What does the perfect annual report look like?

There is no one size fits all ‘perfect’ annual report, and nor should there be given the diversity of the charity sector. However, there is a lot that charities can do to move beyond a minimum compliance lens in their reporting. Here are five areas that charities should consider as they take the journey towards authentic, engaging and impactful storytelling.

Openness around context

No charity operates in a vacuum and reporting should explain where the charity fits in the broader landscape and the societal need it is responding to. The charity’s purpose and strategy should be clearly set out, with a view to the medium to longer term. It is important that reporting brings the values of the charity to the fore through being open about its response to key sector issues, including fundraising, data protection, safeguarding and senior management remuneration, where appropriate.

Openness in how you prioritise

In an environment where funding is scarce, reporting needs to be clear about how and why key decisions are made and how resources are prioritised. Reporting should consider how the needs of different stakeholders have been taken into account, such as funders, staff and volunteers, as well as beneficiaries and wider society. This should be aligned with clear explanations of the risks and uncertainties as well as opportunities for the charity, including how it is responding to a constantly changing external environment.

Openness around governance

The ‘tone at the top’ is important, often first communicated through a statement by the chair and chief executive. It is useful to explain the charity’s governance structure, including any committees and the relationship between the trustees and senior management team. It can also be helpful to comment on how the board of trustees is made up, including how, together, the trustees bring a diversity of background, skills, experience and thought to effectively meet charitable objectives. However, people reporting should go beyond the trustees and a comprehensive report will demonstrate how equality, diversity and inclusion across the charity is achieved.

Openness in how you manage and measure performance

The charity should be clear about its definition of success and how impact is measured. This means explicitly setting out performance, often alongside a comparison with the previous year and current targets, as well as against any longer term ambitions. This should correlate with the charity’s financial review, covering how, as well as how much, has been raised and spent and clarity on financial sustainability. Great case studies will engage hearts and minds, but the charity should also be open about the challenges which have prevented it from being even more impactful, and how it has responded to them.

Openness in how you communicate

At their core, an annual report should embody the purpose and values of the charity. All aspects of reporting should be aligned and communicated with ‘one voice’, for example, by using an overarching theme. The charity should abide by the principles of open, balanced and authentic reporting, which will engage readers and make reporting stand out from the rest.

So, while there may not be one ‘perfect’ annual report, by embracing openness and investing in telling a clear, concise, consistent and compelling story, charities can demonstrate their value and build public trust.

Daniel Chan is senior manager at PwC

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