Good morning and a very warm welcome
to this session about narrative reporting. The good old Trustees Annual
Report – three words that fill so many charity trustees with complete dread! I
cannot tell you how many charity trustees I’ve come across that say “Trustees’ Annual Report?
– I can’t do that! It’s part of the accounts, I don’t get numbers, that’s
the treasurer’s job”. Well, in this session what I’m going to do is help hopefully
to dispel some of those myths and some of those misconceptions that you might
have, and hopefully anyone that has a fear of the trustees annual report at the
moment, that’s going to cease to exist from today onwards. Okay, so let’s take a
little look about what we’re going to cover in this session. So first of all
we’re going to look at and discuss really the importance of the Trustees
Annual Report, or the TAR as I’m likely to talk about sometimes, then we’re going to
look at actually through is responsible for the preparation. Then, getting down
really to the nuts and bolts, we’re going to look at the content of the report
and think about where the focus of the report should really be and how that
actually influences what is actually included – and that will help us to
understand what a really good Trustees Annual Report actually does include and
what it really starts to look like. Then after that we’ll start to think
about whose benefit a good trustees annual report is for, who does it really
matter to, and then we’re going to get quite practical because I know you’re
like have something practical to go away with and I’m going to share with you
some of my key do’s and don’ts before then we conclude with looking at a
few examples of reports that might help just to get your creative juices going a
little bit, so hopefully that sounds that sounds sensible.
Okay so OSCR’s vision is of charities that you can
trust and that provide public benefit, key parts as Martin said earlier as well,
about being a charity in Scotland Now charities traditionally
enjoyed very very high levels of trust and confidence particularly in
comparison to many many other sectors in fact the survey results that we
published last year said that trust in charities hadn’t changed really at all
over the last two years and indeed eight percent of those surveyed said that
their trust had actually increased in charities,
but recent media and pieces have shown how easily that can be threatened. So the trustee value report it’s really
important for a whole number of reasons. Firstly the preparation of a trustees
annual report is actually a legal requirement and it’s a key part of the
annual report and accounts as that very name suggests. Every charity in Scotland
regardless of its size or its form has to prepare an annual report & accounts
and it has to submit these to OSCR within nine months of its financial year
ends. But more than that, a trustees’ annual report
is the charities opportunity I would say to tell its story and to help those
reading the annual report and the accounts and those with an interest in
finding out more about what the charity does and how the charity actually
functions to really get to grips with that. The narrative part of the annual
report and accounts should really help to explain what the numbers in the
financial statements actually mean to add much more context and flesh to those
numerical bones if you like and the report really allows the charity to
explain the activities that it’s been undertaking during the year and how
those activities have helped the charity to deliver the very purposes for which
it was set up and it helps charity trustees to be accountable for the money
that they’ve received in terms of public donations, fundraising campaigns, and
grants received for instance and also to show the difference that they’ve been
able to make to others as a result of receiving those funds. So who’s then
responsible for the preparations? In my experience of working with charities
over the last 15 years or so one of the areas that commonly causes a lot of
confusion is actually who should prepare the trustees annual report who is
actually responsible for it so I’m going to start off and hopefully dispelling a
few popular misconceptions, so the responsibility does not lie with the
charity’s accountant nor the independent examiner nor the auditor and neither
does it simply lie with whichever one of the trustees is designated as the
treasurer for the charity. If I have a pounds every time I’ve spoken to a
charity treasurer who says I just get left to do all the annual reports and
accounts, nobody else helps me with that and that’s not right, okay, because the
simple answer is that actually every single one of the charities trustees
have the responsibility for preparing the TAR and indeed the accounts. But they
kind of course get assistance, they don’t have to do it all on their own
and they can actually delegate the preparation of the trustees annual
report to somebody else for example a member of staff within the charity but
ultimately the responsibility stays with them and that’s set out in law there’s
no getting away from that. I think it’s really important to stress this
collective duty that all the trustees have it is the whole board’s
responsibility to prepare a set of accounts including the trustees annual
report, not just one or two individuals on the board who are nominated by the
others, it’s everyone’s job. When you’re trying to think about how
you start off your trustees annual report,
I normally encourage trustees to think about the objectives or the purposes of
the charity and first of all to make sure that they’re really clear about
what those are okay so if necessary go right back to basics and look at the
charities governing document – so if you’re a company, go back to look at your
memorandum and articles of association if you’re a trust, go back to look at
your trust deed, read it and think about what those purposes actually mean
in practice and then think about the activities that your charity undertakes
in helping to actually achieve those purposes and build the connections
between the two make sure that to actually do marry up because if they don’t,
you’ve got a problem. Okay, when they do marry up then that enables
you to really let the story of the charity unfold from there. In my
experience, when a trustee board really clearly understands the objectives of
the charity and it’s able to clearly link those objectives to the activities
that the charity is actually undertaking, it’s often an awful lot easier for them
to actually achieve real excellence in annual reporting, both financial and
narrative, because in short everything really makes sense.
