Good afternoon,
There are changes afoot in the world of charity accounting and reporting, with some welcome news for smaller charities. So this week, we're giving annual accounts a little love!
Annual accounts might not be the first thing that springs to mind when we think about telling the story of our charity, but there's so much more to them than numbers and paperwork.
In this newsletter, we're sharing what's changing and what it means for you, inviting you to a friendly, practical workshop to help you get to grips with preparing your accounts, and exploring how to tell the story behind the numbers.
Because annual accounts don't have to be just another annual tick-box exercise. Done well, they're a wonderful opportunity to celebrate your work, share your challenges, build trust and help people understand the difference you're making.
Warmly,
Embrace Finance Team
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🦊 Beyond compliance: Telling the story behind your charity’s annual accounts
Your charity’s annual accounts are more than a regulatory requirement. Every year, charities spend precious time and energy preparing their annual accounts. We gather the figures, reconcile the numbers, work with our independent examiner or auditor, and submit everything to the Charity Commission. And then, we breathe a sigh of relief, file them away and move on.
And yet our Annual Accounts tell the world a very real financial story whether we mean it to or not. And this happens as much in the financial review section of the Trustee's Annual Report at the beginning of the report as it does in the financial statements at the end of the report.
The financial review section is a rare opportunity for us to really tell the story of the money, the mission, and the difference we make. Yet all too often this section is overlooked and underloved.
And so what would happen if we thought about our annual accounts a little differently?
What if, instead of seeing them as something we have to produce, we saw them as an opportunity to help people understand our charity, celebrate what we've achieved, and build confidence in what comes next?
At Embrace Finance, we love numbers. We think they're beautiful. But in truth, the numbers are only part of the story.
Even numbers have their limitations. The numbers can tell us important things about our charity's financial past. They can show how much money came in, how much went out, what we spent it on, and what funds we had left at the year-end. But they can't tell us everything.
They don't necessarily explain the difficult decisions we made, the opportunities we were bold enough to take, the challenges we faced or the care we took to protect the people and communities we serve. And they certainly can't tell us what will happen next. For that, we need to find and tell the story behind the numbers. So where to begin?
We always recommend approaching financial storytelling with these three simple questions.
1. What? What are the numbers?
Start with the facts. How much income did we receive? Where did it come from? What did we spend? Did we make a surplus or deficit? What happened to our reserves? Look for patterns and changes over time, rather than focusing on a single year's figures.
2. So what? What does this mean for our charity?
This is where we add the context. Perhaps income fell because a long-standing project came to a planned end. Perhaps expenditure increased because we invested in a much-needed new service. Perhaps reserves reduced because trustees made a thoughtful decision to use them to support people through a difficult year. The numbers tell us what happened. Our words help people understand why it matters.
3. Now what? What happens next?
This is where the story becomes especially useful. What have we learned? What opportunities and challenges lie ahead? What choices are we making to protect our purpose, support our people and strengthen our financial future? The past is written. The future isn't. And the decisions we make today help shape what happens next. Numbers help us make the options visible and shape a possible version of the future which means we can continue.
An invitation
Next time you look at your charity's annual accounts, try reading the financial review in the Trustee's Annual Report as a curious, compassionate supporter. Can you understand what happened during the year? Why it happened? What it means for the charity and the people it serves? And what might happen next?
If the answers aren't clear, there's an opportunity to tell a richer story. Because annual accounts gift us a valuable opportunity to do so much more than demonstrate compliance.
The financial review section of the Trustee's Annual Report is well worth investing an hour or two in. Good financial storytelling helps us build understanding, earn trust, strengthen confidence and bring people together around our shared purpose.
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🍂 Welcome news for smaller charities in England and Wales!
It's not often that regulatory changes make life easier, but new accounting and reporting thresholds should mean a lighter administrative load for hundreds of smaller charities.
So, what's changing?
For financial years ending on or after 30 September 2026, the government has increased the income thresholds that determine how charities prepare their annual accounts and whether they need an independent examination or audit. Broadly speaking:
- Simpler annual accounts: The income threshold for charities eligible to prepare simpler receipts and payments accounts increases from £250,000 to £500,000.
- Independent examination: The income threshold at which charities generally need an independent examination increases from £25,000 to £40,000.
- Full audit: The income threshold increases from £1 million to £1.5 million, although an audit is also required where gross income exceeds £500,000 and gross assets exceed £5 million.
This is a welcome step towards making charity reporting more proportionate. However, as ever, the rules depend on your charity's circumstances, including its legal structure, so it's worth checking exactly what applies to you. You can find the full details in the Charity Commission's guidance here:
- Charity accounts: threshold changes at a glance
- Charity accounts: rules for trusts and unincorporated associations
- Charity accounts: rules for Charitable Incorporated Organisations
- Charity accounts: rules for charitable companies
Still not sure what to prepare?
This
diagnostic
from the Charity Commission is also super helpful.
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🐞 Introduction to Annual Accounts for Small Charities
How to stop worrying and learn to love annual accounts! With new charity accounting thresholds coming into effect, now is a great time to get to grips with your annual accounts.
Join us for a friendly, practical introduction to financial year-end. We'll explore the difference between receipts and payments and accruals accounts, introduce the Charities SORP and useful Charity Commission templates, and look at what to consider when choosing an independent examiner.
Perfect for trustees, charity leaders and accidental finance heroes. No previous finance knowledge needed, and plenty of time for questions!
📅 Thursday 15 October 2026
🕤 9.30–11.00am
💻 Online via Zoom
🎟️ £30
Come with questions, leave with confidence.
Find out more and book your place →
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🌳 The Oak & the Berries
And when it comes to weaving our future story, long-term sustainability means thinking about where our money comes from, how it supports our mission and where we might need to adapt.
📅 Thursday 23 October 2026
⏰ 2.00pm - 4:30pm
📍 Calthorpe Community Gardens, London
🎟️ £49
In this practical and reflective workshop, Yasmin Glover and I will introduce our Money–Mission Matrix and help you explore your organisation’s business model, including the balance between dependable core income and other sources of income that can create flexibility, opportunity and resilience.
Together, we’ll think about how to build a business model where mission and money can flourish together.
🎫 Book now
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