Gift Aid for Mosques

During the Covid19 crisis Mosques suffered as they had to close and there was no Government support available.


Despite this, many Mosques played a vital role. They managed Covid19 safe funeral prayers, promoted spiritual wellbeing using online facilities and supported the vulnerable in the community by reaching out to them.


The pandemic crisis has highlighted the importance of maximising the support available from Government. Gift Aid is one of the main way, the Government supports charities – Mosques often lose out by not having the systems in place to make the correct gift aid claims.


Even bucket donations collected during Friday prayers can attract gift aid with the right systems in place.


Our live webinar is designed to address the knowledge gap. We have joined up with Grant Thornton Tax experts who have direct experience in helping a Mosque claim significant funds in Gift Aid.


The webinar will be hosted by our Founder Director Nasir Rafiq, a widely experienced financial governance expert that helps many charities of all sizes and types within the Muslim Charity sector.


Date: Thursday 2 Sept, 6-7pm, Registration link


A copy of the recording is available. Please email for a copy with following details:


1) Name

2) Contact email

3) Organisation name

Preparing budgets for Trustees

During the 1980s, the Rambo movies were the ultimate action movies. The pinnacle scene in all these movies was when John Rambo prepared for war. The music in the background, the sound of Rambo stripping up his gear, loading guns, marking his face and then tying a red strip over his forehead prepared him for battle. Rambo had infinite bullets, bullet proof skin and luck always on his side, despite all this, he still had to prepare for battle and war. Preparing and planning is a key ingredient for taking on any challenge, mission or objective. Regardless of the size and reach of a charity, they too have to prepare and plan. The work of some charities is too important to fail. Unlike Rambo in movies, charities in real life rescue the vulnerable out of hunger, poverty, desperation and disadvantage. The budget process in a charity should represent preparing and planning process.

Trustees with no financial background often are put off by budget presentation and engagement. When this happens then it is not the trustees that have a weakness, it is the budget process itself that is flawed. I professionally grew up in KPMG UK working in the Government and Public Sector division. My work required reviewing how local councils of all sizes utilised their resources, part of this was to review their budget setting and monitoring processes. This gave me a unique insight of how elected councillors with no finance background engaged in this process – I saw where it went well and where it did not go as well. The charity sector has much to learn from local government. Simple communication is important

When appointing a CEO and the finance lead, the trustees should not only look for budget setting and monitoring skills, the presentation and communication skills are as important.

The CEO and more importantly the finance lead should be able to present finance information in a way that makes sense to the Trustees with no finance background. The role of finance is often misunderstood in charities and this often impacts the type of staff recruited in finance positions. The finance department is not just an accounting and cash transfer function. It has an important role to play in planning and strategy development. Strategy has to mean something


Trustees are often most engaged in strategy development. Strategies should be about how the organisation plans to run and achieve its objectives. This process should not be just a feel good marketing ploy that has no reference to underlying charity resources, ability, strengths and weaknesses. I see this too often. This is where the budget process starts to go wrong. Strategy setting and business setting become two different processes – the left hand does not talk to the right hand. The budget process becomes irrelevant to trustees with no finance background.


Budgets should be linked to strategy and trustees should be engaged to discuss the below.

  • Staff structure, ability and reward

  • IT and facilities infrastructure required to deliver strategy

  • Marketing strategy and plans

  • New markets and development considerations

  • Modus operandi

Trustees should endorse strategic objectives and budget framework in this context. Only then the budget becomes relevant to trustees with no financial background. The devil is in the detail

The finance and accounting profession is technical and regulated. To expect Trustees with no financial background to grasp this in a budget presentation is wrong.

The role of trustees is high level scrutiny and strategic direction – this is what should be expected of them. The details should be left for the employed finance professionals, Executive and those trustees that have a financial background. Trustees have a duty of care and thus should seek independent financial advice when required there is no requirement for trustees to form opinions based on their own lack of skills and understanding – The bigger the charity, this becomes a bigger problem.


In charities where this happens, this reminds me of Rambo and the reality of it. An actor that acts like an action hero when in real life he is not – This only works well and ends well in movies. Charity finance, accounting and budgets can be complex. Trustees need to ensure all the right bits are in the right places for it to work. Preparing is key – regardless of size, risk and complexity of charity.


