The demands for charities and social enterprises to provide more information about their work are increasing from all angles. Funders, supporters, beneficiaries, policy-makers, even the media are keen to know about the difference charities make to the people they help and the causes they champion.

But communicating impact through reporting can be a challenge: even when we are sure what we are doing is achieving something, proving it can be difficult.

With money tight and resources stretched, why should charities care about impact reporting? Why is it worth the investment and what’s in it for them?

Here are five reasons why we think impact reporting is important.

It helps engage donors and funders and makes them passionate about your work

Engaging supporters involves telling them a compelling story about what you do. Talking about the impact you make is an essential part of this: in order to win the trust of your stakeholders, you need to tell the real story of what you do and how you do it. We hope that the impact reporting principles that NPC has developed in collaboration with a host of other sector bodies can help you develop this narrative into something funders really care about.

It diverts your donors from focusing on admin costs

Funders and donors can only make funding decisions with the information you give them. At the moment, much of that information is financial based on the accounts charities must produce every year. This is contributing to the myth that you can assess a charity’s effectiveness based on overheads, fundraising expenditure and other admin costs. Impact reporting provides supporters with the right information they need to make an informed decision.

It boosts your accountability and credibility

Charities have a privileged position in society: they are some of the most trusted organisations in the UK and enjoy tax breaks and other advantages in recognition of the vital work that they do and the people they help. Impact reporting is a way of being accountable to your supporters, staff, beneficiaries and the general public and acknowledging the special status charities have.

Impact reporting can also be important for maintaining this credibility—particularly when a charity hits the headlines. The US charity, Invisible Children, came under fire for its Kony 2012 campaign partly because it was perceived to have poor accountability (to which the charity has responded).

It motivates and inspires staff

Impact reporting is often thought of as part of a charity’s external communications. But it can have powerful internal applications as well—not least motivating and inspiring your staff. Impact reporting can help track a charity’s progress towards achieving their vision and it enables staff to see how their work is contributing to the over all goals of the organisation.

It’s probably easier than you think to get started

You don’t need fancy measurement systems to report on your impact (although they can help). Much more important is having a clear narrative explaining what you achieve and how for the people you’re trying to help—we’ve suggested five questions you can use to think through how to write an impact report. Charities we’ve worked with have found they’ve made a lot progress very quickly and they actually had more of the information they needed than they realised.

Last night saw the launch of ‘Principles into practice: How charities and social enterprises communicate impact’ from NPC, CDG and ACEVO. Find out more about the launch here, and read the report here.