Transparent financial reporting in annual charity accounts produces more meaningful information and underpins their long-term stability, but how do you achieve this? Jonathan Orchard, partner, Sayer Vincent examines the key issues to consider when finalising charity accounts
When the Royal National Lifeboat Institution (RNLI) received negative press attention for spending funds outside of the UK at the same time as cutting costs in the UK, the organisation received many plaudits from peer charities for the effectiveness and robustness of their response.
Implicit in the press reports was the fact that UK donors had been misled - that when donating to RNLI a UK donor would not have expected their funds to be spent on water safety work in countries with the highest drowning rates, such as Bangladesh.
RNLI’s ability to respond so effectively was at least in part due to the transparency in its financial reporting.
The 2018 accounts clearly show that £3.3m (2% of total expenditure) was spent on international projects – this shows in its income and expenditure account, and in the financial summary in the narrative report. The impact of its international work appears at least seven other times in the report.
