reassuring, inspiring, and illuminating financial information to a sceptical world.”