Good Governance Awards 2022 - Insights for charities/non-profits

The seventh annual Good Governance Awards concluded on 17 November 2022 with the announcement of the winners across seven categories.  The Awards aim to recognise and encourage good governance standards and reporting in the charity and non-profit sector. It provides tailored feedback and recommendations to all entrants, allowing them to improve governance and reporting across a range of areas such as strategy, performance, and compliance with reporting standards. 

The annual report represents a real opportunity for organisations in the charity and non-profit sector to showcase their transparency and trust by disclosing their strategic performance, governance practices, culture and financial results. A good annual report does more than meet minimum reporting requirements. It can provide a comprehensive picture of an organisation, including its achievements and future plans. It serves to reinforce relationships with stakeholders and build further relationships with the public, potential donors, volunteers and supporters.

Each of the annual reports entered into the awards undergoes a rigorous assessment process, including a technical compliance review, an assessment of governance practice disclosures and, for those short-listed, a three-stage independent judge review.

In the spirit of improving standards, we have compiled a summary of the Judges’ top recommendations arising from their review of this year’s shortlisted annual reports.

Top ten recommendations for all organisations

1. Ensure consistency between the non-financial narrative and the financial statements in the annual report, and that they read well as one report telling the story of the organisation. Too often these can appear like separate reports that have been ‘bolted together.’
2. Emphasise the connection from the organisation’s mission and vision, and how this flows through to its strategy and activities.
3. Provide a summary overview of the background and origins of the organisation – It’s purpose, why it was established and the impact it wishes to make.
4. Disclose key performance indicators (KPIs) that provide insight on the actual performance during the year against the organisation’s targets for that year and previous performance. Targets should clearly define what success for each activity or programme would look like in a given year and at the end of the current strategy.
5. Ensure clarity, accuracy and consistency in the financial reporting and financial summaries which is not only a Financial Reporting Standards requirement but also fundamental to presenting a convincing report.
6. Given the nature of work of charities and non-profit organisations, their sources of income and the level of public and regulatory scrutiny, boards and their advisors should opt-out of preparing reduced disclosure financial statements, an option otherwise permitted by Section 1A of FRS 102, and filing abridged or abbreviated financial statements. Opting for reduced disclosure is sub-standard to good governance practice for a sector that needs to be highly transparent and accountable for continued support.
7. Design the report so it is readable online. Improve readability and impact by using photographs and other graphics to break up the text and visualise the data for readers e.g., graphics that illustrate the sources of funds, programmes expenditure, and KPIs such as the number of people helped.
8. Outline the organisation’s process around board Director/Trustee recruitment, induction, training and board evaluations.
9. Strengthen the profiling of Trustees/Directors. Provide summary biographies on each Trustee/Director, including details on appointment dates, attendance at meetings and whether they were elected, co-opted or how they were selected/recruited.
10. Introduce balance to the report, and make it more realistic, by addressing the areas of frustration, concern or indeed failure encountered during the period rather than only highlighting the areas of success.

Top five recommendations for larger organisations in particular

1. In general, reporting on sustainability and climate is limited. A focus on ESG reporting would be an improvement.
2. Consider if too much detail is being provided – some of the annual reports were long and included repeated examples.
3. Highlight how the organisation implements board diversity and succession planning as well as the organisation’s policy on diversity (in its broadest sense).
4. Define how the organisation monitors and mitigate risks. Provide insights into the organisation’s risk appetite and tolerance.
5. Shine a light on future income generating strategies and sources, alongside projected costs, and any new areas of expenditure.

For more information, and template annual reports for charities and non-profit organisations, see:

Resources – Good Governance Awards. Chartered Accountants Ireland Technical Hub also includes member resources on financial reporting, audit and other regulatory requirements.

Róisín McGuigan

Carmichael Good Governance Awards Coordinator