Author: Nasir Rafiq is a widely experienced Chartered Accountant and a Financial Governance Expert. He has led and directed large finance function in large and complex charities. He is the founder and director of Dua Governance, a charity finance specialist accountancy and business advisory firm.

Governance – When it goes pear shaped

Dominic Cummings, the former senior strategy advisor to the then newly elected Prime Minster Boris Johnson was at the heart of government when the Covid 19 crisis folded and was privy to all that went on.

After being forced to leave government, he appeared before the MPs committee on 26 May 2021 to answer questions on how government responded to the Covid19 crisis, this was a fascinating and a shocking viewing.


This reminded me of issues I regularly experience in charity and business organisations.


I have never been a fan of the politics of Dominic Cummings but his fascinating insight and views on how the government machine worked really hit a nerve. He had many golden nuggets to share for those that understand the practicality of good governance in large and complex organisations. In crisis the cracks are all laid bare. 


In this blog, I will share some of these golden nuggets:


 1. The role of corporate planning


Yes, its important to have crisis management plans and risk registers. These should be regularly tested. A government can have all that in place at department level, however this is still not effective unless there is a central plan that brings it all together. 


In my line of work, often I see a silo working culture in large organisations. In this culture, staff in each department and division become inward looking and start to tick the box for their own sakes. They do not realise that when the organisation hits a crisis, it is not the department plans that matter anymore – the plan has to make sense in the context of corporate priorities and defense, led by the central leadership.


In my line of work, often I see a silo working culture in large organisations.


Organisations that often have an effective corporate strategy and plan backed by a corporate risk register are the ones that ensure work done at individual and department level is most effective for the wider organisation, its stakeholders and its beneficiaries.


There is no point of having a star performing individual or department, if it does not save the overall organisation from sinking.


There is no point of having a star performing individual or department, if it does not save the overall organisation from sinking.


2. Decision making in crisis


Cummings in his appearance talked about finger pointing of key roles and government departments at each other. He spoke about some great work and talent at junior levels that were being ignored. All this accumulated to a culture of chaos, as the government formulated a response to the pandemic.


In normal times, large and complex organisations can have conflicting priorities and policies between departments and official positions. However, in a crisis these can become a hurdle and hold back when there is culture of silo working.


The one strong leader needs to become the pilot taking over the reins while switching off the auto pilot.


It is at these times; the one strong leader needs to become the pilot taking over the reins while switching off the auto pilot. Those that have the titles may no longer be suitable anymore – others may need to be upgraded to speed up the decision making. Policies that governed the organisation in normal times, may now need to be flexed, removing red tape to create breathing space. All this is needed to respond to the crisis and to save the ship.



Consultation for decision making is good but it is a means to achieve a greater good not the end goal. Consultation should be meaningful in a crisis, not just for sake of it to please individual egos.


The leader and the wider executive may be appointed through a robust and fair recruitment process – these are for normal times. When the crisis hits the fan, the leader is expected to rise to the challenge taking difficult decisions and making most of the tools at his / her disposal. There is no time for hiding behind or blaming others.


An important consideration for those that appoint leaders and CEOs is this question: “Does this leader have the ability to steer the ship in a crisis”. Such focus can have an effect of changing the selection criteria and the value of the leader to the organisation.


The leader must be a leader for all times, not just for the happy times.


3. Data does not float in air


Having worked on data quality audits in the NHS and local government, I recognise the mechanism by which data is generated and checked. Data is not born from thin air, it requires fit for purpose systems, people and infrastructure.


The use of data for normal times can be different from its use in abnormal times. To make the data available in abnormal times, it is not always easy to train people, install systems and infrastructure at short notice – these changes require time and investment.


In my experience, organisations that invest in their IT and data infrastructure in good times are the ones that have readily available information to take the right decisions at the right time in a crisis as well as normal times.


Often organisation neglect the value of investing for the bad times and end up “stop” and “searching” for solutions during a crisis – this is the worst time for investing.


Often organisation neglect the value of investing for the bad times and end up “stop” and “searching” for solutions during a crisis – this is the worst time for investing.


A good leader needs to be able to “see” to navigate through the storm, using the tools at his / her disposal. This is only possible with advance planning and investing.


4. Be careful on who your advisor is


A strong leader will attract strong advisors. The leader will respect them and will know how and when to use their advice, maxmising their value to the whole organisation. Whereas weak leaders either disrespect their advisors and their advise or are led and controlled by them.


