Charities have always known their work makes a difference. Now, the new SORP means they have to show their workings.
On 31 October 2025, a new Charities Statement of Recommended Practice (SORP) was published, signalling substantial changes in annual reporting for many UK charities.
It comes into force for financial periods starting on or after 1 January 2026, meaning accounts to be published in mid-to-late 2027 onwards - or earlier, for speedy filers.
Aim: ‘increase public trust’
The new SORP, in particular its impact reporting stipulations, will enable charities "to communicate both their financial position and the impact of their work more effectively", argues the chief executive of the Charity Commission for England and Wales (CCEW), David Holdsworth. CCEW, alongside its counterpart in Northern Ireland, and the Office of the Scottish Charity Regulator (OSCR), comprise the SORP-making body.
The updates "will improve transparency of registered charities" and "increase public trust" in both individual charities and the wider sector, adds Alex Wright, head of regulation at OSCR.
For the first time, the new SORP has what the regulators term a "proportionate" three-tier reporting structure. All charities must comply with Tier 1 requirements. If your income is between £500,000 and £15m, you’re in Tier 2, meaning you need to meet Tier 1 and 2 requirements. Tier 3 charities, with income in excess of £15m, must meet all three tiers’ stipulations.
The SORP-making body is expected to review the tiers, following changes to charity audit thresholds which are expected in the autumn. Watch this space - but at any rate, everyone must get their head around Tier 1.
Six paras… going beyond TAR
The paragraphs covering impact reporting are 1.27 to 1.33 of the SORP, within its Trustees' Annual Report (TAR) module.
Earlier paragraphs 1.8-1.10 and 1.22 help set the scene about what good reporting should achieve, and highlight the need for consistency and linkage between the TAR and other sections of the annual report and accounts as a whole.
In other words, the impact reporting requirements aren’t just about the words in your TAR, they may also require changes elsewhere.
Tier 1’s sole paragraph (1.27) requires the TAR to contain a summary of the charity's main achievements. Trustees "should" consider how their work has affected the "circumstances of its beneficiaries" and whether it has "provided any wider benefits to society". Infographics, statistics, and beneficiary or volunteer testimonials "may" form part of this, it suggests.
Paragraphs 1.28 to 1.32 apply to Tier 2 and Tier 3 charities, and go further. They require reporting on how well the charity met its aims and objectives; a review of investment performance (if applicable); an explanation of "the impact the charity is making", including the long-term effects of its activities on beneficiaries and society "as a whole"; and say there "should" be commentary on the positive and negative factors - both internal and external - that have affected the achievement of its objectives.
Paragraph 1.33 is only for Tier 3. It relates to fundraising: where material expenditure has been incurred to raise income, the report must explain the effect this has had, and is expected to have, on fundraising income in current and future reporting periods.
So what does all this mean for those preparing charities’ accounts?
Don’t leave it for later
Several commentators, interviewed by CFG, worried that the sector hasn’t properly begun thinking about what these requirements mean.
This could partly be due to accompanying SORP changes around more ‘hard’ financial topics, like lease accounting and revenue recognition. Currently (and perhaps unfortunately) the front page of the Charity SORP website has a section entitled ‘Preparing for the new SORP – steps you can take now’. Leases and revenue are its only two sections.
"If you haven't started to think about it [impact reporting changes] now, really do start now," says Carol Rudge, head of not-for-profit at HW Fisher. It would be, she adds, "much more difficult" if you only began gathering relevant information after the year end.
Don’t leave impact reporting for later. After all, you wouldn’t wait until after your year-end to start thinking about the numbers themselves.
Tick-box? No, but not a nightmare
CCEW’s Holdsworth has spoken of his frustration at "that awful paragraph that I see cut and pasted across tens of thousands of charity annual returns which says: 'We the trustees confirm we comply with the public benefit.'" Charities lose audiences by "not bothering" to explain the work they’re doing, he argues.
Impact reporting must not be treated in that same "tick-box" manner, he says.
Yes, the concrete effect of the SORP’s impact reporting requirements is that you’ll need to write some different things in a report.
But its broader goal is to get trustees and charity staff thinking more deeply about their impact, and whether they have the right strategy to achieve that. Commentators agree that it could play a valuable role in focusing trustees’ minds on such matters.
And yet, even just impact reporting in itself might feel daunting. But Caron Bradshaw, CFG's growth and sector solutions lead and a member of the SORP Committee, is emphatic that charities should not be too worried overall.
The wording of the SORP, she says, is trying to convey that impact reporting "doesn't have to be this high-brow, expensive thing to do". On top of this, the SORP deliberately "gives the flexibility for organisations to tell their story using their own words and their own measurements" and provides "enough latitude" for charities to do it in a way that works for them, she says.
