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06 Jul 2017
For those of you involved with local charities and other public benefit entities (PBE’s), hopefully the term Statement of Service Performance (SSP) is not alien to you. For a couple of years now, charities and other PBE’s have had to include a SSP in their annual reports.
Charities and PBE’s unlike most companies do not exist to make a profit. Their purpose is very different. Therefore, it is not entirely surprising that a set of financial statements for a charity, is of less benefit. They are of course useful, since they will show whether the charity has funds to perform its activities and how much it may have donated. However, they do not tell a user what the charity has done during the year.
This is why we now have a statement of service performance. This is not meant to just regurgitate the financial information which is in the rest of the financial statements. It is supposed to focus on the non-financial information and explain what the charity has achieved during the year and the impact it has had.
The SSP has to disclose the Outcomes. This is best described as why does the Charity exist, what is its purpose, what is it trying to achieve.
The Outcomes for a charity are likely to be the same or similar year on year.
The Outputs are what the charity has done during the reporting period? To be relevant these outputs need to be closely aligned with the purpose of the charity.
An example might be for an Early Childhood Centre. Their key purpose is to educate preschoolers. So we would expect one of their outputs to tell us how many children they have taught during the year, or perhaps how many hours they have taught each child on average.
The Outcomes and Outputs have to be relevant, reliable, comparable and understandable to be useful to a reader of the accounts.
Finally, the SSP should also disclose the impact the charity has had in the year. This can of course be subjective and may be difficult to measure. In a recent Charities Commission article, it is suggested that you ask the question “What would happen if the entity did not exist?” when considering what impact your entity has had.
As this is still relatively new, the Charity Commission have seen a mixed bag of SSP’s. Some are very good at explaining what the charity has achieved during the year and its impact. Then there are others which really just repeat the information in the financial statements.
Please remember it is the Board of trustees who are responsible for preparing the SSP. The Board have to consider what the most relevant outcomes are for the Charity. There are no minimum or maximum number of outcomes or outputs. Focus on the core purpose of the Charity. What is the Charity trying to achieve?
The outputs in the most part should be non-financial. For example; how many people did you help? How many services did you provide? Rather than how much money did you spend?
This is something Boards should be considering at the start of the year. It should form part of their strategic planning – how can you plan what you are going to do if you don’t know what you want to achieve.
If you are struggling to define your outcomes or plan for what outputs you want for a year, feel free to get in touch with me.
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