When the going gets tough, these advisors are not the ones taking responsibility for the decisions their leaders take. The buck will always stop with the leader. If a leader has to rely on the advisors to look good then the foundations are on shaky grounds.


If a leader has to rely on the advisors to look good then the foundations are on shaky grounds.


Leadership is about the grand plan, vision and strategy – the role of the advisor is to fill in the gaps on how this is best achieved.


If the leader lacks what it takes to lead than you can’t blame the advisor when it goes all wrong and the carpet is pulled under the feet when it was most needed.


Many lessons are to be learnt from this controversial advisor of a controversial Prime Minister during one of the most controversial times in British history.


Author: Nasir Rafiq is a widely experienced Fellow Chartered Accountant (ICAEW) and a Charity Financial Governance Expert.

He is the Managing Partner of Dua Governance, a Charity Governance specialist accountancy firm.

Nasir has held many senior finance positions within the UK charity sector and continues to advise many charities on financial governance matters.


Accountability of Muslim charities – We talk to British Muslim TV (Sky 752)

“Accountability of Muslim Charities” – Nasir Rafiq talks to Mohammed Shafiq on BMTV Questions live during Ramadan 2021, Wednesday, 28 April 2021, 4pm.


Nasir Rafiq is the Founder Director of Dua Governance Chartered Accountants and Business Advisors. He is Financial Governance Expert and provides a wide ranging accounting, internal audit and financial advisory services to a large portfolio of Muslim charities of all sizes in UK.


Nasir regularly writes a professional blog for those involved in the charity sector. He analysed the accounts of top 20 Muslim charities to assess the impact of lock downs during Ramadan. Link


He also analysed the overheads of Muslim charities. Link

Gardening and International Relief – a strange relationship

Once, after weeks away, decided to cut the grass and bring some order in the garden. It was a jungle, an impossible task. This is how INGOs approach relief work – disasters are like overgrown gardens in a bad shape, an impossible task. The decision to take on this task should not be taken lightly.


Is it the responsibility of INGOs or should it be the responsibility of Governments to use their resources fairly and justly? Setting the right objectives is the most important part in setting the right strategy. INGOs often fail at this hurdle, impacting the resulting approach.

Before cutting the grass, I put on gloves to avoid splinters, a cap to avoid direct sunlight, I took an allergy pill, as pollen was high. Each time before cleaning the lawn mower, I disconnected the electrics to avoid potential accidents. Risk Management should be part and parcel of INGO work, this should not be seen as a burden. Tie the camel first and then expect God to protect it.


Recruiting able staff, budgeting effectively, enforcing banking and procurement controls, installing proper systems and having a good marketing / PR strategy are all signs of risk management – without these Insha’Allah and Masha‘Allah alone do not work.

I took regular breaks to assess my progress and cleaned the garden on the go. The INGO sector is a fast moving sector sometimes delivering impossible tasks. There is a lot of learning that needs to happen. Better governed INGOs have effective Internal Audit and Evaluation functions, continually develop their controls and better their performance.


Effective Boards don’t get excited on-to-date achievements, they keep the bigger picture in mind – it is not the distance “traveled” that matters but the distance “to travel” that matters – this attitude changes the way INGOs are run.

I uprooted many established weeds with deep roots, they had become part of the garden – they did not add any value, the process looked ugly.


Fast growing NGOs should review the impact of the workforce, those that do not add value should be trained, reallocated or removed – difficult and ugly but a necessary evil. Weeds effect healthy plants and their growth.

After a difficult day the garden was clean – objective achieved.

Nasir Rafiq, BA, FCA is the Founder and Director of Dua Governance Chartered Accountants – A charity finance and governance expert

Stress testing of the 20 large Muslim charities in UK

Ramadan this year will be like no other Ramadan before it. The virus lockdown will mean that there will be no prayers in the Mosques or community iftars (opening of the fast). Ramadan will be at home with family.

Ramadan is also a month when Muslims give their Zakat and increase their Sadaqa donations. Ramadan becomes a peak and most busy period for Muslim charities to raise funds, especially those charities that have international relief operations. They raise funds in UK to deliver projects abroad.

The fundraising planning for Ramadan starts three months in advance and the full year’s income’ depends on the funds raised during Ramadan. The lockdown this year during Ramadan will deprive the Muslim charities from carrying out many of their planned activities.


