CFDG proposes improvements to charity annual reports
Howard Lake | 11 November 2003 | News
The Charity Finance Directors’ Group has launched a range of proposals for consultation that they hope will improve the quality and consistency of charity annual reports.
The CFDG’s aim is to improve charity reporting so the public will know exactly how their money is being spent.
The group has today published a report, “Inputs Matter: Improving the Quality of Reporting in the Charity Sector,” in which it sets out plans to tighten the definitions used in charity accounting. Funded by the Lloyds TSB Foundation, the report contains a number wide-ranging and, the CFDG accepts, controversial recommendations in relation to Support, Management and Administration Costs, Fundraising Costs and the Valuing of Volunteers.
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These include:
- That consideration should be given to include a value for volunteer time in the SOFA.
- Management and administration costs should be called ‘governance’ costs or similar, with the term defined to make it clear what sort of costs should be included, and sufficient detail provided to explain all cost allocations.
- Allocation policies relating to fundraising activity, themselves based on clearer definitions as to what constitutes fundraised income, should be determined in advance of the year-end and be approved by the trustees before they are applied.
CFDG is now asking its members and other interested parties what they think of the proposals, and whether they will lead to more meaningful financial ratios. It is also anticipated that the Report will contribute to the next annual SORP review.
CFDG Vice Chairman, Les Jones OBE (Deputy Chief Executive at WWF) said: “The issue of the use of financial information to compare charities is inevitable and whilst there are many limitations to any such comparison it is clearly going to happen. CFDG are therefore keen to ensure that the financial information provides enough of the right data to assist in this process. We will not be able to move on to meaningful comparisons until we are sure that we have got right the consistency and acceptance of fundamental principles of accounting for the inputs. This will in turn assist with the all important measurement of outputs, outcomes and impacts.”
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.