How to present finance reports to charity trustees

Charity trustees don’t need to be finance experts! But they do need to understand their charity’s financial position well enough to make informed decisions and fulfil their legal responsibilities. So if you’re on your organisation’s finance team, it’s worth learning how to best present finance reports to your charity trustees.

Good finance reporting isn’t about overwhelming boards of trustees with spreadsheets or technical jargon. It’s about providing clear, relevant information that gives trustees confidence and supports effective governance. In this blog, Dan Bishop explores how to strike the right balance between detail and clarity and build a healthy culture around finance. You’ll learn how to communicate financial information in a way that helps trustees answer the most important question: ‘Are the finances OK?’

Estimated reading time: 7 minutes

Why are we giving our charity trustees finance reports?

Stewardship of the charity’s finances is just one of many trustees’ duties. Others include safeguarding, health and safety, legal compliance, HR (if your charity employs staff), etc. The charity’s finances are not just for the treasurer or finance committee.

Trustees’ financial duties can be very loosely summarised into 3 points:

1. Stay legal
2. Safeguard the charity’s assets (but don’t hoard savings)
3. Spend money in line with the charity’s aims and objectives

So how can managers, or those responsible for preparing finance reports (who may be trustees themselves) help trustees carry out these duties? The ultimate question these reports are aiming to answer is ‘are the finances OK?’

But what information do trustees need in order to make good decisions? What level of detail is needed to give assurance and what can be left out?

How detailed should the finance reports be?

I once heard a wise and experienced treasurer say, ‘I report everything to 2 figures – the trustees will make the same decision whether the figure is 13.8 or 14.2 thousand pounds – they’re both rounded to 14 thousand.’

This was for quite a large charity, but the point is that they had found the level of detail that worked for them. Some would say trustees should be ‘noses in and fingers out’. They don’t need to be in all of the detail all of the time, especially if it distracts from more strategic and longer-term conversations.

Some charities may have delegated authority for financial decisions to staff or groups of volunteers. Some trustees may also be key volunteers, and therefore ‘wear several hats’ in their different roles. For example, if a volunteer is in trustee mode, they may need less detail. Though trustees remain accountable for the charity’s finances, they may not have direct responsibility for every penny if they have delegated authority to others. Some larger charities report in ‘pounds thousands’ (£’000s) to keep the reporting, and subsequent conversations, focused on the right level of detail.

The point is to focus on what’s important – be clear about what you need to get out of the conversation and choose which level of detail you need for this. Consider, and even ask the trustees, which financial decisions need trustee sign-off and what should you still share for an information update?

Create a culture of talking about finances

The best way you can help trustees understand and take an appropriate interest in your charity’s finances is to talk about it.

Finance should be on the agenda for every trustee meeting, not just when you’re agreeing the budget or signing off the year-end accounts. Finance should be the thread that runs through all your charity’s activities. Trustees arguably can’t make effective decisions about much else without being up-to-date on the financial position.

There’s a skill in talking about finances without using a lot of jargon that can lead to people switching off or not understanding the conversation. Try to avoid jargon and make the finance reports as accessible as possible to keep everyone engaged and confident. For example, perhaps instead of saying ‘creditors’, use the term ‘money we owe’. You could also include a reminder about the difference between your designated and restricted funds.

As well as talking about finance often, you can also help by starting to talk about it early. As part of your trustee induction, introduce new trustees to your financial model:

• What expenditure is vital and what is nice to have?
• Where does the majority of your income come from?
• Where are the pinch points?
• What form does your reporting take, and what questions often come up?

Whilst you’re at it, your existing trustees may appreciate a refresher on this, rather than just keeping it for new trustees.

Making finances accessible and transparent requires a good accounting system. If your accounting package doesn’t hold and present the data in the formats you (and others) need, or doesn’t help you feel in control of your finances, it may be time for a change.

Fund accounting packages, like ExpensePlus, are specifically designed for charities to manage expenses, create year end accounts and for each person in the team to view the live reports they need for their role.

Financial metrics to communicate about charity finances

Once your trustees have been reminded of their responsibilities and you’ve embedded an excellent culture of talking about finance, it’s time to give your finance reports.

Trustees really just want to know, ‘how are the finances doing?’

This might include answering questions such as:

• What’s gone better than we hoped?
• What’s gone worse than we hoped?
• What are the risks?
• How are we managing them?
• What work is there still to do?
• And, if they’re making a decision rather than agreeing to a proposal, what might the risks and implications be either way?

You may want to consider together as a trustee team which financial metrics are important for your charity. This blog article helps you understand different financial metrics for charities, and may help you prepare your reporting.

This blog article explains the different types of charity reports you could include.

Clarity and context in finance reporting

It’s important to sense-check the level of detail and how to tell a story when you present your reports. Consider who you’re reporting to, about which items and decisions, and when. Ask yourself:

• What information is suitable for all the trustees in your context?
• If you have a finance committee or similar, can you take some of the detail to them to chew over?
• Do the trustees need detail about individual bank balances or is an aggregate cash figure more appropriate?
• What are you wanting to get out of the conversation?
• What information do they need to make good decisions and gain assurance?

It’s important to tell the story in context, which often means reporting on previous years, and perhaps forecasting to future periods/years to give trends. Be careful, though, not to just give pages and pages of numbers – this is giving more data but probably not more information. Consider using formatting and colour coding to highlight significant figures. You can also use comparative figures, whether that’s previous years’ results, or budgeted/forecast figures, to give your actual results some meaning.

Given there will likely be different learning styles represented amongst your trustees, it’s a good idea to present your numbers in different ways. You can include tables, graphs, and accompanying narrative. If you have trustees (or finance committee members) who will likely ask detailed questions, consider getting them on board early by providing read-only access to your accounting package and/or passing any proposed changes to your reporting by them first.

Well-designed finance software packages like ExpensePlus allow you to set up trustees with view-only access to live reports.

Consider which questions trustees might ask – I often spend a few minutes preparing answers to FAQs. For example, why is administration expenditure up since last month? Which grants make up the fundraising subtotal? What is the legacy that we received restricted funds for?

Here’s a test – if after your finance update, you asked every trustee what the 3 headlines were, would
they agree?

Top tips for presenting finance reports to your charity trustees

As a summary, here are three top tips for preparing and presenting finance reports to your charity trustees:

1. Talk about finance little and often (or lots and often)
2. Give your trustees information, not data – focus the trustees on what’s important to make the best decisions and carry out their scrutiny and stewardship duties, and tell the story of the finances with trends/comparators
3. Don’t report numbers and graphs without narrative

Further resources

• Key financial metrics every UK charity should know
• Creating a Budget – A Practical Guide for Churches and Charities
• Understanding Key Charity Financial Reports
• Financial Risk Management for Charities and Churches
• How much should our charity hold in reserve?

Dan Bishop

Dan has held Operations Director and Finance Director roles within several charities and has used ExpensePlus for over 8 years. Through Dan Bishop Finance he supports charities and churches with flexible, expert finance and governance support.