Work commences on a major ICAS project on impact reporting by charities
As work commences on the ICAS funded project ‘Charity Impact Reporting: Informing the 2024 SORP’, the academics working on the project introduce the origins and objectives of their research.
The charity sector and its role
The charity sector in the UK forms a significant part of civil society and its activities contribute to the welfare of our society and the planet both locally and internationally.
There are more than 166,000 charities in the UK (excluding organisations such as churches and public schools) with an estimated annual turnover of £48 billion, a staff base of over 850,000 (National Council for Voluntary Organisations, 2020); and additional voluntary input from supporters and trustees who help to run and govern them.
Charities have high social and environmental impact, and while they are expected to recognise and communicate this to their supporters, ‘impact’ itself can be very difficult to define, measure and report.
Charities and impact reporting
The 2005 edition of Charities SORP (Accounting and reporting by charities: A statement of recommended practice) was the first to provide guidance on good practice for reporting impact in trustees’ annual reports, but in recent times, stakeholders have questioned whether these disclosures are merely public relations exercises, rather than faithfully representing charities’ impact.
Further, impact measurement itself has evolved, as charities develop and use different measures to capture their impact to help manage and improve programme delivery, and report to funders. Nevertheless, resources to assist charities and guidance that is widely applicable to inform charities’ practices in this complex, non-financial area, is limited.
Consequently, there is considerable scope for the Charities SORP to enhance its requirements and guidance around charities’ performance in the trustees’ annual reports - to develop and nurture charities’ efforts to embed impact reporting and effectively convey their impact on the lives of the service-users, and society more generally.
It is expected that a new edition of the Charities SORP will be in place for reporting periods commencing on or after 1 January 2024 and the current development period is the time to ensure impact reporting requirements and guidance are enhanced. To inform the Charities SORP, it is critical to understand charities’ current (internal) impact measurement practices, and how practice is being translated into (external) impact reporting in the trustees’ annual report.
Research objectives
The study aims to address the following research objectives:
1.To identify and explore current impact reporting practices by UK charities, within the trustees’ annual report, in order to understand why charities choose to develop impact reporting measures, how they approach the development of those measures and ultimately whether impact reporting appropriately communicates charities’ achievements to external stakeholders.
2.To assist the Charities SORP Committee by providing evidence and recommendations on how to develop impact reporting requirements and guidance for the Charities SORP.
In order to address these research objectives, the project is divided into two phases over a period of 18 months.
Following an extensive literature review of social impact assessment and impact reporting, the first phase will analyse how charities develop and use social impact measures and impact reporting. This phase will include in-depth semi-structured interviews with a sample of charitable organisations combined with a broader sector-wide survey.
The second phase will further improve understanding of: i) current social impact disclosures within charities’ trustees’ annual reports, annual reviews and impact reports; ii) how these charities’ funders and donors use these reports to acquit accountability demands and make future funding decisions.
Particular care will be taken to recognise that measurement and reporting practices will vary by the areas of charitable operations and the size of the organisations. Thus the research team will seek to ensure diversity in selected organisations.
The research team and the project
The core research team comprises Professor Carolyn Cordery from Victoria University of Wellington, NZ and from Cardiff University, UK Dr Alpa Dhanani, Dr Penny Chaidali and Dr Evangelia Varoutsa.
The research is also supported by a specialist ICAS Steering Group.
Policy and professional implications
This project will bring together mechanisms, approaches and resources used by diverse charities in impact reporting.
By engaging with charity personnel responsible for measuring, managing and reporting impact information and funders and users of such information together with analysing actual reporting practices, the study will:
- Contribute to the enhancement of charities’ knowledge and skills concerning how impact measurement can enable better internal decision-making.
- Identify resources used by charities that effectively convey their impact on the lives of the service-users, and society more generally.
- Demonstrate how charities’ funders and users utilise charities’ impact reporting in their decision-making.
Moreover, as per ICAS’ role to serve the public interest, this project seeks to assist the Charities SORP Committee by providing evidence and recommendations on how to develop impact reporting requirements and guidance for the Charities SORP.
Results from Phase 1 will be publicly available in Q3 2022 and from Phase 2 in Q2 2023.
If you would like to find out more about this research project, or if you are interested in participating as a participant in one or more of the phases of this research, please contact the ICAS Research Centre at research@icas.com.