The story of 20 Muslim charities


Each year these charities collectively raise Zakat and Sadaqa monies for emergencies. This aid saves lives by providing shelter and food when local governments often fail to do so. They provide regular support to more than 100,000 orphans living in poverty. These orphans rely on this support for a better and secure future.

Each Ramadan millions of food packs are distributed worldwide and to coincide with the Hajj ritual hundreds of thousands of Qurbani sacrifices are carried out and the resulting meat is distributed to the most in need and often in the the most remote and hard to reach places.

In order to assess the impact of the lockdown on Muslim charities working in the international relief sector, I reviewed the latest submitted audited annual accounts of 20 mainstream Muslim charities. My objectives were to assess the following:

  1. Total income raised for International relief and how much is related to UK donors.

  2. Total staff employed and the total wage bill.

  3. The average liquidity of reserves and the ability of these charities to spend without selling assets or relying on debtors.

  4. The average level of unrestricted funds that that these charities held and the flexibility these charities had in responding to the economic downturn.

The table below lists the 20 selected Muslim charities in alphabetical order.

These 20 mainstream charities are responsible for a significant portion of the funds donated by the Muslim UK donor. They operate a similar business model and face similar risks and challenges. Their combined financial position can give a good indicator on the potential issues the Muslim charity sector is set to face due to the expected and forecasted economic downturn.

I reviewed each of the accounts and took an average of two years – these latest accounts covered mostly the year 2018. I noticed some issues that made the comparison and the assessment challenging. So, I had to use my own professional judgement and experience to moderate the numbers so that the findings were meaningful and relevant.

Below are the issues that I noted during my review of these accounts.


1. Accounts show historical position more than 12 months old


Often the accounts are submitted nearer the deadline which is 9-10 months after the accounting year-end. As a result, the reported numbers represent figures that may be more than 12 months old.

International relief is a fast paced sector – numbers that showed the position and performance 12 months ago may no longer be relevant. Its important International relief charities work to submit their accounts within six months after the accounting year-end.


2. Income breakdowns are not sufficiently broken down


Income disclosures do not provide enough breakdown to assess the type of income and the geography it relates to. This causes issues when comparing accounts. Different types of income attract a different cost and operating model.


3. Understatement of fundraising costs


Some accounts either understated their cost of fundraising by allocating most of their back-office operations to charitable activities or did not disclose them at all.

Within the Muslim charity sector, the slogan of 100% donation is heavily used and it may be this is resulting in charities to understate their cost of fundraising. Although this approach may suit a certain marketing narrative, it has an effect of hiding costs and the opportunity to control such costs. You cannot fix what you can’t see.


4. Large charity size effect


Islamic Relief Worldwide (IRW) reported income was £127m, the next largest Muslim charity had reported income of less than £40m. This is important to note because if IRW is considered in a similar manner to other charities then what happens at IRW can skew the averages derived from the selected sample that includes IRW. Therefore, it is important to review the averages with and without IRW to ensure the averages were meaningful and relevant.


Findings – the impact of the lockdown


After reviewing the 20 accounts and moderating to ensure they were comparable, my findings are as follows:


I – Income – £370m raised annually of which around £80m raised in Ramadan


In the last reported period these 20 charities raised a staggering sum of £370m during a 12-month period. The UK donations were £225m (61%) of this total raised. This balance included gift aid from HMRC and also included gift in kind income of around £25m – these are goods donated to charities, mainly medical from USA and food from various global Institutions.

It is estimated that these charities raised around £80m (35%) of their income during the month of Ramadan in UK. Due to the lockdown this part of the income is at risk.


Lockdown impact on Ramadan income


Due to the lockdown these charities may not be able to raise funds from the community through Events, bucket collections or within Mosques – this will deprive them from those donors that traditionally either gave cash or pledged money at Events.

The economic uncertainty, 20% salary decrease of furlough employees and a significant drop in self-employed and cash business income can have an impact of reducing the Ramadan income from the expected levels or the levels raised in the last reported accounts.

If the Ramadan income drops by 50%, this can potentially wipe off £40m in total income and around 18% of the total yearly income. Given some costs for Ramadan have already been incurred, this will have an immediate impact on charity finances and the ability of charities to raise funds during the remainder of the year.


II – Payroll – £40m with 1300 employed with many self-employed


In the last reported period, the selected 20 charities spent around £40m on wages and salaries. Using an average salary of £27,410, it can be estimated that these 20 charities employed around 1300 employees.

