Chief Commissioner speech: The Value of the Annual Report

8 May 2013

Speech to the CFG Annual Conference

08 May 2013

The annual report is a key document: it summarises the financial position of your charity; it sets out your activities and, in many cases, looks to the future.

Some people consider the Annual Report to be a rather dry document and a time intensive requirement. Others recognise the opportunities that an annual report presents: creating interest, building support and generating income.

Good reporting is about transparency and engagement. People want to know what they are donating to and what impact it is having. I strongly believe that great financial reporting can help to demonstrate and even to improve this process.

As you know, I am Chairman of the ICAEW Charities Online Financial Reporting Awards. These are among the criteria that the Judges use to assess reports. Something that I particularly look for is impact: both on the intended beneficiary and on the reader.

Some of you will be aware of my role as Chief Commissioner of the Independent Commission for Aid Impact. I made a conscious decision that I wanted to focus on the impact that UK aid was making on real people. For example:

• People who are living in absolute poverty;
• People who have little access to clean water; and
• People who have limited access to education.

I have met many of these intended beneficiaries over the last couple of years and it is their stories that I use to illustrate points in the Commission’s reports and in discussion with Parliament and stakeholders.

Whether considering the impact that UK aid has had in India, where support for better water use and for micro-enterprises has led to improved livelihoods, or, conversely, where we find that UK Aid has not delivered the expected education results in Nigeria, it is the stories of how peoples’ day to day lives have been affected that add colour and depth to reports, that generate interest in the reader.

The best charity annual reports are able to take these stories of effects on intended beneficiaries and build upon them to illustrate the wider work of the charity. Donors want to know that their money is being spent wisely and that it is making a difference. I say this not just as an ICAEW judge, not just as the Chief Commissioner of ICAI; I say it because the evidence backs it up.

New Philanthropy Capital recently undertook a survey, ‘Money for Good UK’ exploring the habits, attitudes and motivations of donors based on qualitative and quantitative data. The results will interest all of you:

• Three in five donors paid close attention to how their money was being used.
• 38% of donors do research before they make a significant donation.
• Donors are loyal to their key charity relationships – 70% of mainstream donors donate over a three-year period to the organisation where they make their largest donation.

Most interestingly, 54% of high income donors said that they would change their giving behaviour if they received better information on the areas that mattered to them.

Indeed; 34% of them said that they would increase their donations by an average of £603. The findings were replicated in mainstream donors who would increase donations by £155 per year.

New Philanthropy Capital calculated that, if extrapolated across the population, donations could increase by a further £655 million annually.

So, the Annual Report is your shop window, particularly to the corporate donor and you should invest time and resource to produce an attractive and informative report.

An annual report can seem daunting, especially at the first draft stage, and sometimes presentation can be forgotten amongst the requirement for quality financial reporting. Nevertheless, there are some golden rules that you can follow to sharpen your report and make it into a key marketing asset.

Help get your message across with ‘at a glance’ summaries. Give readers a snapshot of key achievements, comparatives and illustrations of how the finances relate to all of this. Always show how you achieve value with their money.

Integrate your narrative with your financial reporting so that your key messages and achievements are consistent and clear for the reader; bring your achievements to life. It shows donors that their money is having real impact.

Consider your online reporting. Many organisations have online and social media experts – bring them in to the design phase so that they can advise on the appearance of the report. Digital reporting is increasingly the norm – you should make it easy to use through good design and usability. No reader will visit your site if they can’t choose the parts that they want to read, there are too many pages on screen or the pdf is so huge that their system crashes.

Most importantly, adopt a simple and direct approach to narrative reporting: ‘This is what we said we’d do, this is what we’ve done and the impact we’ve had; and this is what we’ll do next year.