We recently looked at reporting tools available to charities and social enterprises to measure their strengths and weaknesses and improve performance and sustainability. Despite tools like this being available, a recent survey by the Charity Commission revealed that less than half of small charities are able to provide accurate reporting.
The research consisted of a study of 108 small charities with an income of less than £25,000. This is not only limited to smaller charities, the study showed that larger charities also had ‘major flaws’ in their accounts and annual reports.
Does a charity need to submit reports and accounts?
All charities are required, by law to provide an annual report and accounts which need to be made publicly accessible and be transparent on what the charity does.
The annual reports submitted are a chance for charities’ trustees to demonstrate that they have managed resources efficiently and are meeting their objectives. This has become even more important after high profile failings such as Kids Company have caused a lack of trust in charities.
Nigel Davies, head of accountancy services at the commission, said: "The quality of small charity accounts is not as good as we would like.”
"Our reports paint a picture that shows the quality is not always as it should be, and we will be working with the sector to raise awareness over the coming year."
Most charities aren’t aware they have reporting obligations with one in six charities not sending in anything at all and one in five sending the incorrect documents. There are templates available for charities to work from to help with supplying the correct documents available on the Commission’s website.
Photo credit: Charity Commission.
As the above table highlights it is clear there has been some improvement in terms of charities submitting an annual report and the amount of charities not submitted anything has fallen which is encouraging and hopefully this trend will continue to be positive, given further transparency into the working of charities and social enterprises.
Did you know that CAN offer a dedicated business advisory service to help charities and social enterprise with their business plans and reporting?