Toni Hunter's SuperBlog

I tweet  and network with many different people working in the charity sector and find that many of them have their ‘Broadcast’ button stuck on.  “Help us…”, ‘Donate here…”, “We need more followers..”   There are a few exceptions to this of course, such as @eczemasupport  and @freshties  who are real people taking the time to support others, and you will see me regularly conversing with them online

Personal and ‘to the point’

So, when I received this message from a charity connection of mine via Linked In, I could not help but be touched.  The author had taken the time to tell a ‘real’ story, with a compelling message that gave me reason to revisit their website to refresh my mind regarding their objectives.  The message was personal and did not overwhelm me with facts and did not feel intrusive.

Focus on IMPACT

It simply focussed on an example of the IMPACT the Charity’s objectives were  having on real people – not the brand, not statistics and not how desperate they are for your money. 

And of course, I clicked the giving page and donated: Perfect charity PR with intended result achieved. 

My opinion

My only comment would be (because I always have to have my ‘two pennies worth’) to take the time to personalise the message, so it was even less of a broadcast and more of a friendly communication and perhaps leave the fundraising link until after the ‘real’ story.

Gabby’s Message

Dear Friend

I doubt if you know how flat footed I am, so this personal challenge [5k run] is not an easy one for me! It is also for an extremely worthy cause and I would be really grateful if you would do your bit to support me!

Please visit my fundraising page: http://uk.virginmoneygiving.com/GabriellaBeddows

27 of the children that we support, spent this weekend at the Malvern Hills Outdoor Centre as part of our Noah’s Ark Activity Weekend. It is a very difficult time for the young people, helping them to discover and understand their feelings.  One of the young ladies wrote on our facebook wall:

“Thank you so much for such a brilliant and life changing weekend! I’ve met such kind, lovely people, and made some beautiful new friends including all the staff that were on camp!  Words cannot explain how grateful I am for everything you have done for me and how it’s helped me!  I didn’t know that I could ever move on after my Grandma’s death and you’ve helped me to achieve that so I honestly can’t thank you enough! “

With many thanks x

Gabby Beddows
Noah’s Ark Trust
Chief Executive

T: 01905 340019
F: 01905 745121
M: 07967 467958
E: gbeddows@noahsarktrust.co.uk
W: http://www.noahsarktrust.co.uk

If you are not aware of the work of this organisation, please take a moment to look at their website.

Working hard…..

Gabby says “Coming to terms with the death of a loved one is difficult enough for an adult, but for a child or young person it can be overwhelming.  Children regularly tell us that they feel isolated, misunderstood, to blame, angry, sad and struggle to cope with the finality of it all.  

At Noah’s Ark Trust  we help them through their bereavement, offering one-to-one support and guidance along with activity weekends where they can meet other bereaved children.  The service is offered free of charge to families in Herefordshire & Worcestershire and there lies our biggest challenge during this current economic climate. Last year we supported over 800 children and raised over £450,000. We are working hard to raise the essential funds we need to help these children towards a brighter future.

Your ‘two pennies worth’

Of course, I am an accountant working in the Charity Sector, not a marketing/PR professional.  If you are experienced in dealing with the 3rd sector, both Gabby and I would be pleased to hear your views on this type of PR activity, please leave a comment.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

The Finance Act 2010 introduced a new definition which Charities (and Community Amateur Sports Clubs) will need to adopt in order to ensure it remains entitled to tax relief.

Management Condition

The new definition introduces the term ‘management condition’ and states that managers must be deemed to be fit and proper persons to manage the charity.  The term manager is deemed to relate to any person who has day to day control over the running of the charity and any persons who can assert influence over its running. 

Fit and Proper Declaration

An individual is considered ‘fit and proper’ if they ensure that charity funds and tax reliefs are used only for charitable purposes.  HMRC have advised that all managers should sign a declaration as to whether they are ‘fit and proper’ they suggest a person declares the following:

1. I am not disqualified from acting as a charity trustee
2. I have not been convicted of an offence involving deception or dishonesty
3. I have not been involved in tax fraud
4. I am not an undischarged bankrupt
5. I have not made compositions or arrangements with my creditors from which I have not been discharged
6. I have not been removed from serving as a charity trustee or been stopped from acting in a management position within a charity
7. I have not been disqualified from serving as a Company Director
8. I will at all times ensure the charity’s funds and charity tax reliefs received by this organisation are used only for charitable purposes

More paperwork….

For most people this will be no too onerous a declaration and will only be a question of form filling to ensure you have the paperwork in place should it ever be requested. Red tape that could prevent your charitable status from being challenged, which could have catastrophic tax consequences.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

Fraud is often associated with loss of assets, but the non-financial impact can be far more damaging particularly in the 3rd sector where trust is paramount.

In a previous post I wrote about indicators of fraud, in this post I would like to address the impact it can have on an organisation, with particular emphasis on the not-for-profit sector.

Breach of Trust

Morale and trust can be severly altered by the discovery of fraud.  In a charity environment where income and assets are donated rather than earned through commercial activity, reputation and trust in paramount to survival. 

