Charity reporting workshop, 11 November

Hear about the latest reporting developments in reporting in charities.

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This workshop was led by experts from PwC and focused on the latest developments in charity reporting, particularly in the context of COVID-19.

It covered three areas: the impact of Covid 19 on reporting, stakeholder engagement and sustainability and environmental reporting.

Our external guest speakers included Lindsey MacDonald, co-leader of Street League, who talked about impact reporting and was followed by Caron Bradshaw, Chief Executive of the Charity Finance Group, who spoke about insightful reporting.

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Transcript

Daniel Chan

Hi, I am Daniel Chan, and I lead our charity reporting work here at PwC. I was delighted to have over 100 attendees join us for our recent charity reporting workshop, and I’d like to share with you some of our highlights.

We asked our attendees what their last reporting cycle was like, and what their key challenges were. Some common themes came up as part of that, which included around growing concern, and also around remote working, and I envisage these to very much continue.

Our workshop then covered three key areas. These were around the impact of COVID 19 on their reporting, where we provided insight on the guidance that was available in relation to what the FRC had issued, but also what the charity SORP making body has issued as well.

We then asked attendees, what they thought, and how they thought they reported in relation to COVID 19 last year. Many thought that they were able to report in it relatively well as you will see on the chart. We went through some key examples of how charity is reported on COVID 19 over the last reporting cycle, with many being clear, and open, and transparent about how it had impacted them.

A couple of questions after our presentation was quite interesting, which related to, whether there will be further guidance from bodies such as the Charity Commission around this. Actually, there are expected to be illustrative accounts that are coming out, which include a COVID 19 context, so do look out for these. In addition, there was also a question around the balance of reporting between, particularly if you are half your year, or some part of your year had COVID impacts, whereas earlier part of the year was non-COVID related - how do you strike that right balance, and that’s always a challenge that will always be there given the pervasive nature of the pandemic so far. What I encouraged many charities to think about, was to ensure that their reporting reflected the achievements of the full year, not just enabling COVID 19 to dominate the reporting specifically.

The second area of our workshop focussed really much on stakeholder engagement, and in particular for some of the larger charitable companies involved, a new requirement set out in what was known as Information Sheet 3. This consisted of three specific requirements, where larger charitable companies are required to disclose how they comply with Section 172 in the Companies Act, and to also provide a statement on how they have engaged with their employees and have regard for them during decision making, and also how company directors had regard for their engagement with other stakeholders in their decision making. So, these are three separate statements that are now required for many larger charitable companies. And we shared some good practice examples of charities have adopted this. What I would say is to go further than that, many charities are not captured by these specific regulations, also need to think about how they’re reporting about their stakeholder engagement. That’s not just relevant for larger charities, is actually relevant for all charities, no matter what they do, and what their charitable purpose is.

It is important to ensure that your reporting is clear in terms of both who your stakeholders are, how you are engaging with them, why that engagement matters, and what actions and outcomes have arisen as a result of that engagements. What decisions have as a charity and the charity trustees taken in relation to the engagement that’s taken place.

The third area of our workshop focussed very much on sustainability and environmental reporting. Now this has become a much hotter topic in corporate reporting and indeed has led to the introduction of something known as Streamlined Energy and Carbon Reporting regulations.

What we’ve shown in our workshop was some examples of how some charities have been doing this and meeting the specific requirements of what’s known as SECR. More information is also given in something called Information Sheet 5, that was issued by the Charity SORP making body. Charities in scope of this really need to do this, but charities outside of this scope should also very clearly think about whether they wish to report on their sustainability and environmental impact as well. And indeed, we have shown some examples of charities, which are not in scope of the formal reporting requirements but have chosen to perform at least some other reporting in relation to these matters.

It’s fair to say that most of these charities that have chosen to do this, are environmental charities, and hence these disclosures are very much linked to the charitable purpose. But again I would encourage all charities to think about how they can properly reflect the sustainability and environmental impact as part of their reporting.

The next part of our workshop was very much a discussion, and it was discussion with two of our external guest speakers. Firstly, with Lindsey MacDonald, co-leader of Street League, talking about impact reporting; and secondly with Caron Bradshaw, Chief Executive of the Charity Finance Group, speaking with me about insightful reporting.

And for the next part of this video, we will share some of these highlights from our conversations.

