Governance

Tag Archives

What are reserves really for?

The failure of the charity Lifeline Project has renewed talk of whether charities need to keep more money aside. Kate Sayer, partner at Sayer Vincent, says that discussion on this subject often miss the point of reserves.

Whenever a charity fails, there are comments that the reserves were inadequate. Measures often relate the level of reserves to the income of the charity. But this is based on the false premise that reserve levels should be based on a formula, whereas the reserves policy should be based on the risks facing the charity.

We need to remember that reserves are unspent unrestricted income. Charity income is meant to be spent on the charity’s objects to benefit the charity’s beneficiaries. It is not intended that charities should hoard reserves for the charity to continue in perpetuity or to allow trustees to sleep better. In fact, there is a strong argument that high levels of reserves can lead to complacency and poor financial practices, such as allowing long credit terms to those who owe the charity money. Organisations that are short of cash are more likely to steward those funds carefully. That is not to say that charities should not hold reserves; charities should hold appropriate levels of reserves.

Risks that should not be managed by reserves

I often see charities using reserves to help them manage problems that have their root cause in the charity’s failure to manage some other aspect of risk.

Closure
If a charity must close, then it has not successfully managed its risks. While it has opportunities to improve the position, it should seek to do so. If the trustees see early warning signs of problems, then they should consider merger at an early stage, rather than hope that ‘something will turn up’. So this is not a signal to trustees that they should not consider financial sustainability – it is an existential risk that should be on every charity’s strategic risk register. But it should be framed in positive terms – ‘what can the charity do to improve financial sustainability?

From Civil Society Voices.    Read the full article

 


How to Build A Successful Charity From Scratch – In Seven Easy Steps

Whisper it quietly: running a charity is harder than running a for-profit business. Hiring top talent on modest salaries is harder; lack of money makes it harder to move people out with a golden parachute; mergers stumble over egos when the money motive is absent. As a co-founder of eight charities, I have made more mistakes than I care to remember.

Here are the seven key lessons I have learned about building a charity. They may seem obvious, but as George Orwell noted: “to see what is in front of one’s nose needs a constant struggle”.

1. Put in Strong Financial Controls
Any good charity entrepreneur will want to focus all their time and effort on the mission. Controls and audits are seen as dull bureaucracy. But ignore them at your peril. Charities need very strong controls – such as to ensure that no single individual can make or authorise payments – and you need to make sure these controls are being implemented. Charities are magnets for fraudsters because they are seen to be soft targets, but most fraud happens with the help of an insider. I have had three close escapes on fraud. Fraud is not something that happens to other people: it can happen to anyone.

2. Focus on Financial Management
A charity cannot change the world if it is bankrupt. Know your cash position and cash forecast, and build reserves against a rainy day. From the very beginning, charities must set out a clear financial model which demonstrates – to funders and beneficiaries – how the organisation can be sustainable long term through contracting or fundraising. This kind of good financial information can help head off a potential crisis early.

3. Avoid Chasing the Money
Money is tight and getting tighter all the time. Charities are competing harder than ever for a shrinking pot of money. So when a large donation is dangled in front of a charity, the natural instinct is to grab the money and ask questions later. This is dangerous because it means the charity may be making contractual or donor commitments it cannot realistically deliver.

4. Good Governance Matters
Some charity boards are truly excellent; too many are weak. Many boards simply want a quiet life, together with the social status that comes from being able to talk about being on the board of a charity.

To read the full article click here.

Source: The Guardian Voluntary Sector Network


Step-By-Step Guide to GDPR Compliance

On 25 May 2018 the General Data Protection Regulation (GDPR) comes into force and this will have an impact on the way fundraising operates.

An important part of complying with GDPR is considering how well your CRM system will support your ease of compliance, as well as reviewing and revising your approach to handling personal data.

The Fundraising Regulator’s new guidance has highlighted that organisations should be assessing “what impact their approach to Direct Marketing will have on any existing data management systems (for example, Customer Relationship Management (CRM) systems; databases) in order that these systems support the delivery of the agreed approach”.

Charity CRM software provider, Access thankQ CRM, has put together an essential guide with practical steps to becoming GDPR compliant and the important role CRM is to play in that.

Download this free guide to understand:
• What GDPR means for your organisation
• The practical steps you can take to prepare for GDPR
• The important role that CRM plays in compliance
• How thankQ CRM has been developed to make compliance easy

Click here to download your free copy of the guide.

Source: Charity Digital News


Top Tips: How to Be the Best Charity Trustee

You’ve been appointed as a trustee. What are the first steps you should take to ensure you’re going to be a good addition to the board?

Explore the Charity Commission’s Guidance
Your starting place (whether you’re new or not!) should always be the Charity Commission. It is the body to which trustees are accountable and by which they are are regulated. As an initial step have a look at the commission’s guidance outlining the six key duties of trustees and explaining the legal responsibilities. This should be your first port of call for understanding the essential requirements of being a trustee.

Get Some Training
It is critical that trustees have the necessary skills to contribute fully to a board, so it’s a good idea to identify early on where there be might be gaps in your abilities. This isn’t about being an expert in every single element of running a charity – but trustees do need to ensure that they can maintain a general grasp of everything that’s going on.

Many boards run a skills analysis of new trustees, but it is always helpful to reflect first on where you might need support. As trustees progress through their board career, it’s useful to do regular self-appraisals, as well as encouraging the whole board to appraise itself annually as well. Self-appraisal will help trustees realise when it’s time to move on – another important element of being a good trustee.

Get a Mentor
One of the best steps you can take if you’re new to anything, not just a board, is to find yourself a mentor. At first, you may want to consider someone who is already on the board – a sympathetic ear to just sound check ideas with. If you’ve been a trustee for a while, however, and already know the organisation, it is worthwhile getting a mentor from a different board. That will allow you to compare experiences and seek best practice from elsewhere. Obviously, this doesn’t have to be formal – a coffee before a meeting or a drink afterwards will suffice. This is about networking with your peer group.

If you are already a trustee, then offer to mentor someone else – it’s always nice when a newbie enters the room and is offered support like this.

To view the full Guardian Voluntary Sector Network article click here.


Old Meets New As Contactless Payment Tech Added To Collection Devices

A new partnership is enabling charities to accept cashless charity donations via traditional-style collection boxes and buckets.

Charity collection box maker Angal has teamed up with cashless transaction provider Thyngs to incorporate QR/NFC technology into collection boxes and buckets, enabling charities to take card payments and Apple Pay donations as well as cash. The organisations say Android Pay and PayPal will follow later this year.

Supporters will be able to donate an amount of their choice using their smartphones, and the contactless technology will also allow Gift Aid declarations and remote monitoring of each collection device’s performance.

Lee Woodford, managing director of Angal said: “The Thyngs technology allows Angal to pioneer a safe and secure way for our clients to accept cashless donations. Supporters simply scan or tap their mobile phone on our collecting boxes and can donate in less than 15 seconds. This ease of use was one of the key reasons we joined up with Thyngs. Any boxes with the old FRSB tick logo will need replacing soon, so now is the perfect time to upgrade.”

The technology does come at a price though – the collection buckets and boxes will cost at least 60p more per unit, depending on the order volume. Thyngs, which takes a 2.5% fee on each donation in addition to any card-processing costs taken by payment processors, says a single £1 donation made using the technology will cover that cost.

Source: Charity Digital News


Charities ‘Missing Vital Opportunity’ To Show How They Benefit The Public

The Charity Commission has published the findings of its work to scrutinise charity accounts, finding that 54% of those reviewed did not meet the public benefit reporting requirement. The regulator says these charities are missing a vital opportunity to tell their story and explain their impact.

As part of its regular programme of charity accounts scrutiny, the regulator analysed a random sample of 107 charity accounts against two criteria:

 how charities are reporting on the public benefit requirement
 whether the accounts meet readers’ needs

Separately, the Commission scrutinised a random sample of 109 accounts of charities with incomes of under £25k to examine their overall quality.

Public Benefit
The Commission found that 54% of charities (58) did not meet the public benefit reporting requirement. Out of these charities, 13 failed the requirement as they did not describe the difference that their charity had made; 21 charities did not include the statement that they had complied with the public benefit requirements and read our guidance and 24 charities did not do either.

The report includes an example case study from the sample, demonstrating that it can be easy for trustees to get this right and explain succinctly and clearly how their work benefits the public and the difference that they make.

Nigel Davies, Head of Accountancy Services at the Charity Commission of England and Wales, said: “Many charities do a great job of explaining how their work benefits the public. But this review indicates that too many charities are missing out on an important opportunity to tell the public why their work matters, and what difference they are making.

“We know from wider research how important it is for donors and supporters to know how charities are spending their money. Your report and accounts say a lot about your charity’s attitude to accountability and transparency and so don’t miss out on this opportunity. The easiest way to improve the quality of your accounts and report is to use our templates; we know the charities that do use our templates produce accounts of much better quality.”

The full reports are available on GOV.UK.

To read the full Charity Digital News Article click here.


Eleven Charities Fined for Data Protection Breaches

The Information Commissioner’s Office has fined eleven charities that breached the Data Protection Act by misusing donors’ personal data.

