Charity reporting: Let’s talk about impact
Charities Panel member and Head of Finance at charity and social enterprise, Brightside, Rachel Pigott, shares her perspectives on impact reporting and why the charity sector should be leading the way.
What is ‘impact’?
Impact can be defined as a change in positive or negative outcomes for people or the planet.
Charities exist to create a positive and sustainable impact. But how can charities better understand and measure the impact they have more effectively? And how do charities report and communicate their impact to external stakeholders?
How do charities communicate impact?
Every charity answers these questions differently. Charities have a statutory requirement to provide public benefit. Charities in England and Wales are also required to explain, in their trustees’ annual report, the main activities they undertake to further the charity’s purposes for the public benefit. However, due to the limited regulatory requirements, there is a huge variation in the robustness of impact reporting.
Some organisations focus on anecdotes or case studies, some provide activity data, and at the other end of the spectrum, others provide triangulated, longitudinal data and use control groups.
While charities employ a variety of methodologies, there is often a lack of transparency around externally reported impact measures and rarely any mention of how the charity has ensured that the underlying data used to prepare the measures is accurate.
As a sector, I believe, we can and should do better.
Why should we care?
There are many reasons why charities should care about high quality, robust impact reporting. Here are three of them:
- Impact reporting is a form of performance management – robust impact reporting is the foundation for achieving a high impact and ensuring resources are directed to activities with the highest impact.
- Impact reporting can help change the narrative – media commentary on charities is often based on the flawed assumption that front line spending is better than back-office spending. While charities should, of course, ensure they are working as efficiently as possible and keep a laser focus on their beneficiaries, not all back-office cuts are good news as these can damage an organisation’s ability to drive positive impact. Robust reporting on impact and outcomes can help change this narrative.
- Impact reporting builds trust and confidence – reliable information that communicates the impact on a charity’s beneficiaries can demonstrate the value of an organisation to its stakeholders.
How can we do it better?
Measuring and reporting on impact is hard. There is no ’one size fits all’ approach. It is even harder when there are no direct beneficiaries or when the impact is not short-term. However, there are some general principles that can help improve reporting, if applied proportionally, in line with the size and complexity of the charity. As a rough guide, impact reporting should be:
- Outcome-based – what was the change for beneficiaries as result of the charity’s work?
- Transparent – where do the numbers come from?
- Verified – how do we know these are the right numbers?
- Honest – what didn’t go so well and why?
- Regular - not just produced for the trustees’ annual report and accounts.
Let’s talk about impact
The ICAS Charities Panel will be looking at how to:
- Champion better impact reporting by charities across the UK.
- Promote and share good practice in impact reporting.
- Support ICAS members working for charities to improve impact reporting by their organisation.
The Panel will also be exploring how the trustees’ annual report requirements in the Charities SORP could be developed to support better impact reporting, in advance of the next review of the SORP which is due to commence in Autumn 2019.
If you are interested in contributing to the work of the Charities Panel on this topic and would like to find out more, please get in touch with Rachel Pigott or Christine Scott, Head of Charities at ICAS.
Further commentary on impact reporting
Non-financial performance – are your non-financial KPIs useful?
Are your non-financial KPIs in annual reports really ‘key’?
Restoring Trust and Relevance for the Future of Corporate Reporting
The Charity Finance Group
Statutory reporting – is this an answer to public trust?
Grant Thornton UK LLP
Why measuring impact is vital for charities
New Philanthropy Capital
The Principles of good impact reporting