Vulnerability

Charities are often considered to be more vulnerable, but are they?  In fact the incidence of fraud amoung the 3rd sector remains very low in comparison to commercial sectors.  In a survey conducted by The Fraud Advisory Panel, just 7% of respondents reported that their charitable organisations have been the victim of fraud within the previous two years.  In my opinion this incredibly low figure could be as a result of less fraud being detected or a culture that discourages whistleblowing, but never-the-less, 7% is remarkably low.

So why the perception?

• Reliance on goodwill, generally being too trusting allows less ethical individuals to take advantage
• Lack of supervision, particularly where the public are involved, for example during small fundraising events
• Lower levels of management expertise or financial control
• Less frequent or indepth training of staff and volunteers
• Lower levels of remuneration

In my experience, many of these views are unfounded in most organisations, as the survey results confirm.

Financial Impact

Obviously the loss of assets is the easiest way to measure fraud, but have you considered the following?

• The cost of management time dealing with the event and the resulting communications
• The possible increase in insurance premiums, warranties etcetera
• The cost of replacing the assets/cash
• The loss of donations/sales resulting from the damage to goodwill

• The cost of recruiting and training the staff/volunteers to replace those that have been removed due to their association with the event and those who have chosen to leave because of the emotional impact of the event.
  

Non-Financial Impact

Clearly the impact is difficult to quantify but should not be underestimated

• Increased stress and negative affect on morale of internal and external stakeholders
• Less favourable and/or negative messages in the Media
• Loss of public trust, inherent goodwill and general interest in supporting the organisation
• Lack of committment by volunteers and/or decline in numbers willing to volunteer
• Exposure to further incidences of fraud as the organisation may be seen as vulnerable –  ’an easy target’

I hope this information has provoked thought, in the next of this ‘fraud’ series, I intend to look at ways to reduce the risk of fraud occuring.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

The designatory letters DChA are used by holders of a Diploma in Charity Accounting, a qualification awarded by The Institute of Chartered Accountants  (ICAEW) who hope that it will inspire confidence that the holder of the Diploma has the knowledge to make a real difference to the prosperity of an organisation through understanding of charity accounting and financial management.

Prior to 2007 the diploma could be achieved through study and examination or by submitting evidence of experience in advising the 3rd sector.  The ‘experience’ route is no longer available.

At the time of writing this post, around 700 accountants in the UK hold this diploma (listed here) and just over half of these are working in practice as auditors / independant examiners and advisers.   The remaining mainly being financial managers working with in the sector itself.

As a trustee, what does using an accountant with the Diploma mean to you?

• Confidence to trust them to provide specialist financial care with knowledge of your sector and its inherent challenges
• Reassurance that they understand the complexities of Charity Accounting
• Non-financial matters such as governance are addressed with practical solutions
• Information is presented in a straightforward and understandable manner
• Value for Money services with fixed fees and experienced resources to keep fees to a minimum
• You can get on with running your charity knowing that you are in safe hands!

In my opinion providing services to not-for-profit organisations takes additional expertise as the sector has specific accounting requirements as well as a different type environment in terms of targets, principles, reporting and management needs.  Often the people working within this sector do so for low or no monetary reward and do not necessarily have the same skills of someone who has been involved in a corporate environment.  Therefore the level of support and the approach taken to professional advice should be different.

To get the most value from your professional advisers, it is essential that they have carried out adequate and relevant professional development (CPD) and have experience in your industry.

Update:  In August 2010, ICAEW announced that in response to demand the DChA experience route is being re-opened for senior professionals in charity accounting to gain recognition for their expertise.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

Media Trust, a function of the Community Voices program at Charities Aid Foundation (CAF), was organised to provide charities and volunteer organisations across the UK with resources, training, and assistance with communications and the distribution and broadcast of their current events news.

New Grant Program

Their new £250,000 grant program aims to inspire, engage and support disadvantaged and isolated communities to get their voices heard through digital media, and promises to be a boon to the many wonderful efforts of a wide variety of social enterprises.

The initiative offers grants from £1,500 to £61,000 for such assistance to programs based in England.

Two-Phased Approach

The two-phased approach begins with grants offered during the next few weeks ending 28 February 2010, and continues toward the end of this year with a second phase of funding. A total of 27 grants will be offered as of this writing.

At the launch of the program, Media Trust Marketing and Communications Services Director Gavin Sheppard said:
We are extremely excited to begin the process of allocating grants to communities where a fully interactive and inclusive digital project could have a real impact on the lives of individuals and on the wider communities in which they live.

Enhancement of Communications in the 3rd Sector

Funding will advance Media Trust’s vision that everyone should have a voice and the opportunity to be heard, and their mission to work with media organisations and charities to enhance their communications and enable communities to find their voice and make it heard. CAF, Community Voices and Media Trust can all be found at Facebook and Twitter.

This post was written by valued twitterbuddy Nathalie Allard of Raspberry Frog.

 The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

If 2009 had one defining moment it was Social Media moving from buzzword into the mainstream conscious, with everyone from celebrities to politicians embracing the power of social content and conversation to drive actions.