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I will be speaking with and introducing Lindsey MacDonald, who is co-leader of Street League. For those of you who don’t know Street League, they are a leading sport for employment charity, with a mission to see an end to youth unemployment in the UK, that carries out its work through a number of different programmes. And, if Harry you can just put up the impact dashboard, which I am sure Lindsey will talk through, and wonder on things that you’ve heard me speak on reporting over the recent years. You all would have heard me referring to Street League a number of times probably, and that is mainly due to their really innovative work around publishing an impact dashboard online, which is refreshed on a regular basis to keep their stakeholders aware of how they are doing. So, I’m really delighted to introduce Lindsey.

Lindsey MacDonald

Thanks Dan.

Dan

Fantastic, this is more going to just be little bit of a conversation to begin with and then we will open up for any questions, and if you have any questions for Lindsey, please do put them on the chat. Perhaps Lindsey, we can start with, maybe you can tell us a bit about your impact reporting journey at Street League including the impact dashboard that we we’ve shown up on the screen.

Lindsey

Definitely, one of the key things is the word that we use in terms of journey. It does enhance taking a really long time for us to get to the stage of having the impact dashboard and we continue on a weekly basis to learn and identify things that we are not getting quite right. So, I think that’s a key point of reassurance, is that I come at a point of being on journey with impact measurement and reporting.

Street League was very much focussed in its earlier stage, set up in 2003 on participation. And since 2010 what we did was essentially move to much more outcome focused, outcome reporting elements. What’s interesting with our journey is the impact that we’ve seen of the external environment and obviously that’s even more relevant at the moment with COVID, and also the internal environment - how those two drive the culture and the way that you approach the data and reporting. So, we essentially got to a place in 2014 and 2015 where we recognised the economy was quite strong, actually helping young person into a job, education and training outcome might not be as difficult as we were finding at post financial crunch. So, what we really needed to move our focus and attention to, was the impact of our work. That was looking at, if the young person still in that outcome, or in a positive destination six months later, and what does that look like relative to the starting point. So that’s how we think about our particular impact and that’s why we set up a dashboard in the way that we do it. Thinking about where they started, what that need was initially, the programme and the support that we’ve provided along the way. And recognising as well and being very honest about the fact that other organisations are part of these young people’s journey too. Then as I said that progression into outcomes and sustained impact.

One of the key things for us in terms of the journey and going back to the dashboard and other pieces, and learning going forward, is where we’ve really accelerated is when we’ve been open when we’ve published things. Internally, since 2013 it’s been common practice on a monthly basis to publish all the teams performance data. We work across 13 different cities, so we have that regional dispersion that sees benchmarking opportunities, how are teams doing relative to one another, probably helped by the fact that we have a sport culture so there is an element of competition in the teams too. But having that visibility of our data for everyone to see, drives and ensures the quality of it, because you can be certain that if something is missing an outcome, or if their IMD or the barriers in information for young person isn’t complete, and it’s not looking strong relative to their peers, they will make sure that they are improving the quality of the data input. All their data is input by youth and community coaches, employability advisors who are in the frontline and working with, patchy at best, Wi-Fi connections on a daily basis.

A lot of our data collection is actually prior to COVID, so this is all describing life before lockdown, and all of that data was collected essentially in hard copy paperwork and then input separately to our database. So, I think again, recognising the role that sharing honesty and transparent reporting internally actually had, has moved us forward.

Then I think the final thing I wanted to pick and just touch on with our journey was, sharing the orange figure in the middle there - 133 young people – who actually Street League wasn’t the right support for them. They disengaged, that might have been, either them being removed from the programme by our staff for a particular reason, it might be that they unfortunately were sent to prison, they might have decided that they weren’t looking for employment anymore. We capture all the different reasons as to why a young person disengages, it might just be that we lose contact with them, and that’s definitely the majority of our disengagement figures, is that they just don’t show up anymore, our staff aren’t able to get in touch with them, and eventually we have to recognise that they disengaged from the programme.

But reporting that figure of who we are not supporting, shifted the dialogue internally as well, because nobody is paying us. 50% of our funding is by government contracts, payment by results, and the rest of our funding is philanthropic, where corporate donations, individual donations, grants are looking for us to support into positive destinations. None of our funding is asking who we are not helping, and none of it is actually making us accountable for that either. We made essentially ourselves accountable, and that again really shifted in some unexpected ways that culture of reporting and the processes that we actually have internally too.

