What Should Be Included in a Charity’s Annual Report

A charity’s annual report is one of the most important documents it produces each year. It is more than a legal requirement. It is a chance to demonstrate transparency, accountability, and impact. Funders, supporters, regulators, partners, and the public use annual reports to judge how well a charity is run and how effectively it uses its resources. A clear and honest report strengthens trust. A poor one raises concerns about governance and financial control.

In my opinion a well prepared annual report is one of the strongest tools a charity has for demonstrating professionalism. It shows that trustees understand their duties, manage risk, and can explain where money has been spent and what difference it made. This guide explains what every UK charity must include in its annual report, what Charity Commission guidance expects, how reporting varies by income level, and how to go beyond the minimum requirements to communicate real impact.

Why the Annual Report Matters

The annual report is required by the Charity Commission for registered charities. It sits alongside the annual accounts and creates a complete picture of the charity’s financial and operational performance for the year.

It matters because it:

• Demonstrates how the charity advances its purposes

• Shows funders and donors the value of their support

• Provides transparency about spending and governance

• Helps the public understand the charity’s impact

• Meets legal and regulatory expectations

• Provides reassurance that trustees are acting responsibly

• Helps trustees reflect on achievements and challenges

A strong annual report is a vital governance tool. It helps attract support and ensures accountability.

What the Charity Commission Requires

The Charity Commission sets out clear requirements in CC15d. The level of detail required depends on the charity’s size.

Charities must prepare:

• An annual report

• A set of annual accounts

• An independent examination or audit if required

The annual report must explain the charity’s activities, achievements, governance, and financial position. Larger charities must provide more detailed reporting including risks, reserves policy, and future plans.

This guide covers all the elements a charity should include to stay compliant and to present its work clearly.

The Essential Sections of a Charity’s Annual Report

A complete annual report should include:

1. Reference and administrative information

2. Structure governance and management

3. Objectives and activities

4. Public benefit statement

5. Achievements and performance

6. Financial review

7. Reserves policy

8. Principal risks and uncertainties

9. Plans for future periods

10. Statement of trustees responsibilities

11. Optional impact and storytelling sections

Each of these sections contributes to a clear transparent picture for supporters and regulators.

1. Reference and Administrative Information

This is usually the first section of the annual report. It provides basic details so readers know exactly which charity the report relates to.

It includes:

• Charity name and number

• Company number if applicable

• Registered address

• Names of trustees and dates they served

• Senior staff details

• Bankers and investment managers

• Solicitors if used

• Charity’s governing document

• Charity structure (CIO, charitable company, trust or unincorporated association)

In my opinion this section is simple but valuable because it shows stability and transparency around leadership.

2. Structure Governance and Management

This section explains how the charity is run. It should describe:

• How the charity is governed

• How trustees are appointed

• How often trustees meet

• The committee or sub committee structure

• Delegated authority given to staff or volunteers

• Policies for induction and training of trustees

• Safeguarding and risk management frameworks

• How decisions are made

This section reassures readers that the charity has strong leadership. Funders often check this closely because poor governance increases financial and operational risk.

3. Objectives and Activities

Charities must state their purposes as set out in their governing document. They must then describe how their activities during the year helped achieve those purposes.

This means explaining:

• What the charity aims to do

• Who the charity supports

• How services or activities further the charitable purpose

• What major projects ran during the year

This section links mission to activity. It shows the Charity Commission that the charity is acting in line with its stated charitable aims.

4. Public Benefit Statement

Every registered charity must demonstrate that its work delivers public benefit. This must link directly to the Charity Commission’s public benefit requirements.

The report should explain:

• What public benefit the charity provides

• Who benefits from the activities

• Whether access is restricted by fees or membership

• How any restrictions are justified

• How the charity ensures the public benefits directly

Many trustees worry about this section but it does not need to be complicated. It simply needs to show that the charity’s work benefits the public and not private individuals.

5. Achievements and Performance

This is the part of the report that brings the charity’s work to life. It should include:

• Key achievements

• Progress against strategic objectives

• Case studies

• Data on outputs and outcomes

• Stories from beneficiaries

• Evidence of impact

• Comparison with previous years

• Successes and challenges

Funders and supporters often read this section first because it shows what the charity has actually delivered.

In my opinion this is where charities can truly shine. A clear achievements section helps build long term confidence.

6. Financial Review

This section gives readers an understanding of the charity’s financial health.

It should explain:

• Total income and where it came from

• Total expenditure and what it was spent on

• Key financial movements during the year

• Restricted and unrestricted funds

• Material grants received

• Any significant financial changes

• Cash flow position

• Major assets held

• Pension liabilities where relevant

The financial review should be written clearly so non accountants can understand it. Trustees must show that they have managed the charity’s money responsibly.

7. Reserves Policy

All charities must include a reserves policy in their annual report. This policy explains:

• How much money the charity holds in reserves

• Why that level is appropriate

• How reserves will be used

• Whether the charity met its reserves target

• Reasons for any shortfall or excess

Funders look closely at reserves because they want to understand whether the charity is financially stable.

