An analysis by the Government watchdog, of more than 100 randomly selected annual reports for the year ended December 2015, warns that too many charities are "falling short" when it comes to communicating what they do.
When it comes to using their annual report and accounts to communicate the benefit of their work, many charities are failing, according to the Commission.
The research, released this week, reveals that barely half (51 per cent) understand what is required of them regarding reporting the public benefit of their work.
Less than three quarters (71 per cent) of charities clearly explain who benefits from their work – a key element of the 'public benefit' they are supposed to communicate in terms of explaining the work of the charity.
The Commission also found that less than three quarters (74 per cent) of annual reports and accounts for bigger charities, with incomes of more than £25,000 a year, were of an "acceptable quality".
Not explaining the work the charity had done to help its beneficiaries was the most common reason for annual reports and accounts not meeting basic standards, according to the Commission.
The problem was even more acute among smaller charities with annual incomes of less than £25,000, with just 64 per cent producing acceptable annual reports.
A good annual report can also help a charity 'tell their story well' to supporters, potential funders and the public, according to the Commission.
Nigel Davies, head of accountancy services at the Charity Commission, said: "The public no longer give charities the benefit of the doubt; they want evidence that charities make a difference when using their money. Public reporting is an opportunity for charities to tell their story and explain to the public what they do and how they use charitable funds."
He added: "Producing an annual report and accounts is not an administrative box-ticking exercise. It is a chance to show how your charity is making an impact and how you are delivering on your core purpose. Too many charities are still not meeting very basic standards when it comes to making key information available to the public."
This analysis comes after a tumultuous year for the sector, with two of Britain’s biggest charities – Oxfam and Save the Children – embroiled in scandals that have seen them subject to the Commission’s scrutiny, with the watchdog having opened statutory inquiries into them.
Just weeks ago the House of Commons International Development Committee issued a damning report that claimed sexual abuse is endemic in the aid sector because of a 'boys' club' attitude in male-dominated charities.
And in July the Charity Commission's chair, Baroness Stowell, told charities to focus on changing the way they operate rather than trying to spin their way out of trouble. "This is not about explaining better, this is about being better," she said.
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