Dan

Thanks Lindsey, and that’s really interesting, and as you speak if people have any comments or suggestions, do put them in the chat. One of the things that, when I speak to charities one of the challenge is often around getting the Trustee Board’s buy-in in relation to disclosing some of the data that you’ve mentioned around disengagement or information where you haven’t been able to help people or your beneficiaries, rather than the data that is positive and where you could have helped them. What was your journey like in terms of getting buy-in, both at your senior leadership team level, but also at the Trustee Board?

Lindsey

It was starting with internal honesty and openness to begin with. As I said, monthly reporting internally, that went to our board of trustees on a quarterly basis. We had that in place for 18 months before they had seen on a consistent enough basis that there were no alarms going off based on the data and that they felt comfortable, they reached a level of relative comfort. What was interesting was the language. So, actually our trustees, we were quite keen as a senior management team to use probably more aggressive language, if I can put it that way, more accurate language, which was how many young had we failed. Trustees predominantly from a private sector background were less comfortable with using that type of communication style, they wanted it to be more rounded, I suppose, is probably the term I use, but it just took time, and building up that level of confidence really.

Dan

Thanks Lindsey.

I will come to your question Heather, which I am sure Lindsey will be more than happy share hints and tips. Harry can you just move on a couple of the slides, or just that people can see the differences of the impact dashboard. There is a wealth of data here Lindsey in terms of your dashboard and the data available. When I speak to charities about publishing the impact data, particularly when you are refreshing on a regular basis, they always ask me how much does it cost, what resources are needed to do it, and I suppose Street League isn’t a very small charity, but it’s also not one of the very large charities either, and it will just be useful to hear your views on how much resource and cost is needed to achieve what you have.

Lindsey

In terms of the, I guess it’s a difficult thing to quantify, as I say it’s distributed across pretty much our whole workforce. So, there’s 82 members of frontline staff who are inputting the data on a daily basis as part of their overall roles to support young people. We have centrally a data and insight coordinator and a data and insight manager, and that’s actually been additional investment in the last 12 months that we’ve brought in. Prior to that, we just had a data and insight coordinator. I think the key thing is, and the breakthrough for us really, was Power BI. So, that’s the system that you are seeing here. It’s part of the Office 365, or Microsoft 365 package and essentially what it does is, it takes spreadsheets or csv files from whichever database or system you might have and allows you to visualise it. What’s been really important for us is just having a mindset of we want to keep building and we want to keep developing and moving this forward. So, the initial pain and agony and four months of developing the dashboard, the first version, none of that was lost in terms of the effort and energy because it’s essentially Excel spreadsheets and we just need to update that on an ongoing basis.

We are working currently to try and further automate our visualisation on this reporting piece. This on monthly basis to get this published and all of the internal reporting, thankfully off the same set of spreadsheets, is now down to 4 to 4.5 hours of work by the coordinator.

Dan

Fantastic, thank you Lindsey.

There are some questions popping up, it is sparking a bit of interest, which is fantastic. Maybe, if I take Heather’s and Lawrence’s question together. Lawrence is saying, they are looking to doing something similar at their charity, also using Power BI, how long did it take you to get this place, what were your biggest challenge? And then in terms of Heather’s question, back to the point around disengagement, have you understood the reasons behind the disengagement, and I guess have you been able to action some of that, for example, have other organisation been able to help with reengaging or engaging them.

Lindsey

I will take the second question first. First of all, reporting our disengagement brought it to the attention of everyone in the organisation, that that was a reality that young people were, as they were falling off the grip, leaving the programme, and maybe not getting that follow on. So, what we are now doing is, by reporting and sharing the disengagement data on a monthly basis, it acts as a prompt to the frontline staff to say, ‘actually maybe I will just follow up one more time.’ And we did an analysis this summer with one of our partners, which identified good practice in certain regions. In Glasgow, for example, 75% of the young people, who disengaged, were then coming back on programme, and progressing into a positive outcome. What they were saying is the fact that, even though they have been away for a while, the fact that Street League reconnected, they were welcome to come back on programme is what established that trust and gave them confidence to come back in. We are trying to use disengagement data more proactively.

