Paul Ridout’s comments were featured in the July Issue of Charity Times. 

For most trustees, the annual report can feel like one of the most painstaking parts of the job. Its primary role is to demonstrate to the Charity Commission that the charity has fulfilled the legal duties expected of it. Except the reality is that it is far more than a piece of official paperwork. Annual reports are also an opportunity for charities to demonstrate impact – not just to the Charity Commission, but to donors and the wider public, too.

Paul Ridout, partner at Hunters Law commented:

“It is hard to measure the effect of improved reporting by charities on the voluntary income they receive. It’s an increasingly competitive process to win new donors and to retain their loyalty, and a loyal donor may have been supporting a charity for many years already. Having said that, effective reporting sustains the interest of existing donors. 

“Take the example of the local wildlife trust that I support: I pay a monthly amount and receive reports that combine feedback about what the trust has done with appeals for current and future projects. I get a clear picture of what the organisation can achieve with the money I provide, which makes me feel that my contribution makes a difference, and a sense of what the trust can achieve if I were to increase my monthly payment. 

“Or look at an annual report from Great Ormond Street Hospital Children’s Charity, which provides a mixture of personal stories, information about new treatments that are being supported by the charity, details of the charity’s welfare work as well as the usual financial reporting. If you compare that approach with the dry, bare bones reporting that charities used to provide just to comply with their legal obligations, you will see how charities have converted what might once have been a regulatory compliance chore into a vital tool in engaging with funders.

“Effective impact reporting can help charities to secure funding. Funders are answerable for the use of the funds they provide, and they may be under a duty to demonstrate public benefit, so they are looking for more than just confirmation that the money has been spent. They also like to be thanked in a meaningful way, and to know that they have made a difference. 

“Funders can prompt the charities they support to take time to think afresh about their mission and to consider how effectively (or otherwise) the activity in question is actually achieving the intended outcomes for beneficiaries and society.

“A good impact report not only tells funders and others about how the charity has changed lives but also helps to identify what more is needed

“Reporting affects decisions about renewing funding. It can also inform public debate about social issues: poverty in the UK is an example of this, where qualitative reporting is making a big difference to public understanding of the impact of increasing prices.”