What is SORP and Why Does It Matter for Small UK Charities?
If you work in charity finance, you will have heard the term SORP. But for volunteer treasurers, new finance officers, and charity CEOs without an accounting background, SORP can feel like an intimidating piece of jargon. This guide explains what SORP is, why it matters, and what it means in practice for small UK charities producing their annual accounts.
What Does SORP Stand For?
SORP stands for Statement of Recommended Practice. It is the accounting framework that all registered charities in England and Wales must follow when producing their annual accounts and reports.
The Charities SORP is produced jointly by the Charity Commission for England and Wales and the Office of the Scottish Charity Regulator (OSCR). It sets out how charities should present their financial information — what to include, how to structure it, and how to describe it.
The current framework is known as FRS 102 Charities SORP, and a revised version — SORP 2026 — is being introduced to update the requirements for different sizes and types of charity.
Why Do Charities Have Their Own Accounting Framework?
Charities are fundamentally different from businesses. A business exists to generate profit for its owners. A charity exists to deliver public benefit using funds donated or granted for specific purposes.
This creates accounting challenges that a standard profit and loss account simply cannot address:
Charities receive restricted funds — money donated or granted for a specific purpose that cannot be spent on anything else
Charities receive unrestricted funds — money the charity can spend as its trustees see fit
Charities must demonstrate to the public, to funders, and to the Charity Commission that they have spent restricted funds on the purposes for which they were given
Charities must show the full picture of their financial position across all fund types simultaneously
A standard profit and loss account — the format used by businesses — cannot show any of this clearly. SORP exists to solve this problem.
What is the Statement of Financial Activities (SOFA)?
The most important element of SORP is the Statement of Financial Activities, commonly known as the SOFA.
The SOFA replaces the profit and loss account for charities. Instead of showing income and expenditure in a single column, the SOFA shows income and expenditure split across:
Unrestricted funds — money the charity can spend freely
Restricted funds — money given for a specific purpose
Endowment funds — where applicable
This means anyone reading the accounts — a trustee, a funder, a member of the public — can immediately see how much money the charity has in each type of fund and how it has been spent.
For small UK charities, producing a SOFA every month for management accounts purposes, and annually for the statutory accounts, is one of the most time-consuming parts of financial reporting.
Who Needs to Follow SORP?
All registered charities in England and Wales with income over £25,000 per year must produce SORP-compliant accounts and file them with the Charity Commission.
Charities with income under £25,000 must file an annual return but may use simpler receipts and payments accounts rather than full SORP-compliant accruals accounts.
Charities with income over £250,000 must produce accruals accounts following the full SORP framework. Most small charities — those with income between £25,000 and £500,000 — fall into this category.
What Changes Under SORP 2026?
The Charities SORP is being updated with a revised framework known as SORP 2026. The key changes affecting small charities include:
Revised tiering — SORP 2026 introduces updated income thresholds that determine what level of disclosure a charity must provide in its accounts. Some charities that were previously in one tier may find themselves in a different tier under the new framework.
Updated disclosure requirements — certain information that was previously optional becomes mandatory under SORP 2026, particularly around governance, risk, and fund management.
Changes to fund presentation — the way some fund types are presented in the SOFA is being updated to improve clarity for readers who are not accountants.
For charities currently producing their accounts manually — reformatting Sage 50 or Xero exports into a SORP-compliant structure by hand — SORP 2026 means the templates and spreadsheets they currently use will need to be updated.
Why Do Most Small Charities Struggle With SORP?
The honest answer is that the accounting software most small charities use was not built for SORP compliance.
Sage 50 produces a standard profit and loss account. To get a SOFA from Sage, a finance officer must manually export the trial balance, reformat the columns, apply SORP headings, and split figures across restricted and unrestricted funds. This process takes hours and is repeated every single month.
Xero has a two-category tracking limit. Most small charities have more than two restricted funds — each grant from a different funder counts as a separate restricted fund. The result is that most charity Xero users manage their restricted funds in a separate Excel spreadsheet outside Xero entirely.
QuickBooks allows projects and classes but has no SORP awareness, no built-in SOFA structure, and no restricted fund logic designed for charity compliance.
Excel is flexible but fragile. It has no knowledge of SORP, no built-in SOFA structure, and no safeguards against formula errors.
The gap between what small charity accounting software provides and what SORP requires is the gap that tools like Fyntel are designed to fill.
What Should a SORP-Compliant Set of Accounts Contain?
For small charities producing accruals accounts under SORP, the accounts must include:
Trustees' Annual Report — a narrative report explaining what the charity does, what it achieved in the year, and how it managed its finances
Statement of Financial Activities (SOFA) — income and expenditure split across fund types
Balance Sheet — the charity's financial position at the year end, showing assets, liabilities, and fund balances
Notes to the Accounts — additional disclosure including accounting policies, details of restricted funds, trustee remuneration, and related party transactions
Independent Examiner's or Auditor's Report — for charities above certain income thresholds
How Fyntel Helps Small Charities With SORP Reporting
Fyntel is a reporting tool built specifically for small UK charities. It reads a trial balance export from Sage 50, Xero, QuickBooks, or Excel and automatically produces:
A SORP-compliant Statement of Financial Activities
Management accounts structured to SORP requirements
Restricted fund analysis showing the position of each individual fund
A plain-English narrative for trustees who do not have an accounting background
A SORP 2026 compliant annual report ready for your independent examiner
The process takes minutes rather than days. Fyntel is currently in development and accepting waitlist registrations at fyntel.co.uk.
Summary
SORP is the accounting framework all registered UK charities must follow. It requires charities to produce a Statement of Financial Activities rather than a standard profit and loss account, splitting income and expenditure across restricted and unrestricted funds. Most small charity accounting software does not produce SORP-compliant output automatically, which means finance officers spend hours every month reformatting reports by hand. SORP 2026 will update the framework with revised tiering and disclosure requirements. Tools like Fyntel are designed to automate this process for small UK charities.
Fyntel is a SORP-compliant management accounts and reporting tool for small UK charities. Join the waitlist at fyntel.co.uk.