Small Charities Finance Update September 2016

Welcome to the Small Charities Finance Update September 2016


Exciting Times Ahead  for CFG's Small Charities Programme

Exciting times ahead for CFG's Small Charities Programme as we launch our pilot training sessions, as well as our brand new website!

The training sessions have been very successful, with attendees reporting enhanced knowledge through good explanations of the topics and resources. 
We hope this bulletin is a useful tool - please do pass it onto others who work and or volunteer in small charities.

Sign up to receive this bulletin by email, or find out more about CFG's Small Charities Finance Programme.
Nicholas Faraday, CFG Small Charities Programme Manager



Small Charities Finance Training Programme Launch, BOOK NOW!

Welcome to the launch of Charity Finance Group (CFG) Small Charities Finance Training Programme, this is in partnership with Esmée Fairbairn Foundation (EFF) CFG is passionate about good financial management in the charity sector and together with Esmée Fairbairn Foundation CFG is able to use its years of experience and key relationships to create a programme especially for small charities and small groups.

The programme is to provide key basic financial management training to any small charity or group that has an annual income of £1million or less across England and Wales.  The programme is also working with Community Accountants and other Infrastructure Organisations who provide good financial services to small charities to strengthen what they are already doing through training and other activities that foster greater collaboration.   

The training has been set up and is being tested; information about the programme has been shared and is continuing to be shared across England and Wales.  This programme has the potential to provide vitally needed training for the charity sector but with the focus on small charities and this will help to strengthen the whole of the sector. 

What the small charities financial training will cover:
How to prepare your annual reports
Gift Aid how to claim it, Trading and VAT
Budgets, management accounts and cash flow forecasting
Introduction to paying people
Bank accounts, outsourcing, accounting principles and managing risk

The programme has its own website that has free resources on the above topics and a few others, bookings are open now and it will be a first come first serve basis. 
The programme also offers this free Small Charities Finance Update Newsletter that is sent out regularly and you can sign up for it.  The programme has also enabled CFG to create special dedicated web pages for the Community Accountants National Network and Infrastructure Organisations that have useful resources and enables Small Charities to find where their local financial service provider is.

We look forward to receiving your bookings and feedback about the programme so that we can together make a stronger charity sector by having good financial management at the centre of what we do.

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Why CFG supports small charities too

Caron Bradshaw, CEO of CFG

When people talk about the charity sector often they are often referencing the thousands of small and tiny charities who work at the heart of their communities to make lives better and to effect social change.  Yet often these wonderful organisations, who can be the glue that sticks our communities together, fail to secure the skilled support and resources of their larger counterparts.

People are drawn to the causes they support because they believe in changing the world for the better.  We might be forgiven for viewing the administrative and management work that underpins these organisations as being less exciting. But change cannot happen, or is less sustainable, when organisations feel ill-equipped to manage these charities and social enterprises effectively. 

This is where CFG comes in.

We believe in creating a sector that is financially confident, dynamic and trustworthy.  We believe that when charities of all sizes can manage all their resources effectively and plan for the future they serve their beneficiaries in a more impactful way. Smaller organisations do not always attract those with financial skills and often cannot afford to pay to bring in such experience into their charities. We’re seeking to resolve that.
CFG is delighted to have been awarded a grant from Esmée Fairbairn Foundation (EFF) to develop training and create lasting financial capacity in the sector.  We believe that this programme will help charities to provide for their current beneficiaries and are equipped to continue to support them long into the future.

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Why Small Charities need to book this finance training

Tanya Cracknell - Charity Coordinator, Spitz Charitable Trust

Tanya was one of 18 small charities who attended a pilot training for the small charities finance training programme on: budgets, management accounts and cash flow forecasting.  This is what she had to say about the training:

What is the best thing and most challenging about working for a small charity?
The variation in the work and different things I have to do this is both one of the best things about working for a small charity and challenging.

What services do you offer and what do you do?
Spitz believes in relieving social isolation in local communities through the power of live music. We work with professional musicians to engage older people in care homes and residential housing, and link them with young people to create a positive impact on the lives of everyone involved.

What are the financial management challenges do you face?
Funding is a key financial management challenge for us. It was good to meet and discuss similar financial issues with other organisations at the small charities financial training that also face the same challenges as Spitz.

How did the pilot training help you?
The training was very useful for me. Particularly the practical exercise of how to create a cash flow forecast. Doing it by getting a calculator out and filling in a spread sheet really helped me. 

Would you recommend the small charities finance training programme to others and why?
Yes I would. The training I attended was not just focused on one thing but gave the broader picture of financial management.  There was not a lot of jargon and the knowledge that was shared was of a good quality. 

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How Community Accountants help Small Charities 

Jane Pickering BA ACA, Development Manager, Action Together CIO

How did I manage to get involved in this?  A question often asked by treasurers of small charities and voluntary groups. Often they have little or no experience of money management beyond managing their own personal finances but have stepped forward (or been ‘volunteered’ for the job at the last meeting when nobody else wanted to do it!).  This leads onto more questions………What does it mean to be a Treasurer?   What are receipts and payments accounts?  What do accounts look like?   What are restricted funds? What is a Trustees Annual Report? I need some accounts that have been Independently Examined – what does that mean? Auto enrolment – what’s all that about?  The last treasurer has moved and we can’t find any of his records….HELP!!

Unfortunately, panic and worry are emotions connected to running the finances of small organisations.  As Community Accountants we can offer support to help develop confidence and good financial governance for small groups.  Calm can be restored and the organisation can prioritise the good work they were set up to do.  With one conversation on the phone we can help answer questions, we can email information; fact sheets on our website, templates to help with financial recording and a myriad of other resources to help support and strengthen the finance function within small charitable organisations. In a lot of cases this is all that is needed.  If appropriate, we can meet to offer one to one support to put into action all of the procedures we have recommended.  A friendly face that has experience and understanding to support and nurture the treasurer and, critically, the whole committee to understand how to manage their responsibilities in a simple and achievable way and, often, to realise how much they actually do know already.

We can take things a step further and offer an affordable and competent payroll and accounts service so that the organisation can decide to ‘buy in’ the work they do not want to do themselves such as running a small payroll or doing the bookkeeping.  We can prepare and Independently Examine statutory accounts for the Charity Commission and Companies House if they are needed.  As we follow organisations with their development they might start to look for contracts and need help with budgets, cash flow forecasts and costing and we can support with that.

We are committed to supporting our beneficiaries to develop some financial security whether they are a very small group of half a dozen people voluntarily managing a growing project in a deprived area of town, supporting neighbours to come together and make some real change in their street, or an established charity with half a dozen employees managing 2 grants and 3 contracts to support adults with learning disabilities. Our vision is of strong and dynamic communities in Tameside and Oldham that have the means to support themselves and their neighbours to enhance their quality of life.  Having the confidence and ability to manage money within the small charity sector is a skill that can go a long way to achieving that vision.

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CFG wants to ensure Small Charities play a role in the SORP consultation

The SORP Consultations are a series of free roundtables across the country, and are an exclusive opportunity for members to speak with experts about the best way to preserve the SORP and ensure that it remains focused on advancing the public interest.
CFG will be holding four events across England to talk to our members about the SORP Consultation. This is a unique opportunity to share your views with other charities and experts about the proposed changes to SORP FRS 102. We are particularly keen to involve small charities in our response to the consultation. It is important that the SORP works for all charities and not just the medium and large charities.

The Charity Commission and OSCR have called for a SORP Consultations due to the expected review of FRS 102 next year by the Financial Reporting Council (FRC).
The Charity Commission and OSCR are keen to ensure the FRS 102 works for charities, not just the for-profit sector. This is a prime opportunity for our members to help shape such an important piece of regulation and CFG is keen to ensure that your voice is heard.
These are free CFG events, places are limited and priority will be given to CFG members so early bookings are essential. For more information about these events, and to book, click here.
If you are unable to attend one of our consultation events but would still like to participate in CFG’s SORP consultation then please complete our SORP Consultation survey for Small Charities here.  

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CFG Update: Economic slowdown and falling interest rates

Anjelica Finnegan, Senior Policy and Public Affairs Officer, CFG

What’s the big issue? Economic slowdown and falling interest rates

The Bank of England (BoE) took the decision to lower interest rates down to 0.25% in the first week of August. This is the first cut in interest rates since 2009 and the BoE has warned that rates could fall further if the economy worsens. CFG has been closely analysing the potential impacts for charities and how they can plan going forward.