The total annual wage costs of these 20 charities is around 11% of the total annual income – this is competitive and better than the wider mainstream sector average.

This does not include staff employed abroad on local partner payroll and funded by these 20 charities or those that are on self employed contracts. The number of people that rely on these charities for their sole income is far higher than the reported figure in the accounts. 


Ramadan effect – jobs at risk


The sudden drop in income in one month can increase pressure on charities to reduce their overall costs, salaries being the largest costs will need to be reduced. Although the Government has announced to support 80% of the furloughed staff, this will have little effect on charities.

Furloughed staff will not be able to generate income, jeopardising the ability of the charity to continue employing staff after the lockdown when the funds are no longer there to support them.

The self-employed income support from the Government does not come in until mid-June 2020 – this is after Ramadan and may make it difficult for the self-employed to support the charities during Ramadan.


III – Cash reserves and liquidity – Charities had £107m in cash at year-end


At the end of the last reported period, 20 charities held cash balances of £107m – this was 68% of the total funds they held. This shows the biggest asset these charities have on their balance sheet is cash and the cash they raise is not significantly used to procure assets in UK.

The last reported period showed that six charities had cash balances below the sector average of 68% making them less liquid than others. During the month of Ramadan if the expected cash is not raised then these charities may suffer immediate cashflow issues.


IV – Low unrestricted funds can harm long term viability


On average the unrestricted income accounted for 23% of the total income raised. This is the portion of income where donors do not restrict the income to a project. Unrestricted income traditionally will include gift aid and Zakat monies that the charity can spend on any project that is eligible for Zakat.

During Ramadan, charities raise a significant portion of unrestricted funds by way of Zakat and Gift Aid. A significant drop in income during Ramadan will have a bigger effect of reducing unrestricted funds available for Muslim charities.

Charities held around half (46%) of their total funds as unrestricted. However, seven charities held unrestricted funds below the total average during the last reported period. If unrestricted income is significantly reduced then these charities will have less flexibility to use unrestricted funds to cover deficits in projects, overheads or charity activities that are funded by unrestricted income. 


The response by charities must be robust


Charities must act to protect themselves and the beneficiaries they serve. The response has to be immediate and for the long term. Economists are predicting a long period of economic down turn and recession and the Muslim charities must adjust to this new reality so that they can continue for the long term. I recommend the following key actions:


1. Cashflow forecasting should drive decision making


Trustees and management must base their short- and long-term decision making on a credible cashflow forecast. This must include all cash income and spend and should aim to keep the cash levels at a certain level. The target cash level will be different for each charity based on their strategic priorities and short / long term plans.

The cashflow forecast should be for at least 24 months and the assumptions should be realistic, so that risk is managed properly.

All Auditors will require to assess the going concern of each charity they audit. This means they will need confidence that the charity will be operating without any significant disruption for at least 12 months from the date they sign the accounts – they will need to rely on a credible cashflow.


2. Reducing costs should be led by strategy and plans


All charities will have to tighten their belts and reduce cost. Reducing the wrong costs or at levels more than required can have a detrimental impact on long term fundraising, programme quality and / or levels of compliance required to protect staff and beneficiaries.

Costs should be reduced within the context of an overall strategy and long-term plans.


3. Hidden overheads must not remain hidden


Overseas project overheads can become leaks like that in a water bucket. These overheads are not separately reported as part of the annual accounts and are shown as part of the charitable expenditure on projects. The bigger the overheads, the more funds are required to deliver the actual project overseas.

Charities must consider the costs of project delivery before committing to further spend. This may require pulling out from countries where it is too expensive to deliver projects or consider joint delivery with partners that may be able to deliver cost effectively using economies of scale. These decisions should be based on facts and figures and not mere emotions, which is often the case in the Muslim sector.


4. Annual reporting must improve


We are heading towards difficult times and during these times, charities must work to improve donor confidence in them. This can only be achieved with good audited accounts that donors can use to assess performance and compare. Within the Muslim charity sector many accounts are not user-friendly or provide sufficient detail.

Large charities should consider moving to charity specialist large audit firms. The challenge provided by such firms has an effect of improving the overall external reporting and financial governance.


5. Charities should consider merging to reduce back office costs


Many Muslim sector charities deliver the same service and operate a similar operating model with little that differentiates them. They should consider merging to save back office costs and possible project delivery costs abroad.

