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“I’ve been part of round-table discussions with fellow sector leaders—and I’m astonished at how few charity finance directors seem to know what’s coming. It’s essential, yet largely ignored.”
— Paul Foden, CEO, Aedon.Accounting

The Wake-up Call No One Is Heeding

The Charities SORP 2026 isn’t optional. It’s mandatory for all charities preparing accruals-based accounts—typically those with income over £250,000 or registered as charitable companies.

From 1 January 2026, a full overhaul of how charities recognise revenue, report leases, present reserves, and disclose trustees’ narrative reporting takes effect. Yet too many finance directors remain oddly quiet on the subject.

What’s Changing—and Why It Matters

The Exposure Draft, published in March 2025, introduces:

• Three reporting tiers based on income thresholds (up to £500k, £500k‑£15m, and over £15m).
• Significantly enhanced trustees’ report disclosures, especially on impact, sustainability, volunteers, and financial resilience—even for smaller charities.
• Major updates to lease accounting, now requiring most operating leases to appear on the balance sheet as right-of-use assets and liabilities.
•  A new five-step revenue recognition model, differentiating between exchange and non‑exchange income—changing the timing of recognition for grants, contracts and legacy income.
• Cash flow exemption lifted—only Tier 3 (£15m+ income) charities must prepare a statement of cash flows; smaller charities are now exempt unless mandated by FRS 102.

Why I Feel Finance Directors Are Dozing Off

In round‑tables and webinars, I hear too many say: “we’ll get to it later,” or worse, “this may not apply to us.” That’s dangerous. The SORP isn’t just a technical update—it raises reporting standards dramatically. Being unprepared creates real risk:

• Funders expect impact, reserves policy, volunteer contribution, and sustainability detail—right in the Trustees’ Report. Most charities currently fall short.
• Leases once hidden off balance sheet will now affect your assets/liabilities and liquidity ratios overnight.
• Revenue timing misalignments could trigger qualified audits.
• Directors and trustees need to clearly explain how reserves support future plans—or face reputational risk.

What You Should Do Now

It’s time to get up to speed. Here’s your immediate checklist:

1. Determine your Tier under the new SORP to assess disclosure expectations
2. Revise your trustees’ report, expanding impact and sustainability narratives, and volunteer/no‑cash disclosures—even for smaller organisations.
3. Identify lease contracts and assess which must now be capitalised.
4. Adopt the five‑step income recognition model, and revisit how you treat legacies and funding income.
5. Push board oversight: explain reserves policy, future plans, sustainability risks and controls.

If all that sounds like a huge lift—good. It means your charity isn’t ready. Now is the time to act.

The Right Tools Matter

At Aedon.Accounting, we’re supporting charities through this transition via Aedon.Charities, our dedicated platform for charity accounting.

We build tools to help you:

• Structure your Trustees’ Report to meet SORP expectations
• Recognise revenue under the new five-step framework
• Record lease liabilities transparently
• Track volunteer contribution and reserves policies
• Integrate ESG/sustainability reporting

Don’t let inertia lead to risk. The SORP 2026 journey isn’t just about compliance—it’s your opportunity to raise standards, build transparency, and instill confidence in stakeholders.

Work with Aedon.Accounting – And Stay in the Right Lane

Wake up. Get ready. Follow Paul Foden’s updates at Aedon.Accounting’s resources page—and start preparing your charity now.

Use Aedon.Accounting for compliant, streamlined charity finance and visit Aedon.Charities to learn more. We’ll be writing lots more on Charity SORP compliance ahead of the 2026 measures being released. Don’t fall behind. Follow us for the most up-to-date information.