Our first webinar for charities focused on the headline changes to income recognition and leases. Alongside this the new Charities SORP 2026 also delivers a major reset for Trustees’ annual reports which was the focus on the webinar presented by myself and Glen Bott.
And while much of the content may feel familiar, the way charities are expected to tell their story has fundamentally shifted. The focus now is sharper, more structured and far more joined up with the numbers.
Here’s what you need to know.
TIERED REPORTING. A new structure. And a new mindset
The updated SORP introduces a tiered reporting framework based purely on gross income:
- Tier 1: up to £500k
- Tier 2: £500k to £15m
- Tier 3: over £15m
This determines how much detail you need to include, particularly in your Trustees’ report. But the bigger change is philosophical.
The Charity Commission has effectively rewritten Module 1 to bring greater clarity and consistency, with one clear expectation:
Your Trustees’ report must align with and explain your financial statements.
Too often in the past, narrative and numbers have drifted apart. That is no longer acceptable. The report should now provide a clear, credible, and connected story of your charity’s performance.
From compliance to storytelling
At its core, the Trustees’ report is about public accountability. It answers three simple questions:
- What are we here to do?
- What have we done this year?
- What difference has it made?
Under SORP 2026, there’s a stronger emphasis on making that story:
- fair
- balanced
- understandable
And crucially, relevant to your stakeholders, whether that’s funders, beneficiaries or regulators.
The biggest shift: impact reporting
If there’s one theme running through the new SORP, it’s this: impact matters more than ever.
Charities have always reported on activities. Now they must go further and clearly demonstrate:
- how those activities benefited beneficiaries
- the wider impact on society
- the longer-term outcomes of their work
For those charities in Tier 2 and 3, this is no longer optional.
Bringing impact to life
The SORP encourages a mix of qualitative and quantitative reporting, including:
- beneficiary stories and case studies
- KPIs and measurable outcomes
- trend data showing progress over time
The most effective reports will combine both. Personal stories create emotional connection. Data provides credibility.
Volunteers: more visibility, more clarity
All charities must now include a clearer explanation of:
- the scale of volunteer involvement
- the nature of activities undertaken
- the contribution volunteers make
There is also greater clarity around the distinction between:
- general volunteers supporting day-to-day activities
- non-general volunteers providing specialist or professional services
For Tier 2 and 3 charities, additional disclosure is encouraged, such as volunteer numbers or hours, where this data is available.
This is another area where good systems and data capture will be key.
Financial review: sharper and more transparent
The financial review section has seen some of the most significant changes, particularly around reserves. The SORP now defines reserves as: funds freely available to spend on any of the charity’s purposes.
That means charities must exclude items such as fixed assets, designated funds, long-term investments and certain committed future costs.
There are stronger expectations around:
- reconciling reserves to the accounts
- clearly explaining your reserves policy
- comparing actual reserves against that policy
- setting out what action you are taking if they don’t align
This is a big step forward. It should drive far greater consistency across the sector and give stakeholders a clearer view of financial resilience.
Going concern and financial risks
Another key area of focus is transparency around financial sustainability.
If reserves are low or pressure exists, Trustees must now explain:
- why the charity is still considered a going concern
- what uncertainties exist
- what mitigating actions are in place
For the larger Tier 3 charities, there is also a forward-looking requirement to explain what could affect future performance, from funding risks to changing demand.
The direction of travel is clear. Stakeholders want realism, not reassurance.
Sustainability and ESG: from optional to essential
For the first time, sustainability reporting has been formally introduced. Tier 1 and Tier 2 charities are encouraged to disclose how they are responding to and managing environmental, governance and social matters. Whilst for Tier 3 it’s now mandatory disclosure that’s required.
These charities will now need to report on how they respond to and manage :
- environmental impact
- social responsibility
- governance practices
While this will evolve over time, ESG is now firmly on the agenda, not just for corporates, but for charities too.
Planning ahead: it starts now
Although the new SORP applies to accounting periods commencing from 1 January 2026, the message from the webinar was clear. Don’t wait.
Many of the new disclosures rely on data that needs to be captured throughout the year. That includes:
- impact metrics
- volunteer activity data
- ESG indicators
Without that groundwork, producing a compliant and compelling report will be much harder.
A real opportunity to rethink your report
Perhaps the most important takeaway is this.
This isn’t just a compliance exercise. It’s an opportunity.
A great Trustees’ report should:
- connect narrative and numbers
- demonstrate impact clearly
- provide transparency on financial health
- speak directly to stakeholders
Done well, it becomes a powerful communication tool, not just a statutory requirement.
Need support?
If you’re starting to think about your first SORP 2026 report, now is the time to act.
Our not-for-profit specialists are already helping charities to:
- review current reporting
- redesign Trustees’ reports
- build impact measurement frameworks
- strengthen reserves policies
Get in touch today to start the conversation.