In my opinion every charity should calculate reserves carefully and update the policy annually. It is a key marker of good financial stewardship.

8. Principal Risks and Uncertainties

Charities must demonstrate that they understand and manage their risks. This section should include:

• A description of major risks facing the charity

• How trustees assess risk

• How risks are mitigated

• Policies that reduce risk

• Financial and operational risks

• Safeguarding risks if relevant

Common risks include funding shortages, cyber threats, safeguarding issues, loss of key staff, regulatory changes, and economic uncertainty.

This section proves that trustees are carrying out their duties responsibly.

9. Plans for Future Periods

This section explains the charity’s goals for the coming year or beyond. It gives supporters clarity about direction and priorities.

It should include:

• Planned projects

• Strategic aims

• Fundraising objectives

• Growth areas

• New services

• Planned restructuring or improvements

• Long term ambitions

Charities that show clear planning often gain greater trust from donors because it demonstrates focus.

10. Statement of Trustees Responsibilities

The annual report must include a statement confirming that trustees are responsible for:

• Preparing the annual report and accounts

• Keeping proper accounting records

• Safeguarding the charity’s assets

• Taking reasonable steps to prevent fraud

• Ensuring the accounts comply with relevant law

Although this is a technical section it reinforces the accountability of trustees and protects the charity’s integrity.

Optional Enhancements That Strengthen an Annual Report

While the Charity Commission sets minimum requirements charities can go further to make their report engaging.

Consider adding:

Impact infographics

Visual summaries of outputs and outcomes.

Donor and funder acknowledgements

Recognition of major supporters.

Volunteer contributions

Stories and statistics showing volunteer impact.

Environmental or sustainability reporting

Useful for charities with environmental or ethical aims.

Diversity and inclusion reporting

Shows commitment to representation and equality.

Partnerships and collaborations

Highlights joint working and community links.

Community feedback

Testimonials from service users or partners.

These additions help the report speak to both the heart and the head. They make the document more meaningful to funders and supporters.

How Reporting Requirements Differ by Charity Size

Charities with income under £25,000

• Simplified annual report

• No requirement for independent examination unless required by constitution

• Light reporting but still needs public benefit statement

Charities with income £25,000 to £1 million

• Full annual report

• Independent examination required

• Governance disclosure needed

Charities with income above £1 million

• Full annual report

• Audit required

• More detailed risk management and strategic reporting

Larger charities must provide more comprehensive analysis because they manage more funds and face greater responsibilities.

The Link Between Annual Reports and Annual Accounts

The annual report sits beside the accounts. Together they show:

• What the charity did

• How well it performed

• What it spent

• How it managed funds

• What assets it holds

• How it safeguards resources

Accounts alone do not demonstrate impact or governance. The annual report tells the story behind the numbers.

Common Mistakes Charities Make in Their Annual Reports

Some mistakes weaken the credibility of a charity’s reporting. Common issues include:

• Providing vague information

• Not linking activities to the charitable purpose

• Weak or missing public benefit statements

• No clear reserves policy

• Not explaining the impact behind achievements

• Failing to address risks

• Using technical language that funders cannot understand

• Copying last year’s report without updating

Avoiding these mistakes strengthens governance and demonstrates accountability.

How to Make an Annual Report More Engaging

Keep it readable

Avoid jargon where possible.

Use stories and real examples

Funders respond to human impact.

Balance numbers with narrative

Neither should dominate.

Include visuals

Charts, photos, and infographics make data easier to understand.

Show transparency

Explain challenges honestly.

Celebrate success

Recognise achievements and hard work.

In my opinion an engaging report is more likely to be read, shared, and valued by supporters.

Real Examples of Strong Annual Report Content

Example 1: Small community charity

They include a clear achievements section showing how many people attended their sessions and give a small number of human stories. Their reserves policy explains the reason for holding three months of costs. Simple but effective.

Example 2: Medium sized youth charity

They include strong outcome data showing improvements in wellbeing for young people. They add photos, quotes, and case studies. They also provide a clear financial review and risk assessment.

Example 3: Large national charity

They produce a detailed strategic report with financial analysis, future plans, partnership impact, environmental reporting, and diversity metrics. The report shows strong governance and planning.

Each charity reports at a level suitable to its size but the common theme is clarity and transparency.

Final Thoughts

A charity’s annual report is one of the most important documents it produces. It must comply with Charity Commission requirements but it also serves as a powerful communication tool. A strong report tells supporters what the charity achieved, how money was spent, how risks were managed, and how the charity plans to move forward.

In my opinion the best annual reports combine transparency with storytelling. They go beyond the minimum requirements to show funders and supporters exactly what the charity stands for and what it has accomplished.

When trustees prepare the report carefully they demonstrate accountability, build trust, and strengthen the charity’s reputation for years to come.