New independent research commissioned by the Charity Commission has found that charities need to do more to describe how people benefit from their work. Many charities are missing out on the opportunity to explain, through their reporting on public benefit, how their work has a positive impact on their beneficiaries.
The research, by Sheffield Hallam University, assessed how well registered charities are getting to grips with the new requirement, introduced in 2008, to report on public benefit in their Trustees’ Annual Report (TAR).
Put simply, public benefit reporting is about explaining:
- What a charity’s aims are and what it has done to carry them out
- Who it seeks to benefit
- How people have benefitted
The research has shown that trustees are generally able to explain their charity’s aims and who benefits from its work. However they are less successful in explaining how they have benefitted in practice.
In its analysis of the research the Charity Commission notes that overall charity trustees have made progress with the new requirement. Charities with incomes over £500K were particularly successful, with 94% partially or fully addressing public benefit in their Annual Reports.
However, the research shows there is room for improvement and many smaller charities are still not meeting the reporting regulations.
Key findings from the research, which involved a review of 1402 TARs and discussions with 30 charities, showed:
- For charities with an income over £500K, 26% had prepared TARs which were awarded the highest scores of four or five, out of a maximum of five. This meant the TAR fully and clearly met the requirement, with no ambiguity whatsoever. This fell to 10% of charities with an income between £100K and £500K, 2% of those under £100K and 2% of those under £25K.
- A higher number of charity TARs were awarded a score of three or more, which meant they had at least met the basic legal requirements but lacked clarity in some areas. This accounted for 67% of charities over £500K, 36% of those in the £100K to £500K band, 15% of those between £25K and £100K and 13% of those under £25K.
- The number of charities that stated in their TARs that they had ‘had regard’ to the Charity Commission’s guidance on the public benefit requirement was 72% for those over £500K, 42% between £100K and £500K, 22% between £25K and £100K and 11% of those under £25K.
The Charity Commission is concerned that some trustees involved in the research had not familiarised themselves with its guidance. They had instead relied on staff or external advisors to deal with the public benefit reporting requirement on their behalf. The research has also highlighted confusion amongst charities about the purpose and importance of their TAR. Submitting a TAR is a statutory requirement, and for charities over £25K these are made available for public scrutiny on the online Register of Charities.
Sam Younger, Chief Executive of the Charity Commission said:
“It is encouraging to find that overall progress has been made in relation to public benefit reporting. However, many trustees are still not fully explaining how their charity’s activities have contributed to their aims or how people have benefitted in practice.
“This is not surprising given that this is a new requirement and we are aware it may take charities some time to adapt. That said, some charity trustees that participated in the research found the reporting process to be a valuable exercise in helping them to re-focus on their core aims. It also provides an opportunity for charities to show grant makers and funding bodies the impact of their work.
“I would urge all trustees to look at the range of guidance we have produced to help them give a clear account of their charity’s public benefit.”
The Charity Commission will continue to raise awareness of the public benefit reporting requirements and encourage trustees to use the range of guidance, including sample TARS, available to them. The report of the study undertaken by Sheffield Hallam University and the Commission’s initial analysis of the research are available on the Charity Commission website.
