If you’re running a smaller charity, you know that financial reporting can feel like a mountain to climb. The good news? The latest Exposure Draft of the Charity SORP aims to make that mountain a little more manageable.
In developing the Exposure Draft, the SORP-making body sought to think about the needs of smaller charities. Text has been drafted with this in mind, including relevant examples where necessary to illustrate the requirements.
The draft introduces a three-tiered approach. Tier 1 is designed for charities with a gross income of £500,000 or less, and within this tier there are tailored requirements for:
- Trustees’ Annual Report
- Statement of Financial Activities
- Allocating costs by activity
- Disclosure of trustee and staff remuneration, related party and other transactions
- Statement of cash flows
There is a renewed focus in the Trustees Annual Report to showcase the vital impact your charity is making, the importance of volunteers in operating your charity and how you plan to make a difference in the future. Importantly, Tier 1 charities are not required to report on sustainability or explain how legacies are accounted for, which lowers reporting pressures.
Smaller charities can also prepare the Statement of Financial Activities using a ‘natural classification’ method, and an example of reporting in this way is included within the SORP. This method may resonate more with trustees, donors and other key stakeholders.
Yes, the full SORP still clocks in at over 300 pages. But the aim is clarity, not complexity, and having a strong, compliant report is more than a box-ticking exercise — it’s a chance to showcase your charity’s story, values, and achievements.
