Essential Charity Finance

What does good financial management in a small charity look like? This short guides takes trustees through the essentials.

What is charity finance?

Charity finance is about the good financial management of your organisation’s resources (money, physical assets, people, data and intellectual property). This covers registered charities and also community groups and voluntary organisations. 

It includes where the money comes from (grants, contracts, donations, legacies, trading and so on) and what the money is spent on (staff, premises, provision of services to the people who use the charity, buying in goods and materials, and so on).  

It is also about the operating context and conditions for your charity.

Does your charity operate in a specific city, town or area, or is it national, UK wide or international?

Is your charity the only one of its kind, meeting a very specific need, or several charities ‘competing’ to address the same challenges in society?

Is your charity aiming to eliminate the problem it works on, and by when?

One example might be a charity looking for a cure for a specific disease or illness. Or does your charity work in an area that improves your community or people’s quality of life? Examples here might be sporting clubs, theatre groups, choirs, youth groups and social activities for different groups of people. 


Why does charity finance matter? 

Efficient management means you don’t waste money, time and other resources. It means you have more of those resources to use, as you set about achieving your organisation’s purpose. 

Effective management means you have taken steps to keep your resources safe and looked after, so that you can use them for their intended purposes.  

There are specific laws and regulations which apply to charities. As a trustee, you need to understand the rules on financial reporting, to keep the charity in line with the law. Trustees also need to understand the legal requirements for sharing information with the regulator and the general public. 


Who needs to know about charity finance? 

Good financial management is one of the central responsibilities of all charity trustees. It is not just the responsibility of the Chair or the Treasurer.

Many charities help their trustees understand their role, responsibilities and provide information and training – but it is also your responsibility as a trustee to ask questions and find out more.

Charity Finance Group can help you develop your knowledge, skills and confidence as a trustee, so you can be even more supportive of your charity. 

Where do we start? 

CFG has put together two checklists for small charities. The first checklist is for the trustee board to work through together, to assess the overall situation.

The second checklist is for individual trustees to understand what you already know and feel confident about, and where you could usefully develop more knowledge and skills. 

Checklist for the Board of Trustees

Checklist for Individual Trustees


Additional resources

Essential Charity Finance for Trustees with MHA (2018)


Build your skills and knowledge 

Foundation Charity Finance course, Thursday 16 June 2022.


Check out CFG's latest events and training courses.


Have you seen our other CFG Guides for Small Charities? Head back to Series 1 which includes guides on banking, GDPR and records management.