Trustees’ Annual Report - What to Include and How to Make It Your Shop Window

The Trustees' Annual Report (TAR) is a key document that every charity must prepare – regardless of their size. It showcases what your charity does and sets out their plans for the future.

It is not only a legal requirement but also an opportunity to communicate the charity's impact to its beneficiaries, funders, donors, other stakeholders, and the public – think of it as your Charity’s ‘shop window’.

What is the Trustees' Annual Report?

The TAR is a narrative report that accompanies the charity’s financial statements. It should be written and approved by the Trustees, and explains the charity's objectives, activities, achievements, and financial health.

What Must Be Included in the Trustees' Annual Report?

The content of the TAR depends on the size and structure of the charity. However, certain elements are commonly required:

1. Legal and Administrative information:

Details of the Trustees during the year of the report and, importantly, up to the date of signing the report. You should also include any Trustees who were appointed or resigned, and the dates they happened.
Charity number and Company Number (if a Charitable Company)
Principal address
Registered office (for a Charitable Company)
Auditors/Independent Examiners details
And for larger charities, where appropriate
Bankers
Solicitors
Investment Managers

2. Objectives and Activities: Outline the charity’s goals and the main activities undertaken to achieve them. These should be the same as the objects in the governing document.

3. Structure, Governance, and Management: Explain how the charity is structured - is it an unincorporated charity, a Charitable Incorporated Organisation (CIO) or a Charitable Company. Include the date the organisation was established and its governance model e.g. governed by its Constitution or Articles of Association.

You should also include whether any of the Trustees have a beneficial interest in the organisation and a statement that they are all volunteers (unless they aren’t and then you should explain the circumstances why some Trustees are paid, and that permission has been granted by the Charity Commission).

The Charity’s Trustees who served during the year should be listed and, if your charity is a Charitable Company, you should also include a statement that the Trustees are also the directors for the purposes of company law.

Details about the trustee's management processes should also be included, including:

Trustee Recruitment and Appointment procedures
Trustee Induction and Training
Organisational Structure and how day-to-day decisions are made (this is often delegated to the CEO).
If the charity is working in partnership with other organisations, information about the relationship should be included and how they work together
Risk Management – a statement of how often the Trustees review and update the risks faced by the charity
Governance and internal control – a statement of how the Trustees internal controls work to protect against loss of charity assets.

Finally, a statement about the Trustees having had regard for Public Benefit reporting (see the guidance PB3) should be included.

4. Achievements and Performance: Describe key milestones and achievements during the past year, along with any challenges faced. Remember not to just include the great stuff! This is also the place to shout out about your volunteers, the impact they make and the benefits they receive from volunteering.

5. Plans for Future Periods: Provide insight into the charity's strategic direction for the next 12 months and beyond – remember that by the time you sign off the report you’ll probably be half way through the next financial year, so look forward from there as well.

In this section you can also include the Principal Risks and Uncertainties that could impact the charity's operations and how these are being mitigated by the Trustees.

6. Financial Review: Provide an overview of the charity’s financial position, including income, expenditure, investment policy (if applicable) and reserves policy. If your charity does not have a reserves policy, you should make a statement saying that, and why.

7. Statement of Trustees’ Responsibilities: Confirm that the trustees are responsible for preparing the report and that it meets the applicable reporting standards. This report is slightly different depending on your type of charity, but your Auditor/Independent Examiner should be able to help you with the wording.

For comprehensive guidance on preparing the Trustees' Annual Report, consult the Charity Commission's resource: Prepare a charity trustees' annual report.

Normally, the Audit/Independent Examiners Report is immediately after the TAR, and this is then followed by the ‘numbers’ - the Financial Statements.

Enhancing the Trustees' Annual Report

Although there are specific items that must be included in the TAR, there is no set format, so the TAR offers room for creativity and storytelling.

Here are some ideas to make it more eye catching and engaging:

Impact Stories: Share real-life stories from beneficiaries or staff to demonstrate the charity’s impact. Remember it’s not what you’ve done that matters, but the impact it makes.
Infographics and Visuals: Use visuals to make complex information accessible and engaging.
Quotes and Testimonials: Include quotes from beneficiaries, funders, or partners to give additional support to your impact.

Conclusion

In our time we’ve seen some really wonderful jazzy and colourful TAR’s that really make the charity stand out. Of course, you don’t need to do it this way, and as long as you have the minimum information in there it’s absolutely fine. But, in a sector where the impact you have is particularly important, wouldn’t you want your Trustees Annual Report to have just as much impact? 😊

Here are some useful links to further information: