This could almost be a mantra from many of the charities we work with.
Much of this attitude stems from the fact that charities give a higher priority to delivering the work they were set up to do than to managing the funds they have had to raise to enable them to do that work.
In these increasingly difficult times for charities it is paramount that they manage and are seen to manage money effectively and efficiently.
The ability to record faithfully all financial transactions, whether for income raised or for funds spent, is important for number of reasons:
- The charity itself fully understands its own financial position and can pinpoint weaknesses and future possible difficulties
- The charity can inform its public (beneficiaries and donors alike ) how it spends their donations and how it gives good value for money
- The charity satisfies its accounting requirements to the Charity Commission, Companies House ( if limited by guarantee) and the tax authorities e.g. for VAT and GiftAid
We have noticed how many charities do not invest in an appropriate accounting/bookkeeping system. We have also discovered that many do not invest in skilled personnel to operate the systems often leaving it anyone who has spare time, rather than an appropriately skilled person. This is a risky approach.
Most funders we know now demand transparent and timely financial reports as an integral part of the evidence that the charity is fit for purpose.
Of equal concern is the lack of skills at board level. Frequently trustee boards do not have a Treasurer with a finance background, or someone who is not only fully conversant with Charity Accounting requirements (SORPS 2005 etc) but also is prepared to ensure that checks and balances are in place and implemented. This has often proven to cause major problems and conflicts within the charity.
Achill Management now provides a bespoke service that can help to eliminate such risks.
- We can conduct a financial review looking at policies, practices and processes. Based on our findings we can provide suggestions for change
- We can research, test and assist in the process of installing an appropriate accounting software package if none exists or the present system is failing.
- Since most charities now raise their funds from a variety of sources, their ability to differentiate how these funds are allocated to the various projects and how they are actually spent is essential.
- Achill Management can review current arrangements to help the charity avoid the risk of “ robbing Peter to pay Paul” –or leaving it to the auditor or independent examiner to sort out at the year -end accounts stage. This is often too late and the damage to reputation will be difficult to repair.
- We can also assist charities to ensure that they try and fully recover the real costs of a project when they make funding submissions to potential donors. Clear presentation of budgets will help a donor in making a positive funding decision.