In terms of signposting, that would definitely be something. If it’s a decision or an event, if I can describe it that way, that sees an young person leave our programme, absolutely that young person would be supported to access the relevant social services, mental health services, housing, accommodation, whatever support they need with the reassurance that as and when they are ready to come back into looking to find a job, they are absolutely welcome to come back to Street League.

In terms of the first question, what I would say is, anyone starting on this journey now is in a very fortunate position, because actually they have done a lot of work, I would say, in the last 24 months to make Power BI much more user friendly. So, the biggest challenge we had was trying to understand how to use Power BI when nobody, not even corporate companies were using it very effectively, or in a very widespread way. So, we thankfully had very curious data and insights coordinator at that time, who essentially took this on as a side project and convinced the senior management team that this was an opportunity to really leverage.

Looking at where it is today, what I would absolutely encourage anyone to do is look at the support they can access through Datacount. Datacount UK is an NGO that harnesses data science and data scientist from the private sector, and will provide support to charities, social enterprises, not for profit organisations to go on a data journey. And absolutely part of their skill set would be either Power BI, possibly looking at Tableau, there are different tools that are actually now available that might make more sense depending on where your dataset is coming and what you are trying to achieve as an organisation.

Dan

Thanks very much Lindsey, that’s fantastic and Russell has also commented they are also implementing this currently, and it has taken them about 18 months to get a robust process in place, which I think resonates with the journey that you were talking about earlier. And I know, I was fortunate enough to be at the launch of your first and second version of the impact dashboard, and I know just how far you’ve come. But if you look forward, where do you see this going next, both with Street League, in terms of your impact reporting, but also the wider charity sector, and how do you see that developing more widely.

Lindsey

In terms of where Street League wants to go next and how we are working on facilitating that journey, because we are now at a stage, of almost looking for marginal gains. It’s not a complete revolution that we can achieve, we need to be looking at which area, how do we properly improve and maintain systems as well. So, we’ve used something called the data maturity framework, and we do that now on an annual basis, we just did our second one. That looks at every aspect and element of your data from collection, all the way through to systems, management, ethics, governance, and reporting. What we found really interesting and useful with that framework, is that it makes you think about, so from a Street League perspective, our culture is social impact data. So, to be really, honest and transparent, but we don’t get it right as we should, is necessarily applying the same approach scrutiny reporting thinking with all aspects of our data across the organisation.

So, HR data, for example, is one that in the last six months, particularly in light of things like black lives matters and looking to address gender pay gap and understand inner quality in our organisation, HR data is something that we are now looking to move forward in a similar way. Then again using Power BI, the opportunity that we see is bringing data from HR, from finance, from social impact, from external sources as well. So, you saw the unemployment figures there in the dashboard are integrated but using much more of the capability to bring datasets together and understand what that means from an internal, across the organisation, and from an external perspective.

Then the other piece I think for Street League has been realising, and we talked a bit about this yesterday down when we were catching up, recognising that we are very committed to and spoke a lot about being more transparent. Actually, what transparency at a basic level means, is showing ever more and more data. So, what you realise by showing ever more and more data is that it gets very opaque very quickly. What we are trying to really challenge ourselves with now, is thinking about how do we make sure that our impact reporting isn’t necessarily transparent, but is actually clear and honest, and being really challenging to ourselves that are we telling that clear and honest story through our data, through our reporting, and is it saying the reality of what’s happening, rather than just showing all of the data, and recognising that that might just confuse or muddle readers essentially.

Dan

Thanks Lindsey, and it almost was prompted, but it isn’t in terms of our own ethos from Building Public Trust Awards for charity is around clear, accessible, and engaging reporting that is open and balanced, and is centric really to stakeholders and to readers. And I guess what I’ve seen is, just linking back this to reporting, what we were talking about earlier in terms of trustees annual reports, and I’ve certainly seen digital reporting referenced within trustees annual reports, and in some cases the snapshot view as at the yearend published in the annual report, by clearly referencing that, a live view, it is obviously online and refreshed on a regular basis. I’ve seen a couple of charities embrace that, but very much in the early stages, I would say.

Thank you, Lindsey. I am just going to pause there for any other questions in the chat, I don’t think there have been any. I certainly found that incredibly interesting. Are there any final thoughts that you would say just before we go on?

