Annual Reports in Fundraising - WCVA - 2 Oct 14 1

Presenter:• Frank Learner

Greengage Associates

-

Associates -

Greengage

01446 700183 www.greengageassociates.co.uk

Making the most of your Annual Report for Fundraising

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Annual Report - A Better Ask?

• Annual reports are notoriously dry and dull - yawn!

• Many charities haven't adequately explored the purpose and benefits of their annual report.

• Too often, annual reports broadcast 'everything we did this year and how great we are‘.

• Lost opportunity to reconnect your audience to why what you do matters, not how much you do.

Theme: a charity’s annual report is another valuable opportunity to deliver your fundraising message.

Extracts from Canadian charity fundraising website:

Any different to the UK?

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Covering today

• SORP 2015 changes.

• What funders expect from the annual report.

• Structure and style options.

• Recent award winning reports.

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SORP 2015 - Context

• Planned 5-yearly review of SORP 2005 delayed for Financial Reporting Standards (FRS) update.

• Two SORPs available to charities:• FRS 102 - applies to UK and Ireland.• FRS for Smaller Entities (FRSSE).

• Modular: easier to identify smaller charity elements.

• In force for period starting on or after 1 Jan 15.

• This session covers just FRS 102 SORP.

• Planned 5-yearly review of SORP 2005 delayed for Financial Reporting Standards (FRS) update.

• Two SORPs (out 16 July 2014) available to charities:• FRS 102 - applies to UK and Ireland; contains

specific reference to public benefit entities.• FRS for Smaller Entities (FRSSE).

• Modular: easier to identify smaller charity elements; smaller = below audit threshold (income £500k - now).

• In force for period starting on or after 1 Jan 15.

• This session covers just the FRS 102 SORP.

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SORP 2015: FRS 102 or FRSSE?FRSSE SORP• Optional for qualifying charities - any 2 of 3 criteria:

• Income < £6.5m (?? 2016: £10.2m).• Balance sheet total < £3.25m (?? 2016: £5.1m).• Staff < 51.

• Broadly allows continuation of current practices.• Significant update likely from 1 January 2016.

FRS 102 SORP• Mandatory for FRSSE-ineligible charities.• Significant changes to required detail.

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FRS 102 SORP - Significant Changes

• Sofa headings simplified - see handout.

• Cash flow statement mandatory for all charities.

• New terminology:• ‘Must’, ‘Should’ and ‘May’. • ‘This SORP requires …’ - additional to FRS 102.

• Reserves policy - greater explanation: derivation and comparison of amount with target.

• Risk management statement: description of principal risks, management plans and financial impact.

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FRS 102 SORP – Other Changes• Executive remuneration: derivation of pay and

benefits disclosure for ‘key management personnel’.

• Related party transactions: tightening of definition and exemptions - eg disclosure of donations.

• Strategic Report for charitable company above FRSSE threshold. Group higher level narrative into discrete part of TAR; extra signature required.

• Grantmaking disclosure: details of grants made to institutions can be given on web to avoid long Note.

• Social investment policy explanation.

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FRS 102 SORP - Basically Unchanged

• Legacies.

• Reserves definition.

• Public benefit.

• Balance sheet.

• Restricted funds.

• Ethical investment approach.

• Donated goods for resale.

• TAR - structural freedom.

• Performance against objectives including material fundraising activities.

• Educational fundraising activity as charitable activity spend.

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Funders View of SORP • Robust framework vital for continuing support and

confidence in charities.

• Form of comparability across a diverse sector.

• Do not radically change the accounting requirements - now well established.

• Bare compliance not enough to tell funders what they need to know. Stating achievements and adopting a story approach with non-financial info is the best way to explain the accounts.

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Deliver a Joined-up Report

• Critical importance of charity ‘story’ where accts are linked to non-financial performance info.

• Need for a much more intimate narrative, as accounts may not actually tell very much.

• Performance measurement and reporting can be difficult, but key to use performance-based track record to justify what is to be achieved.

Tips: - Powerful examples.

- Performance Indicators.

- Activities: same in narrative & accts.

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Explaining Charitable Activity

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Looking Back or Forward? • Balance of narrative should be 75% back and

25% forward.

• Funders build on stewardship and track record, and want to know what you do well. Future plans and aims are not facts.

• Evidence sought includes:• Capability to achieve funder’s goals.• Capacity to manage funder’s investment well.

Tip: Just tell a good story and link Future Plans to achievements.

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Impact Reporting & SORP 2015• Achievement & performance section: ‘charities may

refer to impacts’.

• Impact definition: ‘the long-term effect of a charity’s activities on both individual beneficiaries and at a societal level’.

• SORP encourages charities to use impact reporting but acknowledges major measurement problem in many situations.

• Depth depends on a charity’s role and resources.

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Presentation & Style Options • Written for who?• Place in communications

strategy?• Fit with other documents

such as review?• How ‘glossy’?• Other media than print?• Who has editorial control?• Recommend ‘Best

Practice Guide’ by Kay Parris - downloadable from Charity Comms.

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Fundraising Performance

16,591 - Income Generated

6,416 - Cost of Generation

Ratio = 2.6:1

Charitable Activity Cost

13,043 - Charitable Act Cost

19,459 - Total Expenditure

Ratio = 67%

SORP 2015 Demo Sofa (£k)

Donations/Legacies 14,010

Other Trading 2,581

Charitable Activities 641

Investment 814

Total 18,046

Raising Funds 6,416

Charitable Activities 13,043

Total 19,459

Investment Loss -1,357

Net Income/Spend -2,77015

Performance Ratio ExampleIn

com

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Typical Key Indicators

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ICAEW Charity Accounts Awards

Institute of Chartered Accountants: Charities Online Accounts Awards - some 2013 winners by income bracket.

• £250k to £1m: Sth Yorks Funding Advice Bureau.• £1m to £5m: No awards; shortlist included Marine

Conservation Society and Warwickshire CAVA .• £5m to £30m: Breakthrough Breast Cancer.

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• Helps voluntary and community organisations to develop fundraising skills. Income £248k.

• 39 pages, just text and graphics.

Sth Yorks Funding Advice Bureau

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Example of Web Display

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What Donors expect in a Report• Well defined plans & sense of purpose?

• Clear set of achievable objectives?

• Do activities match the objectives?

• Same activities for words and numbers?

• Evaluation of results: making a difference?

• Adequate cash to complete planned work?

How does your charity match up?

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Filing Shame?

• Web is part of CC ‘File Early’ campaign.

• Helps to form a funder’s opinion of charity’s credibility.

Late = Red