In December 2018 the Charity Commission released their report into Public Benefit reporting – a report that highlighted only 66% of charities explain their activities are to further its purpose for the public benefit, a decrease of 5% on the previous year; and 66% included a public benefit statement, an increase of 4% on the prior year. Overall, 52% of charities demonstrated clear understanding of public benefit, an increase of 1%, a statistic the Charity Commission viewed as disappointing.
A year on from the report and our experience of clients and other charity accounts publicly available shows that little has changed in public benefit reporting. Most charities tend to include a statement that they consider themselves to be a public benefit entity, but very few demonstrate how their activities achieved public benefit. In some instances there is no reference at all to public benefit in charity accounts.
For the most part, charities state the activities they have undertaken but don’t make any link to their beneficiaries and the impact made. The Trustees’ report and public benefit statement is an opportunity to take a step back and reflect on what the charity has done and who has benefitted. It is also part of what holds the Trustees and management team accountable.
The Charity Commission gives good guidance on Public reporting (see advice here). There is a small charity and large charity reporting regime with differing reporting requirements; a large charity is classified as one with incoming resources of more than £500,000. There is no reporting requirement for those charities with incoming resources under £25,000.
Based on my experience in the charity, not for profit and education sector, the Trustees’ report is often delegated to the Chief Executive Officer or Finance Director with little or no involvement of the Trustees at all throughout the process. The danger with this approach is that the CEO or FD are in the day-to-day detail and their focus for the Trustees’ report tends to be on aspects of the organisation they control and understand, and are very fact based.
It is critical for the Trustees to review the report cold and add some context to ensure the report satisfies the public benefit requirement. The public benefit statement is also a marketing opportunity in that you can show potential funders the impacts your charity brings to its beneficiaries, which may prove the difference between securing funding and not.
Although we see a greater proportion of charities with poor public benefit reporting, we also see some great examples. We have also seen charities prepare annual Impact Reports which focus only on how the public benefit objective was achieved, so there is a lot of good practice in the sector as well.
The above are observations from across a broad portfolio of charity, education and not for profit clients.
If you need any advice around your charity’s public benefit reporting, please contact me or your usual Bishop Fleming contact.