Lindsey

For me, always the cult of the sector and to ourselves is that, for all of us, to almost I suppose to use the opportunity, if that’s the right word, of COVID 19. What we’ve seen is a much higher level of honesty and vulnerability by charities, recognising that things are incredibly hard and that we can’t possibly be achieving necessarily exactly the same outcomes or the same impact as we did 12 months ago. That might be less, it might be more, it might be different. And I think trying to capture the opportunity of using this real time honest reporting at the moment in the sector, taking that into the future as we approach something more normal, would be a real outcome, something really positive. Let’s not revert back to over ambitious claims, if we can all move forward in a more honest and open approach, that will be a good outcome.

Dan

Fantastic. And thank you very much Lindsey, and it’s great to have you join us this morning, I certainly found that extremely interesting, and hopefully everybody found that useful in terms of thinking about your own impact reporting journey as well.

I am delighted to now welcome our second speaker, who is Caron Bradshaw, Chief Executive of the Charity Finance Group, as Aidan mentioned. Before we start, congratulate Caron on her recent award. She was named women of the year at non-CCAB in the recent women in Accountancy and Finance Awards, so congratulations Caron, it’s a fantastic achievement and we are delighted to have you here with us. Caron is also a member of the charity SORP committee alongside myself, and I am delighted to have you here, just to share a bit of your thoughts on where charity reporting is now and how charities can better tell their story. So, welcome Caron.

Caron Bradshaw

Thank you.

Dan

Maybe if I can start, and again, like with Lindsey, please do post any comments or questions in the chat as we go along. But the first question, just to ask you Caron is, what’s the use and purpose of charity reporting, and specifically the annual reports and the role that they have in helping charity to tell their story.

Caron

Before I go on to answer that, I just want to say that Lindsey’s presentation was absolutely fantastic. I was scribbling down notes as you were talking. The reason why I mentioned that, isn’t just to give my colleague a big thumbs up, is to say that for me the purpose of reporting, there’s two bits of it. The first bit is the compliance bit, and the second bit is the communication bit. The bit that sorts the wheat from the chaff really is that mindset piece, that says, how am I going about this? What am I doing? Am I just ticking the box, and doing the bare minimum that I need to, or am I thinking about this is a rich tool that I can really communicate what the organisation is about, why it exists? I don’t know if you’ve Simon Sinek, but if you’ve not watched his TED talk already, do, starting with why people engage with who we are, what we believe in, what we stand for, not just the things that we do, the activities that we undertake.

For me that’s the real part of this question, is about what’s the purpose of reporting is, you can do it as a compliance thing, or you can think of this as a communication tool.

Dan

Absolutely, and I completely agree with that. I guess, seeing in those two terms, compliance and communication. In your role, you speak with many different charities and many different finance professionals across the sector, what are some of the key challenges and even opportunities that charity is having in telling that story in your view?

Caron

Again, it goes back to this question of compliance and communication. Obviously there is the bit that says that all of our stakeholders want to know how we raise, how we spend, and how we keep hold of monies that we are given. Through whatever means, whether that’s through contracts, or whether that’s through philanthropy or donations or by other means. So, sometimes there is a real difficulty in understanding how one can strike a balance between those different audiences, and to express the income that you are getting, how you are spending it, who you are serving. All of those elements are really difficult, and Lindsey was talking about transparency and honesty there. The size of the number of disclosures we have to make has exponentially grown over the last 5 or 10 years, but I don’t think necessarily the clarity has matched that progression, if progression is the right word indeed. So I think there are a whole load of challenges around trying to pick through what you have to do and ticking off those disclosures, whether they are about 172, or whatever it might be, that add additional commentary and narrative to the reporting. So, that’s one challenge.

The second challenge is being able to pick those things that are really going to land what the organisation is about and what people are interested in us for. I think to pick up the challenge side there for a moment, one of the big challenges is not being seduced by some of the measures that we think perhaps are quick wins like ‘pence in the pound’ or the disclosures that are going to feed that Daily Mail-esk appetite for particular nuggets of information. Whilst I do think that we should be expressing how much of the money is actually being used in the frontline activity, I don’t think we should be doing it as a ‘pence in the pound’ ratio. I know there are some good example where that’s been unpacked and more information is being given, but that for me is a real potential trip hazard and challenge.