Be aware of possible sticking points
Nonetheless, commentators highlighted some areas that might be more tricky.
Charities in Tiers 2 and 3 "must consider the long-term effects of its activities" both on beneficiaries and wider society, says SORP paragraph 1.30.
"It’s really easy to say ‘I’ve put on 10 training courses," says Rudge. "But what difference has that made?" That’s the sort of question you need to be asking - and answering.
Measuring longer-term, big-picture impact "is actually really hard", adds Naziar Hashemi, head of non-profits at Crowe UK - noting that the sector has for years been talking about moving on “simply talking about the outputs, not the outcomes".
Stuart McKay, partner at MHA, adds that the need to demonstrate benefits to "society as a whole" could be particularly tricky. "That is where charities will struggle, because it's an open-ended question," he argues. "Any claim that you make, your auditor will have to come back and say, ‘okay, how did you come up with that figure?’."
This could be where qualitative evidence is particularly helpful. As 1.30 notes, "personal beneficiary or society-wide impact stories may be of value in communicating meaning". Qualitative evidence should not be seen as inferior to quantitative.
McKay also highlights that SORP 1.27-1.33 doesn’t just impact your TAR. You’ll need to consider where and how your Statement of Financial Activities (SoFA), Balance Sheet, and in particular the Notes to the Accounts need to change. Those notes might not need to be longer necessarily, but things like the way you describe charitable activities in your figures may need to be more clearly aligned with the language and framing of the narrative report.
"If I told an FD, ‘you're going to have to rip up your charitable expenditure note and redo it, not only the current year but the prior year as well, and restate it, so that it now links to your trustees' report’ - they would go, 'Ah, that's a big job'," he warns
Hashemi highlights another possible tricky area - the Tier 2 (and 3) need to "comment on those significant positive and negative factors", both internal and external, which have affected your activities and future plans. Beware the fact that comms and PR colleagues - who arguably need to be involved even more closely in this annual reporting round - will be tempted to "put a gloss" on the negatives, she notes. "Actually, this is supposed to be a balanced report," Hashemi continues.
See the opportunities
Don’t fall into the trap of assuming your annual report just sits ignored on the regulator’s website, or is unread beyond a couple of already friendly funders. It is a key source of truth about your charity, and in a world of AI slop and false narratives, you should make it a compelling one.
"If we can't be really clear about what it is we stand for, the difference that we're trying to make, and the way in which we are using resources creatively, in an adaptable way, then it's really difficult to compete against all of that background noise," Bradshaw says.
A well-produced annual report and accounts is a document which donors, funders, beneficiaries, future hires and others might find compelling.
Or they might not. Imagine you’re a time-pressed stakeholder. "Think: ‘would I read this report?’," says Helena Wilkinson, a charity and governance specialist and formerly head of charities at Price Bailey. "If you open a set of accounts and it's just full of block text, I can guarantee you, even though they might be saying the most fantastic things, you're going to go, ‘I haven't got the time to read that and digest’." Think about different designs, infographics, pictures and so on, she urges. Even just a bit of bold text here and there can draw the eye and engage the reader.
This said, be aware that Companies House "randomly rejects some accounts which have got too many pictures in them or are in colour", Hashemi reports. This is relatively easy to get round - just create another, slightly less beautiful version, should you be one of those unlucky rejects.
Take inspiration - and take time
Hashemi also advises taking lessons from private companies. Charities can be "snobbish" about learning from the for-profit sector, she acknowledges. Ethical chocolatier Tony’s Chocolonely, and telco giant BT tell their stories powerfully, she says - not just in formal reports, but in the social impact section of BT’s website, and the ‘Our promise’ pages on Tony’s.
It might also be sensible to look at how your corporate donors, or private sector counterparts tell their story - why not try speaking their language?
Hashemi also suggests specific charities to peruse - among them two clients, The Brooke and Heart of England Forest, plus the Esmée Fairbairn Foundation, Marie Curie and Street League.
Wilkinson points to Teach First and the Zoological Society of London's as good examples from her recent reviews of large charities’ annual reports. She also suggests that "virtually all" of the UK’s 200 largest charities exhibit good impact reporting - she advises charities to take inspiration from ones operating in a similar space to them.
With its new impact reporting requirements, the SORP-making body is itself hoping to be impactful, by inspiring the sector think more strategically and tell its stories better.
But it won’t be an overnight impact, commentators interviewed for this article agreed. “Changing a style is going to take time," Wilkinson says, adding: "Don’t try and solve it all in one year, don’t try to get to perfection [immediately]. Create something, and you then have the ability to build on it year on year and get it better and better."
For year one, it might be a case of just making sure you get the job done and meet the SORP’s requirements. The question is, would you then aim higher for year two and onwards?