As Annual General Meetings (AGM) approach for many of PM+M’s Not-For-Profit clients, trustees are busy working on the trustees’ report which is incorporated into the financial statements.
The financial statements focus on the charity’s financial performance and position but in isolation this does not give the reader a rounded overview of what the charity has achieved and the resources they’ve used.
The trustees’ report is an opportunity to publicise significant activities, the achievements of the charity and the impact they have made on delivering their services to their users. All registered charities must prepare a trustees’ report and make it available on request. Registered charities with a gross income exceeding £25,000 in a financial year must file their accounts and annual report with the Charity Commission.
It’s important to understand that the charity generally has three viewers:
- Current and potential funders
- Beneficiaries of their services
- Wider public
Charities are publicly accountable, so the information provided should show a fair, balanced and transparent review of the charity.
The Charities SORP (FRS 102) sets out seven main section headings for the trustees’ report:
- Reference and administrative details
- Structure, governance and management
- Objectives and activities
- Achievements and performance
- Financial review
- Plans for future periods
- Funds held as custodian trustee on behalf of others
Finally, a statement of trustees’ responsibilities must be included and signed by at least one trustee.
A charitable company must also incorporate a strategic report if they are not classed as a small company.
On a recent monitoring review carried out by the Charity Commission, 54% of the sample did not meet the public benefit reporting requirement as it did not include a public benefit statement nor did it explain who benefitted from the charity’s activities.
The public benefit reporting requirement must include both an explanation of activities undertaken by the charity to further its purposes for the public benefit and a statement by the trustees as to whether they have had due regard to the Commission’s guidance on public benefit.
Other common areas which are required but are overlooked include:
The policy should cover the reasons why the charity needs reserves, the levels of reserves the trustees believe they need, steps taken to ensure the required levels are maintained and the process in place to monitor and review the policy.
Key management personnel
Trustees need to set out who they delegate day to day management to and whom they consider to be the key management personnel of the charity.
If you would like any further information please speak to Helen Binns (firstname.lastname@example.org), head of the PM+M Not for Profit sector, who will be more than happy to help.