The second area, I would say, is around that ability to tell our story. Some of our topics are not as interesting as other topics, they just aren’t. They are not as publicly, I can talk from personal experience, charity finance is not the sexiest of topics, if I could put it that way. But some of the topics that we deal with as organisations are more controversial. They are operating in areas where there are differences of opinion, where public opinion can be very divisive and very polarised. That’s another challenge, is picking through how do we tell our story in a way that’s going to engage with the people that we need to inform, and who have an interest in what we do. I’ll pause there.

Dan

Fantastic note, thanks Caron. We just had a comment from Laura, great point around quality of reporting. Laura says, she has this battle sometimes, given the cost of developing the report, and the resources needed, useful to get an idea on how internal and external stakeholders use annual reports around the investment. She has done some work around internal perspectives, but there may be, I don’t know if you have a view, in terms of I guess from the wide readership you speak to and I guess I can share from my perspective too, but around who is it that the reporting is for and why do people find it useful?

Caron

I don’t think there is a straightforward single answer for this, because when we talk about the sector, we tend to think of this sector as one whole homogenous group of organisations that all act and react in same way, and the reality is very different. We’ve got 168,000 just in England and Wales, large and small, all operating in very different areas, and in very different business model. There isn’t a single answer to that. The most important thing that organisations can do is think about their own position, what is their business model, who are their stakeholders, what are the important things that make them them, how do they express and set aside their organisation? And effectively what is their USP, why are they there, what is it that they are doing, rather than seeking a simple answer to that as a boiler plate almost. I think there are key themes that will always be common to all organisation’s reports, either because of the legal framework requiring it or because we all operate in a society and that society does have some areas where it is interesting, like, pay remuneration, how we go about those sorts of thing. There isn’t a single answer to that unfortunately.

In terms of trying to strike that balance correctly, there are lessons from other people that you’ve just seen already one this morning from Street League, where we should shamelessly steal each other’s good bits, I really do. Look for other examples that are out there. We’ve seen some fabulous ways in which people can communicate and give a real richness to annual reporting cycle. Whether that’s through videos from the finance team, explaining and unpacking some of the more complicated and dull notes to the accounts, or whether it is somebody expressing as a frontline worker, the experience that they’ve had changes the lives of the people that they have been engaging with. Or whether it’s a business card, that gives the top five things that they’ve achieved that year, or conversely looking at CLIC Sargent ,the impact report that sits alongside their annual reporting, and gives a ‘warts and all’ experience of what’s happened.

I would shamelessly steal other people’s good bits, and I’ve made loads of notes this morning and I am going to be going back and looking at some of those things that Lindsey was talking about.

Dan

And I completely agree. And those of who has listened to me speak before will know, I see the trustees annual report as a key part of a suite of wider communications that a charity does make to its stakeholders and I can echo all the comments that you made there Caron. There have been some interesting comments just around, and from Brian, that say numbers will have to be used to tell the story, not just present broad facts without context, from the nods, we are certainly agreeing with that. Reporting can be about knowledge sharing as well as compliance, and that’s an interesting view. I think Laura has commented that she has found that quite useful perspective to share. What are your views on using reporting as knowledge sharing as well as the compliance aspect I suppose?

Caron

I will encourage people not to pursue this as a compliance. It’s one of the things that is publicly available about you. And whether we like it or not, it is a reference point, whether those people that are looking at our thinking about donating to us, writing a story about us, or being an employee of ours. These are reference points that are available, so it feels to me like a missed opportunity, not to make the most of that.

I can’t agree more with the comment about the numbers and the narrative. Numbers without the narrative are as meaningless as narrative without the numbers. The two things have to go hand in glove, in my view. And I also have a view and have expressed this many times, so Dan sorry if I sound like a stuck record, you’ve heard this from me many times. For me, the annual report can never answer all the questions. It can simply signpost those bits where you need to delve deeper, is a method if you like, hooking in interest. I don’t think you can ever hope to answer everybody’s questions through an annual report, and if you do, you end up getting into territory of not being able to see the wood for the trees, because there is just too much information. We’ve all been in those Board meetings where there are stacks of papers, and people say, ‘well I told you it’s on page 97, bullet point 3.3.4.’

Transparency and honesty, that concept that Lindsey was just talking before, is absolutely for me the perfect summary. It’s about being pithy, about engaging, having a story, not just having a raft of numbers that people can wade through.

