SORP 2026: What charity fundraising and finance teams need to know

SORP 2026 is mandatory for charities preparing accruals accounts (known as traditional accounting). Smaller charities using receipts and payments accounting are not affected. 

Why SORP 2026?

SORP (Statement of Recommended Practice) is the framework for how charities must prepare their annual reports and financial statements. It supplements FRS 102, the UK's core accounting standard and rules, with guidance on how charities should apply them.

When those accounting standards were updated, SORP had to change too. SORP 2026 is written to support you - not trip you up - with practical guidance to make compliance more straightforward. 

The one big change you need to know about: Charity tiers

SORP 2026 introduces tiers classifying charities by their gross income. By recognising the variations in charity size, complexity, risk and public interest, this new approach makes reporting proportionate.

In practice, that means less paperwork for smaller charities and increased accountability and transparency for larger organisations. 

• Tier 1: Not more than £500,000. Tier 1 requirements apply.
• Tier 2: Above £500,000 and not more than £15m. Tier 1 and 2 requirements apply.
• Tier 3: Above £15m. Tier 1, 2 and 3 requirements apply.

Charity reporting requirements 2026: Key changes that matter for most charities 

What you need to say about impact.

Impact reporting is no longer optional – it's now mandatory for all charities as part of annual reporting.

Many charities already do this. So, for most of you, the change is about being more explicit and evidence-based in how you talk about the difference your work makes to beneficiaries and wider society. For others, the shift means moving beyond describing outputs to explaining outcomes.

How to talk about future plans

SORP 2026 brings the future into clearer focus. From a summary of ambitions for smaller charities to explaining how current activities contribute to long-term goals for larger organisations.

Charities are required to provide commentary on where they’re heading, with an emphasis on financial resilience such as reserves. Transparency and reassurance should be front and centre here. 

Restricted funds: More clarity, fewer misunderstandings

SORP 2026 extends expectations around how charities present restricted, unrestricted and endowment funds. Their definitions remain the same. However, you must now set out why restricted and endowment funds exist and how and when they'll be used. And where monies are transferred between funds or their purpose changes, robust justification is a must. 

As the cause of many a misunderstanding around a charity's financial flexibility and resilience, it's a welcome move for many in the sector. 

What meaningful disclosure really means for trustees

A theme running through most updates is transparency that supports public trust in the sector - governance is always a hot topic. And trustees are now expected to explain how decisions are made, how oversight works in practice and how governance supports sustainability.  

For the biggest charities, disclosure extends to environmental, governance and social (ESG) matters. From carbon footprint to staff wellbeing and ethics, the emphasis is on how the charity delivers its impact. 

Generic statements such as 'the trustees meet regularly and oversee the charity's work' are no longer enough.

SORP 2026 expects meaningful explanations showing how governance is applied. 

The do's and don'ts of explaining risk

Under SORP 2026, all charities are expected to report on principal risk. The level of detail depends on your charity's size and complexity, but what's clear is that it must go beyond boilerplate phrases like 'risks are reviewed regularly'.

The update is all about acknowledging the uncertainties and challenges that could impact service delivery, financial stability and organisational reputation. There's no need for a full risk register. But matters such as how you identify, manage and mitigate risks like reserves, environmental issues and cyber threats are expected to be addressed. 

Legacy income: Same accounting rules, new reporting requirements 

If you're a tier 2 or 3 charity, you're now expected to explain legacy income, providing context around timing, value and how it affects financial sustainability and planning. Legacies come with uncertainty, and this update goes a long way towards preventing legacy income from being misread. 

Getting income recognition right

Income is no longer recognised based on entitlement, certainty and measurement. Instead, transactions are classified as either:

• Non-exchange – donations, grants and legacies given without restrictions or conditions, or
• Exchange – income from contracts for goods or services 

Where income is recognised as 'exchange', it's now reported using a five-step model mirroring FRS 102, which reflects actual delivery of services. So if you're a social care provider, training organisation, membership body or deliver services under contract, for example, this will likely affect when and how much revenue you recognise. 

Good to know: Gift Aid is always treated as non-exchange income.

For most fundraising and finance teams, SORP 2026 doesn't introduce a lot of extra work. Most data and practices already exist in some form. And so it's about levelling up on the things you already know need to happen – SORP or no SORP.

Impact should be top of mind across the whole organisation. From fundraising to frontline delivery, impact data already exists and stories are just waiting to be told. Capturing and documenting as you go will make light work of year-end impact reporting.

• Appeal wording must be watertight.
  
  Fundraisers are already familiar with framing the ask so supporters can see how their gift could help, yet without restricting donations. But extra care here could save reporting issues if funds need to be moved or released later.   
  
  
• Restrictions need to be more robust.
  
  Fundraising, finance and delivery teams need to be 100% aligned on any restrictions. A shared understanding of why it's necessary and how it will affect planning, delivery and reporting means everyone is on the same page when it comes to accounting for and explaining them further down the line.
  
  
• More cross-team collaboration.
  
  From donor promises to income recognition and delivery activity. Getting it right and documenting the evidence relies on fundraising, finance and frontline teams working together. So when year-end arrives, reconciling data is straightforward, decisions can be readily evidenced, and risk can be explained confidently.
  
  
• Joined-up, explainable data matters more than ever.
  
  Charity finance teams are tenacious. But the numbers now need to add up when read alongside impact and delivery, and be presented with robust explanations behind key decisions. The best CRMs bring fundraising and finance together to make this easier, more accurate and to remove the stress of recalling reasoning at year-end.

For trustees, as stewards of public trust, SORP 2026 is about transparency and clearer articulation. There's a definite shift away from purely financial reporting and generic statements about responsibilities to telling the story behind their governance. Key expectations trustees should be aware of include:

• Why and how decisions are made, with documented evidence
• How oversight works in practice to monitor performance and risk
• What financial, operational and environmental sustainability means in reality
• Greater transparency around key risks to the charity and how they're managed and mitigated

In summary, trustees are expected to present a fairer and more balanced view of a charity's impact, finances, risks, and future.  

Be assured, it's not about more work, but aligning data for compliance - not just for operational efficiency.

CRMs, such as Donorfy, enable many of the practical shifts trustees and teams are being asked to make. 

The best bring everything together – and integrate with finance tools – to give everyone a single, reliable source of income and donor data structured to support financial and narrative reporting requirements.   

Remember…

SORP 2026 isn't there to catch anyone out - it's about bringing good practice to the forefront.

For the majority of fundraising and finance teams, it's about demonstrating what you already do well - no time-consuming overhaul, just better data capture and more meaningful explanation.