How can charity trustees effectively use impact reporting?

When executed effectively, impact reporting can enhance stakeholder understanding and can be an effective tool for charity trustees in the following areas.

• Mission alignment: stay focused on what the charity is there to achieve (its purposes) when planning activities.
• Storytelling: demonstrate what the charity does and the value of its work, particularly when applying for grant funding or fundraising.
• Beneficiary-centric metrics: track metrics that relate to the well-being of their beneficiaries. This could include the number of people serviced, improvements in health education, reduction in poverty, and other tangible outcomes.
• Transparency and accountability: provide stakeholders (donors, supporters, volunteers, and the public) with clear information about how funds are applied, and the impact achieved.
• Long-term vs. short-term impact: allows focus not just on immediate outcomes but sustained change over different timeframes.
• Collaboration and learning: can improve the overall quality of reporting on the charity’s work and provides a platform where charities can share best practices and lessons learned.

Putting aside reporting responsibilities, is this not a missed opportunity for those who do not report on impact in explaining a charity’s purpose to not just stakeholders but also the public?

Have charities really made progress in impact reporting?

Based on a review of the last filed financial statements for the Top 25 registered UK charities by income and excluding education providers, we found that:

• 48 per cent produce a separate impact report;
• 32 per cent report on impact as part of their financial statements; and
• only 24 per cent of those charities had evolved their impact reporting compared to five years ago.

Those that did have ‘impact’ sections within their financial statements were mostly reporting on how they performed against goals and objectives, with little link to the wider societal impact referenced in the SORP.

Maybe for these larger charities, impact reporting is considered to be less critical as their charitable purpose and public benefit are commonly understood? Perhaps it is more important for charities with a story that is harder to tell?

But is it time for more guidance and consistent expectations around such an important measure of charity success?

This article is part of RSM’s Charity trustee insights hub. It has some great insight pieces for charity trustees to consider on key topics right across the charity sector, including governance, reserves, digital transformation and finance function, to name a few.

If you would like to discuss impact reporting in the charity sector, please contact Andrie Kazamias, Hannah Catchpool or your usual RSM contact.