Comment / NHS charities: still room for improvement

Across the charity sector recently published research shows a modest improvement in the quality of public benefit reporting by charities, but too many are still falling short. That was the conclusion of the Charity Commission’s latest monitoring reviews of charity trustees’ annual reports and accounts.

Charities are required to report each year in their annual reports on how they have carried out their charity’s purposes for the public benefit – who they help, how they help and confirming they read our guidance on public benefit. This is vital so that the public can understand exactly what a charity does and how donations are being used. In NHS terms, the focus is telling how you made a difference with charitable funds to NHS patients.

For the NHS, it has arguably become even more important since 2013 when accounting rules required all NHS charity accounts with material levels of income to be consolidated with their host NHS body. In this context, the annual report is perhaps the key document in communicating with donors and the public about how funds are being used in line with their charitable purpose and not being used simply to supplement exchequer funds.

You need to give donors confidence that in giving to your charity they made a difference. This is not a simple celebration of fundraising activities but a more thoughtful recap on what the money was used to fund.

In our monitoring review, we found that just over half of a sample of all charities demonstrated a clear understanding of the public benefit reporting requirement. While this was an improvement on last year, it still leaves half of charities not grasping this key requirement. In the NHS context the boards of the corporate trustee need to know this guidance, not just the charity sub-committee and fund advisers.

More generally, we found that just 74% of the accounts we reviewed were of acceptable quality in terms of meeting their readers’ needs. This is measured by a very basic standard – are all the required documents there, does the report explain the charity’s activities, are the accounts prepared on the right basis and have they been subject to independent scrutiny?

No NHS charities were in the sample and I doubt that they are guilty of this. But that is no reason for complacency. There is always room for improvement and improving communication with the public.

Our wider research into trust and confidence in charities shows that the public no longer gives charities the benefit of the doubt. It wants evidence that charities make a difference when using donated money. Public reporting is an opportunity for charities to tell their story and explain how they are making a difference.

The HFMA Example charity annual report and accounts 2018/19 is a good place to start for ideas on improving this key means of communication – it goes beyond the requirements set out in the statement of recommended practice FRS102 to include features that are recognised as good or best practice.

In particular using case studies and highlighting real examples of how funds have been used to enhance patients’ care or experience in pursuit of the charity’s aims are excellent ways of bringing your story to life.

There are good examples of this approach being used across the NHS, but we would hope to see an even wider adoption of the approach in future years’ reports and accounts.