Dan

Absolutely, we as accountants tend to like the numbers, but I can absolutely agree with you that, numbers without the narrative and the context and the explanation around it is, that’s what tells the real story in my view.

We’ve had a really interesting one, and a question that spoke to many charities about from Hannah, which is, whether you see there to be value in separating the strategic and impact reporting and the statutory accounts and reporting? Some charities combine them, some charities produce two separate reports, I am sure you will see different experiences and Hannah is saying that she sometimes finds a conflict between telling the story and meeting the regulatory requirements. Do you have a view, or what have you seen in the sector?

Caron

This is a debate that’s been going on for 10 to 15 years plus, probably as long as we’ve really got to the stage of thinking about being more than just looking at compliance and trying to tell our stories more. And I think there are whole host of challenges around impact reporting anyway; attribution, causation, all of these different things are very difficult in terms of expressing the impact that we have. Expressing the outputs that we offer, and sometimes the outcomes of those outputs is a much easier piece, there is an inherent challenge around the impact reporting itself. When you then combine with the annual reports, there is a real tension, because, as I mentioned before, the number of disclosures that you have to make is exponentially increased over the years, and in some regards you could say that that downs out the space or crowds out the space for being able to tell your story and express what the impact of the organisation is.

I don’t have any simple answers for that unfortunately, but I would certainly recommend to people that they do try to ensure that the annual report includes story telling and impact, even if they then want to separate out and dive deeper or give much more flesh on the bones of impact reporting that they put in their annual report. Because as I said before, it’s the one thing that for many of you will be publicly available in a regulatory context, and therefore if it’s a just a dry, dull, regulatory compliance document, you’ve missed an opportunity for really a rich storytelling and advert, if you like, for your organisation.

Dan

Thanks Caron.

I mean, Laura has just shared her view from Save the Children on the chat as well, around how, pulling out the impact content from the work, and making a draft available, at least internally, early for them to adapt for external communications. Like yourself Caron, I’ve been involved in a number of these debates as to whether you split them out or not.

I guess, the problem that sometimes charities communicate to me, is the duplication of effort and the teams involved in putting together this information. Often, the annual report is seen as a finance team element rather than the impact reporting is more of an impact team or comms team requirement. It can be difficult to pull them together. But what I have seen some charities do is, prepare the whole annual report as one document including the impact data but then, where appropriate, using the same information recycling the information in a separate document, and depending on the stakeholders. So, it’s not reproducing the two different things, but very much reusing the content in a different way depending on the audiences. Because, as you rightly say, different stakeholders will want to use the accounts in different ways, for example, funders will want normally to request a set of accounts, for example, and may not accept a second impact report in some cases. I don’t know whether that adds to that Caron.

Caron

One of the things that strikes me while you were talking and just thinking about the length of the report; there is two words that comes to my mind, one was digital, and one was accessible. For me, we tend to perhaps get a little bit hung up on the length of the documents and think of it in terms of it in terms of, is it a novel or is a reference. Do we want it to be something that somebody sits down and reads from end to end, or is it something that we want to be easily used as a resource so that people can access the bits of information about you that are particularly of interest to them.

So, there is a tendency to worry about the size of it, and think, ‘oh it’s getting too big.’ But if we can make that information accessible with digital and with most things now being more often than not accessed online, rather than just as a document that wallops on your door mats once a year. I think that there are opportunities there for us to make information much more rich. For people to be able to drill down and to use technology in the ways that you’ve seen Lindsey show this morning that enabled people to go, actually that’s whetted my appetite in an annual report. I am going to look at that dashboard on an ongoing basis, because I am now really intrigued at the journey that this organisation is going on. I don’t think many people read annual reports as a novel. They do read it as a reference point, and they go to the bits that are relevant to them.

So, the more that we can put in those particular areas, the trade-off that you make in terms of gravity versus richness, could be false economy if you end up just trying to cut down the page count. And if you can bring those teams that are working together to produce the single document that is accessible for multiple purposes, then actually feels like it has some merit in it.

Dan

Absolutely, I would agree with that. I think that sign posting comment is really important, and as you rightly said, we are seeing many charities do now is publishing their annual report and accounts online in PDF format with clickable links between different sections that people can easily find them and interactive contents pages and that sort of thing is becoming certainly more widely available, so definitely echo that.