Branding can still be maintained with existing trustees still having influence and control. Where there is a will there is way. Muslim charities should be able to provide value for money to UK donors and this is one avenue through which value can be provided. This will also ensure charities can be protected in a tough future economic environment so that they can continue to provide valuable and life saving service to their beneficiaries. 


6. Dua Governance Webinars


Dua Governance is holding a series of free webinars tailored to the Muslim charity sector. These are aimed at trustees, management and those that work with Muslim charities. Topics include the following:

  • How to use Cashflows for decision making

  • Morals of Charity Finance for Trustees and Executive

  • How to Read Charity Accounts

  • Financial Governance for Charity trustees

  • Financial Planning for Trustees & Management- International charities

  • Accounting implications for overseas charity structures

  • Salary Benchmarking – Muslim charities

  • Effective Internal Audits – Charity sector


Author: Nasir Rafiq is a widely experienced Fellow Chartered Accountant (ICAEW) and a Charity Financial Governance Expert.

He is the Managing Partner of Dua Governance, a Charity Governance specialist accountancy firm.

Nasir has held many senior finance positions within the UK charity sector and continues to advise many charities on financial governance matters.


Please email to register your interests.


The question of charity overheads

Donating is key part of faith and worship during the month of Ramadan. Each donation during this period represents, a prayer, an emotion, memory of a deceased loved one or simple sacrifice of personal funds – this is why, when some charities are not able to give a satisfactory answer – it hurts.

Muslim Charities in the last 20 years have become large with millions at their disposals. Stories of high salaries and high spend on marketing with few bad stories of mismanagement of funds or safeguarding issues damages the reputation of the whole sector. The question of overhead and value for more becomes more pressing.


During the Covid crisis in 2020, I analysed the accounts of 20 large Muslim charities to assess their financial health. This provided a glimpse of the charity sector finances of the 20 Muslim charities.


In summary

  • they raised around £225m of which around £80m raised in Ramadan

  • Payroll – £40m with 1300 employed with many self-employed

  • Charities had £107m in cash at year-end

When considering the question of overheads, donors should look out for the following in the charity accounts:


1. How much is being spent to raise funds and is this disclosed properly?


Although this makes donations increase in size and helps charities contribute more to their causes, a high spend with little returns may suggest waste of funds.


My analysis of the 20 large charity showed on average the cost of fundraising was around 17% of the total funds raised – each £1 spent was raising £6.


My analysis noted some did not disclose fundraising costs at all, despite these charities raising millions each year. It costs to reach donors, especially when you have employed fundraisers, adverts on TV and social media, poster, and leaflet campaigns and call centres – this all adds up.


When a charity does not disclose its costs of fundraising costs, these costs are then showing as part of charitable costs – money spent on actual causes. This maybe driven by the desire to show 100% donations (or close to it).


Online fundraising, TV adverts, fundraising consultants and call centres, all focused on raising money from the public demand’s significant resources. A charity that uses such methods to fund raise can expect to raise £4 for every £1 spent. As a result fundraising costs can be around of 25%, if not more. This is supported by my analysis of the 20 charities – four charities had cost of fundraising around that level.


However many charities do better and these costs can be from around 15% depending on the fund raising model employed by the charity, its established brand and following.


2. How is charitable spend incurred?


If this is incurred through third party organisations abroad, then the real overhead incurred abroad is not disclosed in the charity accounts – this sits with the third-party organisation. The charities are required to disclose these third party partners and how much grants are paid to them.


A good and effective overseas operation that is planned and delivered properly will have indirect overheads of 5% to 10% of the total spend in the country. Some countries are more costly than others for delivering relief projects. Overheads lower than 5% may indicate cutting of corners or some exceptional circumstances.


3. How much is being spent on support costs and what is included?


The Charity Commission requires all charities to disclose their support costs in their annual accounts. These are indirect costs that are incurred when delivering projects.


For an International relief charity, this should represent the general back-office costs (i.e. finance, HR, facilities and IT costs) that support fundraising and charitable activities. For an International relief charity this can range between 5% and 12% of total income.


The larger the charity, the smaller the percentage due to economies of scale. This does not mean a large charity becomes better at managing support costs – they should be measured against a similar size charity.


