The Goldie Company

Best Practices in Charity Annual Reporting

Thursday May 19, 2011

Here are some helpful tips on annual report writing from the Voluntary Sector Reporting Awards. The VSRAs, created by the CA-Queen’s Centre for Governance in partnership with the Institute of Chartered Accountants of Ontario and sponsored by PwC, annually recognize the Ontario’s best non-for-profit Annual Reports.

Top 10 Best Practices:

  1. Include a strong introduction, with a table of contents, to significantly help orient the reader to the activities of the organization. An executive summary is a “must have.”
  2. State clearly the organization’s mission and relate the activities back to the mission throughout the report.
  3. Give a clear statement of performance objectives and targets and describe how they link to the mission.
  4. Disclose your organization’s risks,issues and challenges in the context of the mission.
  5. Tell the reader how your organization governs itself and how that governance structure reflects the mission of the organization.
  6. Have management discuss the financial information in light of the organization’s mission, vision and values; link that discussion to present operations, risks and future plans; all should be written in a concise “discussion and analysis” section of the report.
  7. Post the annual report and the audited financial statements (if not included in the annual report) on your website in an easy to find area.
  8. Decide on your primary audience and write the annual report for them using plain language appropriate to that audience.
  9. Balance carefully the “too much information” approach versus “lack of content” approach to arrive at a happy medium in the annual report. Ensure that one person edits the report so that it is internally consistent both with regards to content and to writing style.
  10. Avoid committee reports in favour of one broadbased board report that tells the organization’s story in a compelling and integrative manner. The committee reports can be posted to the website if they are considered important disclosures.

Things to avoid in your annual report include:

  1. Not providing a strong introduction so a reader can size up an organization quickly.
  2. Lack of stated performance objectives and targets, such as budgets and the non-financial indicators of mission accomplishment.
  3. Not stating the risks, issues and challenges.
  4. Non-disclosure of the governance structure.
  5. Lack of clarity in fundraising costs.
  6. Lack of discussion and analysis about the relationship between the financial reports and the organization’s service results.
  7. Poor quality financial information that either does not agree with audited financial information, misuses auditor’s reports or leaves out pertinent details.