ICO investigations found many of the charities secretly screened millions of donors so they could target them for additional funds. Some charities traced and targeted new or lapsed donors by piecing together personal information obtained from other sources. And some traded personal details with other charities creating a large pool of donor data for sale.

A summary of how each charity breached the law can be found here.

The Information Commissioner has exercised her discretion in significantly reducing the level of today’s fines, taking into account the risk of adding to any distress caused to donors by the charities’ actions. The same approach was taken to fines issued to the Royal Society for the Prevention of Cruelty to Animals (£25,000) and British Heart Foundation (£18,000) in December.

Information Commissioner Elizabeth Denham said: “Millions of people will have been affected by these charities’ contravention of the law. They will be upset to learn the way their personal information has been analysed and shared by charities they trusted with their details and their donations.

To read the Charity Digital News article in full click here.


New Reporting Obligation to HMRC Affects Charities Making Grants

Those charities which receive more than half of their income from financial investments in any year need to check whether they have an obligation to report details of their grant recipients to HM Revenue and Customs (HMRC). If more than half of your charity’s income is from financial investments and those investments are managed for you in whole or in part by a broker, fund manager, independent financial adviser, or wealth manager then you may need to carry out checks on your grant recipients and make a report to HMRC to meet your obligations under the ‘Common Reporting Standard’.

The Common Reporting Standard is a global agreement to combat offshore tax evasion through the sharing of financial information between tax administrations. For more information on the Common Reporting Standard and the reporting requirements please refer to guidance issued by HMRC.

To read other Charity Commission news click here.

Want to keep up to date with all the Charity Commissions news, guidance and events? Make sure you’re following them on Twitter @ChtyCommission, LinkedIn, and sign up to their blog from their website.

Source: Charity Commission News Issue 56 – February 2017


Regulatory Alerts Issued For Fundraising Charities

The Charity Commission recently issued an alert to promote the new Charities Act fundraising rules, which came in to force on 1 November 2016. The new rules affect:

 the trustees’ annual reports of larger charities that fundraise from the public
 the agreements that must be in place when third party fundraisers raise money for charities

The changes will help charities demonstrate their commitment to protecting donors and the public from poor fundraising practices. The new law will also help to ensure that fundraising standards form part of the agreements between charities and any commercial participators or professional fundraisers with whom they work. Find out how your charity is affected by the new provisions, and when compliance with them is required. You can also look at Charity reporting and accounting: the essentials (CC15d) which have been updated to reflect the new requirements.

The Charity Commission also issued joint alerts with the Fundraising Regulator about the importance of following data protection law when handling donors’ personal information, and about complying with their legal trustee duties when working with third party fundraisers as set out in the Commission’s guidance Charity fundraising: a guide to trustee duties (CC20).

To read other Charity Commission news click here.

Want to keep up to date with all the Charity Commissions news, guidance and events? Make sure you’re following them on Twitter @ChtyCommission, LinkedIn, and sign up to their blog from their website.

Source: Charity Commission News Issue 56 – February 2017


One in Four Organisations Still Unprepared for GDPR

A quarter of marketers (26%) believe their organisations are still unprepared for the introduction of the EU General Data Protection Regulation (GDPR), with just over half (56%) reporting that they feel prepared and 5% believing it’s not their responsibility.

In addition, just two-thirds (68%) of those asked said their business would be GDPR compliant in time for 2018, according to the second edition of the DMA’s ‘GDPR and you’ series of studies into the industry’s awareness and preparedness for the GDPR.

The results show that two-thirds of respondents (66%) have ‘good’ awareness – rising from 53% in June 2016 – and that marketers ‘personal’ feeling of preparedness has increased dramatically from 49% to 71%. However, there is still a clear need for urgency with many marketers not believing their businesses will be compliant before the new rules will come into place.

According to the research, over a third (37%) of marketers said profiling is one of their biggest concerns under GDPR, while half (50%) said it was legacy data and the runaway winner is consent with 70% agreeing that it would change under the GDPR. The result of these concerns is that the biggest priority for business are ‘conducting impact assessments’ (42%), ‘giving data subjects greater control of their data’ (36%) and ‘revising your data policy’ (31%). ‘Auditing your data privacy policy’ on the other hand has dropped from 39% to 30% since June 2016.

Chris Combemale, CEO of the DMA group, commented: “May 2018 should be a date that is in every marketer’s diary, giving us around 16 months before the GDPR comes into force. It is concerning that only half of our industry feels their businesses are prepared for the new rules and not that many more believe they will be ready in time. The finish line for GDPR readiness is fixed and the risk to businesses of not being compliant is significant. Our advice is to continue preparations in earnest over the coming year. Not making it across the line in time is not an option.”

To read the full article click here

Source: Charity Digital News


Page 1 of 3123