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How can I tell how effective a charity is?

This is one of seven fact sheets in a series about reporting on charity issues. It provides context for accurate reporting and details of where to get more information.

Other topics in the series are:

  1. Why do charities have paid staff?
  2. How much money goes on running costs?
  3. Why do charities fundraise?
  4. Why do charities deliver public services?
  5. Why do charities campaign?
  6. Are there too many charities?

Download this fact sheet as a PDF (50KB)

The figures only tell part of the story

There are things you can learn about a charity’s performance from the balance sheet but they will fall far short of the full story. The annual report and accounts are designed to be read together and this should be kept in mind when reading the financial accounts.

You can look at where a charity’s money has been spent and read about its priorities in the annual report to judge whether it’s spending funds wisely.

You can also get a sense of whether the charity is sustainable by looking at the figures. But you may need to get a fuller picture by reading the annual report or speaking to the charity directly because of the very specific ways in which charities report on their finances.

The figures also show spending on fundraising and governance costs. Please see our factsheets How much money goes on running costs? and Why do charities fundraise? for more on this.

Impact reporting

No two charities are the same, which means there is no standard or universal measure of effectiveness.

However, charities understand people want to know how they are creating change, and charities are increasingly trying to report their impact.

For example, a charity for homeless people could report on housing and employment gained by beneficiaries because of its work, while a medical research charity could report on treatment breakthroughs for affected patients.

Ideally charities should report on the services they provide, what beneficiaries think about the services, and their impact – the change their services achieve.

When charities file their annual report and accounts, they are now required to reference the impact of their work (set out in the Statement of Recommended Practice SORP).

This is still a relatively new area for charities to report on. And because of the diversity of their work it’s difficult to compare organisations.

Useful press contacts

National Council for Voluntary Organisations (NCVO)

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  • Telephone 020 7520 2413
  • Out of hours 07714 243 942
  • @NCVO

Charity Finance Group

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  • Telephone 020 7871 5477
  • Out of hours 07889 129 971
  • @CFGtweets
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