When you understand the link between the objectives and the activities, any
trustee should be able to quite easily and quite freely, almost off-the-cuff
explain to any other person asks what their charity is about and what their
purposes are and what activities they do to achieve those – it’s about having real
coherence between these two things. So, what makes a good TAR? When we
think quite practically then about how you start off actually starting to write
your TAR, I think these pointers are potentially quite helpful. Firstly, as
we said, think about the objectives and be clear about these objectives as we’ve
said already – this is really key, make sure as a group of trustees that you
understand the objectives and you can explain those to other people, it’s
absolutely the best place to start. This is why the charity set up. Then
think about the charity’s beneficiaries, who are actually trying to help or who
you’re trying to make a difference for? Now sometimes that might be really quite
obvious for your charity but don’t assume that everyone will actually know
that and actually give that some explanation in your annual report,
because if you’re hoping to increase maybe donations to your charity, people
actually want to know who their money is going to help. Then we’ve got the three
WHATS if you like, so the report then needed to cover what was done, okay, so
that’s the outputs from the charity, what was achieved,
that’s the outcomes, and then what difference was actually made – that’s the
impact. So maybe a very simple example
helped it to illustrate some of this. So as we think about a charity that has
been set up to provide vocational training for disadvantaged young
adults, so the ‘what was done’? So say training was provided for 80 people
during the year. What was achieved? The training resulted in 76 people gaining a
vocational qualification. What difference was made? So out of 76 people who gained a
qualification, 52 have already secured full-time employment which required them
to have that qualification that they gained. You now start to
see how just using that simple example enables you to say the why, the who, and
the three whats. So, let’s think about benefits. We talked earlier about
transparency and accountability being demonstrated by a really good, strong,
trustees annual report but what about the other benefits of having a good
narrative? Fortunately there are lots of really good benefits so the trustees can
be assured that all the efforts that they’re going to put into preparing a
good TAR will actually help the charity and a whole bunch of other ways.
So, for example, if the report is really well written and it’s well communicated
and it contains really fundamental key messages about the charity then the
charity can then use it to connect a really wide range of audiences which
allows the trustees annual report potentially for the text to be used for
different purposes. For instance some charities might choose to use it as a
promotional tool and that could be really helpful if the charities may be
trying to prompt action from others such as maybe signing a petition, becoming a
volunteer, or donating money or goods to the charity. Alternatively if the
charity is engaged in a particular campaign or a project then a good TAR
can help to explain a lot more about that, why it’s important to the charity
why the charity is actually undertaking it and how others can become involved in
that too. So a good TAR can actually help the charity to do whatever it is
actually trying to do at that point in its lifetime, whether it’s simply trying
to continue its normal activities, but maybe it needs to seek a bit more
support from others to do that, whether it wants to engage in brand new
activities, and it needs a different kind of support, or whether maybe it needs to
contract or change the activities or the services which is delivering and it
wants to then explain the reasons for that to its outside audience. So, all of
those things can be achieved by really good open and transparent narrative
reporting. Of course, if we think about
press headlines it can also potentially help to deflect bad
publicity. Being open and being honest about what’s happening is often
the best way I think to avoid suspicion and rumour. So, here come these top tip
folks, now this is the practical bit, this is the stuff that you’re going to
take away and hopefully remember. Hopefully now you’re starting to think
that actually preparing a really good trustees annual report it’s not an
insurmountable task, it’s not something to be frightened of and it is something
that you can engage in even if you haven’t done so before. I’ve got five
top tips here for you. The first one remember what we talked about tell
the story of what you did and the difference that the charity made.
We’ve covered that today as a really key content point so what did you do and
what difference did you make? Remember, obviously, to compliant with the content and the
time requirements. The content of the annual report is actually set out in
regulation, as a charity of accounts regulations 2006. If you’re a small
unincorporated charity and you’re preparing receipts and payments accounts
the requirements are set out quite simply in schedule two of those
regulations. If you’re preparing accrued accounts, that means if you’re a large
charity or if your company, then you’re actually you’re looking at the charity
statement of recommended practice to understand what you need to include in
your TAR. Remember that regardless of what size or what legal
form your charity is you have to submit your annual report in your accounts and
also your annual return to OSCR within nine months of the financial year end.
The next tip I have for you is really take ownership and engage actively in this
process – this applies to every single charity trustee.
Please, please, do not leave this task to just one member of your board, work
together and use the very passion and the enthusiasm for what that charity is
about which is why you became involved in the charity in the first place – that’s
what it all boils down to. Then think about being creative, okay, think about
different ways in which you can communicate
you don’t have to just have a Trustees Annual Report that is simply text, it
doesn’t have to be pages and pages of just boring text and it often it’s
actually better if it is using different media. You can present information in
different ways, you can use diagrams, use tables and graphs and also remember that a
picture can paint a thousand words and that I think really, really true when you
comes to the Trustees annual report. I’m going to show you in some of the
examples at the end what that actually might look like. If you’re trying to
actually communicate really key messages to an audience who might not read a
trustees annual report before, or maybe a potential funder who’s maybe reading
lots and lots and lots of these, then you want to ensure that the person who’s
reading it comes away with a really good solid understanding of what your charity
is doing and don’t make them work too hard to find that out – make it really
easy for them to see that. Lastly, take time to think about what is
suitable and what’s appropriate for your charity. My colleague talked earlier about the
massive diversity that exists within the Scottish charity sector, 24,000 charities.