Over the last 18 months or so economists have been debating when the BoE would increase rates. Commentators are now speculating when the Bank will cut rates further as we adjust to the news that the British economy is expected to shrink by 0.4% in quarter three.
If this slowdown is temporary we can be relatively confident that charities will weather the storm. Indeed the last recession showed that the sector was not immediately hit by economic contractions, a pattern that may be repeated. However, given that charities have taken longer to recover than other parts of the economy from previous recession, if this turns into a long term trend the implications for charities could be significant.

Taking the optimistic view, there might some light at the end of the tunnel: the budget surplus target for 2020 has been dropped and if the chancellor decides to change the government’s fiscal plan and pump money into the economy by spending more on services and projects in communities, charities may see a welcome influx of funding.  However, it is unlikely that the government will traverse that route unless the downturn becomes more serious. The Bank of England’s £170bn stimulus programme is an implicit recognition that this government is not keen on spending more money to support the economy.

Direct Benefits pension’s schemes under more pressure
Low interest rates will cause further challenges for those charities already struggling to pay down their pension deficits. Long term cuts to interest rates will make it harder for charities to generate the returns necessary to fund their pension promises. This could tip some schemes over the edge, forcing charities to close.

Charities should contact their advisers as soon as possible to discuss what impact the fall in interest rates will have for them and their liabilities. It is also worth keeping in mind that charities are now required to report their pension deficits up front in their annual returns, and so they will need to outline clearly in their annual report how they will tackle the deficit and respond to these new challenges in order to reassure their beneficiaries, supporters and funders.

Foreign exchange
The cut in interest rates has compounded the hit that the pound took following the Brexit vote, with the pound falling by 1.4% against the dollar and Euro. Those charities operating overseas have already felt the impact of this. For example, World Child Cancer has reported a 9-13% cut to their programme funding.

Charities operating overseas should review their budgets for the coming year and take advice on building in further contingencies, especially as the BoE is preparing markets for a further cut to interest rates to 0.1% later on this year and may be forced to introduce more quantitative easing which would further weaken sterling.

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How a small charity overcomes financial pressure through good financial management

Ruth Chapple from Campaign for Better Transport

 What’s the best thing about working in a smaller organisation?
The variety in the workload, as I have quite a wide ranging role. Also the ability to really see the effect I’m having within the organisation, and the effect the organisation is having in the wider community.

...And what’s the most challenging thing about working in a small charity?
There’s no-one else to pass a problem onto. Once it lands on my desk I have to deal with it, and sometimes I have no idea where to start! This can be fun, going and finding out about area of HR or accountancy that I haven’t previously known about but there’s also a lot of pressure to know the solutions to things.

As an operations director, do you find it a challenge to balance lots of different areas and develop the skills to oversee them all?
Yes, it is difficult. I have quite wide ranging experience, but keeping up to date with changes in accountancy and HR rules in particular is a challenge. I have a good idea of where to get help when I need it, and try to make sure I ask for help when I’m not sure.

What do you value most about your membership of CFG?
I regularly attend London members' meetings which always remind me where the boundaries of my knowledge are and help me keep up to date with technical finance issues. The helplines are also a valuable source of advice and support.

What are the most important skills needed for your role?
A cool head under pressure (which I confess I do struggle with sometimes!) and an ability to solve problems quickly. Sometimes that’s me actually knuckling down and fixing something but often it’s facilitating a discussion between the right team members to get an issue sorted.

What have been the biggest changes to the charity sector since you started working in it?
There’s a much bigger focus on transparency now, and campaigning is viewed with a certain amount of suspicion. It doesn’t feel like it’s assumed that you’re doing ‘good things’ just because you have a charity registration these days; you must prove your impact to funders, the general public and politicians if you want to survive. I also feel like fundraising is becoming ever more challenging and all charities need to think more inventively to fill the gaps. This is a particular challenge to small charities who don’t have the resources to invest in new fundraising streams.

If the Government could change one thing that would make your (or your charity’s) life easier, what would it be?
Repeal the lobbying act and stop telling charities to ‘stick to their knitting’. Charities are often best placed to campaign for change on behalf of their beneficiaries and this should just be an accepted part of our role in society, not a right we have to defend.

What song best sums up your job?
I couldn’t think of anything but when I asked the team they said ‘Living on a Prayer’! Funding has been a significant challenge this past year so I think we are feeling the pressure at the moment.

What's the last book you read?
The Bloodline Feud by Charlie Stross – I love a bit of fantasy or science fiction after a hard day at work.

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Major News and Updates for Small Charities from CFG:

Small Charities
Pensions and HR
Law and Regulation

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