4. What is the salary ratio to income?


All charities are required to disclose their payroll costs in their accounts. During my analysis of the 20 Muslim charities, I noticed the overall ratio of payroll cost to total income to be around 11% of the total income. All charities are required to disclose staff on salaries (including benefits) higher than £60,000.


A lower ratio may indicate many workers on consultancy contracts and costs hidden within fundraising and charitable costs.


If a charity runs its own field offices, then the salary of such office staff should also be disclosed in this note. However, if the charity model is such that the projects are delivered through a third-party Partner which is often the case, then the salary costs of the field office are hidden within the Partners accounts only.


My Analysis showed that Muslim charities generally need to improve the information they disclose in their annual accounts – these should not be just marketing documents but a mechanism to satisfy the donors with many genuine questions and concerns.


Muslim charities appeal using faith values and the very same values require transparency, better accountability and that the donations are spent wisely and effectively.


Nasir Rafiq is the founder and director of Dua Governance Chartered Accountants and Business Advisors – He is a widely experienced Fellow Chartered Accountant and a charity finance specialist.

Govt support for the Self Employed

My initial thoughts on the support for the self-employed:


1. You are eligible only if your self-assessment profits were below £50k and there is monthly limit of £2,500 – many will fall into this bracket which is good news.


2. If you have not been declaring your full income in your self-assessments, basically avoiding tax then you have a problem. I can see a large number falling victim to this.


3. HMRC will use your past three year self-assessment, being 2016-17, 2017-18 and 2018-19 to work out the average monthly income based on your average taxable profits. This will be done by HMRC.


4. HMRC will then pay 80% of this average monthly income as a grant directly to the self-employed bank account – this is not a loan and nobody will be required to pay this back.


5. People do not need to contact HMRC now, if they are eligible HMRC will contact them directly. I can see issues with many being missed due to wrong contact details. Please update your HMRC contact details.


6. The HMRC grant is taxable and you will be paying tax on this in your future self-assessments. This income should be treated same as sales in substance.


7. I don’t think there will be any VAT implications – many will not be VAT registered due to being below the threshold.


8. HMRC is sorting its house out so needs time to process this all, therefore they will make the payment in June 2020 for the past three months – the self-employed will have to survive from their own funds until then – this can create significant issues for many in the short term.


9. Those that played clever and set up companies to pay themselves dividends to save National Insurance, will now lose out as dividends are not covered by this scheme. They can only apply 80% of the minimum salary they were taking, which for many was equal to their personal allowance.


All in all those that declared all their income during the past 3 years will get something, be it three months late. The Government has also delayed tax payments to help cashflow.


Will this support be enough, time will tell – I am not sure.


If anybody needs to pick my mind, send me a message.

The reality of Furlough employees and Government support

Everyone is talking about Furlough employees and the fact the Government will fund 80% of the salaries of such employees from 1 March 2020.


Many think this Government scheme applies to ALL employees – this is not so and there is a small print.


The Government is not compensating organisations for loss of income. These organisations can be mosques, charities or businesses – the purpose of this funding is not that and the Government will not compensate for loss of income.


As a result of the current lockdown, organisations suddenly had staff that could not work anymore and businesses were at risk of going down under. The immediate response of businesses would have been to let staff go. This is when the Government stepped in and said that they will fund 80% of such staff that either have been made redundant or at risk of being made redundant.


This Government support is so that staff are NOT made redundant and kept on the business or charity payroll.


The Government said to treat such employees on leave “Furlough” and these employees MUST NOT work at all for their employers. If they do work, be it part time or with reduced wages that implies that they were not at risk of losing their jobs, so such employees are not covered by the scheme. In practice many employees will fall in this situation as businesses and charities will do whatever to keep the ball rolling.


The Government expects each employer to determine the employees that are or should be on leave for this lock down (i.e. 3 weeks) and declare them as Furlough employees by formally writing to them. These employees must not then work for that employer during this period.


Although this scheme keeps staff at risk employed, it does nothing to address the loss of income or donations in the short term or long term. The effected organisations must develop their own plans to address the impact of this interruption.


The Government has asked the banks to give loans to businesses or charities, backed by Government. The banks being banks have started to pick and choose. They are applying their normal due diligence and at times are requesting personal guarantees. Not sure how far this will address the issue in its current state.


There is some support for small cash donations from Local Councils – this is focused on small retail businesses and may take time to get through.


I sense turbulent times and it is imperative that organisations, be it large or small, plan ahead to weather this perfect storm.