Managing Finances

Accounting & Finance, Governance

Basic Finance for Charity Trustees

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Blood flow in the body is vital for a living and healthy human being. Finance in charities is like blood in the body. There is no charity activity without it. Money buys the goods and services for the most in need and connects the donating hand to the one that receives it. In humans high blood pressure and cholesterol can lead to disease, heart attacks and death. Like humans charities follow the same path. Cashflow problems, banking freeze, fraud, bad accounting and waste of money leads to beneficiaries losing out and in extreme cases a bust charity – unlike local government, charities are not bailed out and die their death. Recent Covid19 crisis has shown this far and wide. To stay healthy humans need to work on their diet, regularly exercise and see the doctor for check-ups. Charities are no different. The political and social environment is constantly changing and the economic conditions are not always favorable. Quality of staff, training, regular performance reviews and checks by internal and external professionals, keeps the finances strong and healthy. To be healthy, we don’t need to be health experts. We just need to know and do the basics. These basics can be life and death in the long term. We have organised a Webinar – Finance Basics for Charity Trustees to discuss the basics of finance that should matter to Trustees of any size charity. As a trustee, you don’t need to be a finance expert. All you need is to ask the right questions at the right time from the right people – our webinar is designed to equip you with just that. Register now @ https://bit.ly/3DGXJSC. All registrants will receive a copy of the recording.

Accounting & Finance

Let Your Numbers Talk

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Good Governance requires charities to use good quality financial information for decision making and accountability. The year-end financial statements prepared by charities provide the following minimum benefits: An annual feedback on use of reserves and financial activities. This is often a year old and may not represent the current state. If audited, then independent certification to confirm whether the financial data held by the Charity is materially ‘true and fair’ – meaning there are no ‘big problems’ in the accounts. The Executive and Trustees can be held accountable for income and spend. A discipline is enforced for keeping records and maintaining audit trails of income and spends.   In addition to the above, charities that aspire to improve their governance should use their financial statements as effective tools to improve control, inform strategy and achieve transparency, for example: The financial statements should make sense to trustees and those charged with governance. They should inform decision making and strategy otherwise there is a risk that decisions may not reflect ground reality. This could potentially lead to disastrous consequences or waste of resources. Charities should use the year-end process to take stock of their financial controls. Financial controls and financial statements are interlinked. Late or poor quality financial statements are often as a result of inadequate financial controls. The financial statements must be user friendly, reflecting the nature of the charity. This raises the charities profile and credibility among its donors and external bodies such as banks, institutional funders and regulators.   By Nasir Rafiq (Founder and Principal Dua Governance) An Expert in Governance and Internal Control

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