Every single one is so different, not least because we have a whole range of
different sizes of organizations, but we also have such different activities and
purposes that are happening within those 24,000 charities – so think about what
works for your charity. So here’s my ‘dont’s’ – things to really
seriously avoid. The first thing I would say is please avoid leaving it to the
last minute. You want this report to be something that your charity can be
really proud of and that is of great benefit to you, so that is going to take
time. Start early and do the best that you can okay, do not as we said earlier,
do not leave it to just one person – it’s not just the treasurer’s job and it’s
not just one trustees job. Engage all the charity trustees in the process okay. Try to avoid using complicated language, try to avoid using jargon or
just maybe rely on numeric information. Keep it simple and explain things and,
for goodness sake, please, please do not use the same text as you did last year
but with the dates changed! Keep it interesting, you’re not seriously telling
me that from one year to the next that every charity just does the same thing
because I don’t believe that. Even organisations that you might think might
be relatively the same from year to year, like maybe a brownie pack or a scout
group, you might think they do just the same thing year after year – but I’d be
willing to bet that there are differences. For example the scout
group might go on a kayaking trip in one year but they might not do that in next
year the next year they might go on I’ve know a hill walk or something like that
there always be something different that means you can keep it interesting and
keep it fresh. Don’t make assumptions that people automatically know what your
charity does from its name or indeed its reputation, it might not be obvious to
people who are trying to engage with your charity for the first time. Don’t
make assumptions go right back to basics. I’ll also say that when things don’t
go to plan, be honest about that, there’s no need to shy away from maybe a change
of circumstances or a plan that maybe didn’t bottom out as you originally
anticipated and a lot can actually be learned from an experience like that. There’s nothing wrong with explaining that things have changed or
circumstances have changed that necessitated a change in activity. So, I promise you some examples so here we are.
Now these examples hopefully, I’ve got three examples that I’m going to round off
with here, and these are from small medium and large charities and hopefully
these are going to help to illustrate that size isn’t a barrier to
communicating really key messages effectively and also that very different
approaches are needed for different charities. So the first one we’re going
to start with is for a small charity now I don’t expect you to be able to read
the text, don’t worry about that, but hopefully you can see that we’ve got a
mixture of text and imagery on that on that trustees annual report. This is
from a small faith-based charity at St James’s Episcopal Church in Leith. This charity actually publishes their annual report and their accounts on
their own website, this is actually a screenshot from their report which I’ve
chosen to let you see how even really a small charity can use a slightly
different method of communication. In this case obviously they’re using photos
to illustrate some of the activities which they talk about in their report. This I think potentially helps the reader to see what those activities
might involve and maybe even to consider how they might want to engage in those
activities in the future. Those among you that have really
really keen eyesight might also pick up on the the outline that they’ve given of
their objectives on the left of the page and then the link to their activities
during the year on the right hand side you remember what I talked about earlier
it’s about linking the to linking the, you know, why we set up and what are we
actually trying to do. The next example is from a slightly larger charity this
is Stirlingshire Voluntary Enterprise. This is a kind of infographic if you like,
it wasn’t actually part of their annual report for the charity but it
was instead it was published alongside it. I think it’s a really strong
example of how a whole bunch of different key facts about the charity can actually
be portrayed in a really interesting in a very eye-catching way. There’s
absolutely no reason why your trustees annual report couldn’t include that, as
one of its pages or even little segments
of it to try and break up some of the text in the report, just to add a bit of
variety. Lastly, this is my personal favourite as I’m a great dog lover, and
anyone who is a dog lover is going to have a wee smile at this one, this is the Dogs
Trust 2015 annual report. I have to say for me it really uses imagery to
sort of maximum effect and I’ve picked out sort of two pages from this one.
This first one here is right at the start their annual report and this is
where they clearly explain their objectives or the mission as this
charity terms it, and the second page, here we are, outlines the goals and
the aims that the charity had for the year and then how they go on with those
plus the plans for the coming year. Again, I think having that overall
objective of the charity sort of really clearly articulated upfront, that’s the
page before that one, really helps I think we’re setting the aims for the
year and reflecting also on how well those have been met. So I hope that’s
provided two really good food for thought for you all, that it has really stirred
up some of your enthusiasm for having a go at producing a really dynamic, a
really interesting and a really enlightening report of your charity next
time around. I’m really, with all my OSCR colleagues, really looking
forward to seeing what you guys can actually do.