I might move on slightly in terms of looking at the future of reporting and those of you who are on this workshop, who don’t follow the SORP governance processes as closely as Caron and I, may not be able to be there. There currently is SORP engagement process that’s going on with a wide range of stakeholders in relation to what the SORP might look like in a few years’ time following a governance review that happened last year. And the SORP committee which was established earlier this year is currently looking at that quite closely and trying to hear different ideas as to what that might look like in the context of the wider IFRS 102 framework.

Caron, are you able to share any initial views that you have in terms of where you might see charity sector to go in.?

Caron

Firstly, I am going to say, don’t leave this to the accountants. That’s not because I don’t consider myself to be an honorary member of the profession or that is in some way a terrible thing to happen. But given what we’ve just said about the ability to bring through these various different strands, this really has to be not just about the financial end of the report, it needs to be about the impact and about the narrative too.

So, my first please is this processing is ongoing now, and now is the opportunity to engage and to ensure that it is representative and useful for the people that are involved. I suspect that we, without wanting to sound terribly dismissive of all the work that we are going through, I suspect that not as much will change as we perhaps hope at the beginning. I would like to think that some of the elements that are in a report like the compliance content that actually one can now find in a digital age in a much easier, more real time way, could be removed from that document. There is everything in the kitchen sink, otherwise will end up being in that annual report and accounts. I do think that we are seeing a journey towards all areas that are being seen within the private sector. So, sustainability accounting, etc., all of that may not be requirements at the moment, but it certainly is going to find its way embedded through; that’s the journey of the direction of travel.

Similarly, with things around pay gaps, and those sorts of more socially aware areas, I think are almost certainly going to find their way into our reporting at some point in the future. I do think that there is, much more interest on the impact side than there is necessarily on the strict compliance side. So that the looking at the international finance reporting standards in relation to the pension disclosures may not be the thing that is going to drive the direction of travel, we’re going to have to see that shift at some point.

Within this, there is an opportunity because we are as a nation starting, and COVID has really shone a light on this, is an opportunity here to start really talking about that social purpose pieces and the why we exist. Lindsey was absolutely right that the spotlight has been on us as a sector, but as society is moving towards trying to think more socially, more holistically, and not so compartmentalised. The outputs are not, for me, the bit that is going to be the most pressing for individuals, it’s going to be the purpose, the difference that’s made. And that’s just as true of the private sectors, of charities, but for charities is in our DNA. So that for me is the direction of travel that we are going to start thinking more about social reporting rather than just the facts and figures.

Dan

I completely agree with all of that and it’s great to hear your thoughts on that and it’s the direction of travel that we are going in, and I guess a plea with everybody to engage with the process. Engage with us as you think about what it is that actually your needs and wants are, what your stakeholders needs in one side, around charity reporting going forward, as Caron said now is the time to engage with the SORP committee, but also the various engagements strands that are out there with representatives from across all the jurisdiction across all the different types of stakeholders.

Any final words or comments from you Caron just to share with our audience just around any final things to consider.

Caron

Well I would be remiss not to make a plug for something that is in a slightly different direction. This Friday there is a meeting of the IFR for Not For Profits, which is, if you like beyond the SORP, this is about the international space. We know that all of our reporting has its roots in the private sector reporting frameworks, and they aren’t always as fit for purpose for our sectors we would like them to be. There is this initiative, looking at trying to develop an International Financial Reporting Standard for Not For Profit organisations. This Friday there is a starter, a taster webinar for those that are interested. I know that it is going to be difficult to get people interested now in SORP, to have it one removed, may feel distant and irrelevant, but actually, what happens internationally always then comes into our domestic agenda.

So, this is your opportunity to not just pull the bodies out of the river, but to go upstream and find out why they’re falling in.

Dan

That’s a very good point Caron. It’s fair to say that, the UK is seen internationally as a leader in terms of charity reporting with the SORP. Very few other countries have a SORP equivalent in their own countries, but I am excited about this initiative as well and I am really pleased that my colleague from PwC Austria, Bernhardt, is on one of the groups helping facilitate that internationally. So, I’m keeping close contact with Bernhardt but obviously you at CFG are taking the lead from a UK perspective so it’s great to hear that.

So, thanks very much Caron.

 

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