“What happens with the money I donate?”
“Are the people in need really getting the help they need? Do I need to give more?“
Or worse, “Should I stop donating?”
These are a few typical queries that your donors may have when they lack transparency or clarity regarding the use of the funds. If they have doubts about their donations, it can have far-reaching consequences. This is exactly where your charity’s financial reports can help.
Charity financial reporting helps you stay compliant and build trust with all stakeholders, trustees, patrons and volunteers. Regular reporting can also help you spot fraudulent activity or financial inefficiencies before they escalate.
According to the 2024 BDO Charity Fraud report, 84% of charities experienced losses due to fraud. But the real damage goes beyond simply financial loss. It also leads to a loss of morale, your organisation’s reputation and the loss of staff, volunteers, and patrons.
When you provide a regular charity funding report, you build trust and maintain transparency while securing consistent donations and long-term support. The KindLink CRM has been built keeping in mind the needs of non-profits. On our platform, you can directly claim and report the Gift Aid claim from the HMRC, along with automated Gift Aid reporting and more. Get started now to explore the many benefits.
Before that, let’s explore the benefits of donor reporting for charities and non-profits.
1. Building Trust with Donors
Accurate charity financial reporting and bookkeeping help build trust with donors and the general public. When a donor has a clear understanding of how their money is spent and the impact it is bringing about, they’re more likely to continue their contribution and form a long-term relationship.
For instance, when they see a breakdown of the funds raised and their distribution, whether towards operational expenses or helping those people in need, they will be willing to trust you with their money and continue their commitment. In this way, they also become advocates for your cause, spreading the word among their connections.
2. Regulatory Compliance
Nonprofits and philanthropic organisations are highly regulated by legal frameworks. Charities need to abide by the framework of the Companies Act 2006, the Charities Act 2022 and the Charity Commission for England and Wales.
Each of these laws requires non-profits to maintain records of yearly submitted returns, financial statements and charity funding reports. These documents should be kept updated, as you might be required to submit them at any time for audit and regulatory review.
Failure to comply with the regulations may result in a charity facing enforcement action by the Charity Commission, removal from the register of charities, legal action and reputational damage.
3. Strategic Future Planning
Perhaps you run a food bank in your local town, with the intention of extending this to other areas over the next 5 years. Turning that vision into reality requires solid funding, long-term planning and decision-making.
To continue supporting the cause, bring about change and be prepared for the future, you need to be able to make data-backed, strategic decisions. The reporting requirements for charities are not just limited to taxation, funding and compliance purposes but also to prepare for the future.
When you have visibility into how funds are spent, you can identify what works, what needs to be improved, and how to best reallocate resources. Proper fund allocation gives a new lease of life to the programmes, helping bring about positive change.
It also helps clarify how much more funding is needed, the best way to increase donations and the best resource allocation process. Incorporating financial reporting for your charity can play a role in identifying potential cash shortages and how best to ensure the obligations are met.
4. Improved Accountability and Governance
Charity reporting requirements help bring about accountability among the trustees and the leadership. By maintaining a detailed charity funding report, they can show their commitment to good governance practices, which helps them earn the trust and confidence of the patrons.
As a charity, being transparent matters the most. Donors are likely to ask how their contributions are being used, and as charity managers, it’s your responsibility to provide those answers. Financial reports allow you to provide detailed donation breakdowns while also keeping stakeholders informed of progress, shortfalls and future plans.
5. Better Funding Opportunities
Whether it’s Gift Aid reporting or planning your next fundraising campaigns, your charity’s financial reporting can come in handy in multiple ways.
When you understand where you stand financially, how money is allocated, and the financial deficit, you can create targeted fundraising campaigns. For instance, would you rather raise a general appeal or a specific, goal-led fundraising campaign? The latter option is promising, actionable and gives donors a concrete target to support.
Besides, when donors see how their previous donations have been used and the impact they’ve made, they’re much more likely to donate again. By understanding the true costs and outcomes of the funding, you create a customised donation drive, helping you make a bigger impact on society.
Automate Your Charity’s Gift Aid Reporting Process With KindLink CRM
Your charity’s financial reporting can help ensure continuous patronage and funding from donors. It also helps you make data-backed decisions and stay compliant with the regulations. However, running a charity also means that you’ll have your hands full, and you’ll need the right tools to ensure operational efficiency.
KindLink CRM makes it easy to report and manage Gift Aid claims, raise donations, hire new volunteers, and a whole lot more. It’s a single platform, designed for non profits, to help you manage a large number of activities – all in one place.
You can raise donations through our free, easy-to-set-up online fundraising page or connect with passionate volunteers via our integrated marketplace. And with direct HMRC integration, Gift Aid claims are automated and simpler than ever!Get started now to enjoy the benefits of KindLink.