Big brands were of course at the forfront often driven by a desire to have a first mover advantage in the press or reacting to some PR disaster that overtook their traditional PR and Marketing teams.

For my mind the big winners of 2009 were not the politicians or the big brands but charities small and large right across the world who were able to get awareness of their campaigns or services in front of a whole new Social Audience people who love to talk about and share the work of good causes with their own audiences.

Social Media has create an explosion of good will, from Pro-bono services to fundraising all driven by the open lines of communication created by sites like Facebook and Twitter.

The Social Dynamic Duo

There’s no denying that Facebook and Twitter have become the must use Social Age tools and should form the core part of any Social Strategy, together they create a powerful team and can feed each other and reach into different demographics creating unique social interactions.

Ask and you shall receive

In the Social Age asking for help is more than acceptable it’s expected, got a cool new project and need an expert to give you some advice? Ask your Social Supporters on Facebook and Twitter if they can’t help,they will usually pass the message along or flag it to their community if they can’t help personaly.

This dosen’t stop at just pro-bono services but also fundraising if you have positions to fill on events, ask your Social Networks to help fill the spaces.

In the social age the conversation is king.

The organisations that find the most value and worth from Social Media not to mention create the most powerful social actions are the ones that talk, and not necessarily about just their own cause.

Go off topic from time to time, talk about the weather or TV events that have captured the public imagination, shows like Doctor Who or sporting events (Olympics, World Cup) that cut across the usual demographic divides are a great way to build relationships with existing supporters and bring in entirely new supporters to your cause.

Team up with other organisations on Twitter and Facebook that have broad or similar goals to your own, cross promote each others social messages to encourage supporters to cross the divide.

Don’t look at others orgs as competition instead look on them as a way to build even more relevant networks and share in Social Success.

2010 is the year for your Charity / Non-profit to embrace Social Media and become part of the age of Social conversation, make a start today and setup a Facebook Fan Page and a Twitter Profile

With thanks to valued twitterbuddy and BullyingUK ambassador, John Carnell of TechnicaVita for allowing me to reproduce this post.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

One of the key roles of the Charity Commission is to encourage charities to adopt good practice.  They have set out six clear principles to communicate their definition of an effective charity in their guidance booklet CC10.

For a full copy of this guidance click here.  In brief, these ‘hallmarks’ suggest that a charity that is effective and well governed

• Is clear about its purposes, mission and values
• Has a strong, clearly identifiable board or trustee body that has the right balance of skills and experience
• Is fit for purpose i.e. is structured appropriately to deliver efficient services
• Is continuously learning and developing to maximise the impact of its work
• Is financially sound and prudent.  It controls the use of valuable resources to maximise its potential
• Is accountable to the public and its operations are transparent and understandable to all stakeholders.

It is the Trustees’ responsibility to ensure these hallmarks are in place.

In May 2010 the Scottish Charities Regulator reported that Charities with fewer trustees are more likely to fail.  Obviously quality of Trustees is a more important issue than quantity, but effective recruitment and retention of skilled and dedicated Trustees is imperative.

If your organisation needs assistance in developing these key principles or would like an audit of its effectiveness, please get in touch.  I use my own experiences as an accountant and auditor working in the 3rd sector in conjunction with sourcing highly skilled professionals from my business network to create a bespoke solution.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

History and culture has fuelled belief that Trustees can not be paid for their time, expertise or services rendered.  Whilst they should not be paid simply for acting as a Trustee, Chapter 9 of the Charities Act 2006 includes a statutory power that allows trustees and connected persons to be remunerated for goods and services they provide to the charity, subject to specific safeguards being in place to prevent abuse.

The biggest stumbling block is the governing document. 

As many charities were formed prior to the 2006 Act, standard clauses are often included in incorporation documents, constitutions or trust deeds that specifically prohibit trustee remuneration.  Obviously, this needs to be overcome before any further consideration can take place.  Amendments to governing documents are often complicated and time consuming due to their ‘public’ nature and may need to be approved by the Charity Commission.  Read guidance.

Safeguards

Assuming such a clause does not exist, the safeguards specifically mentioned by the 2006 Act are:

• The trustees must demonstrate that they have consulted Charity Commission guidance and have decided that it would be in the charity’s best interest for the services to be provided by the trustee/connected person.
• There must be a written agreement between the individual and the charity recording the terms of the arrangement and specifically the amount of remuneration agreed.  The individual being remunerated must not be involved in any decisions or other matters related to this agreement.
• The amount of remuneration agreed to be paid by the Trustees must be reasonable for the level of service being provided.  In other words, there needs to be evidence that the Trustees are utilising resources in a commercial manner.  This is a key principle of Trusteeship.
• Only a minority of Trustees can be remunerated in any form.  So if there is a small Board, take care.

A charity trustee should not be in a position where any personal interest may conflict with their role as a trustee.  They should not benefit directly or indirectly from their position whether through payment in money or benefits in kind.

A working example

A small charity has a part time bookkeeper who reports to a practicing accountant on the Board of Trustees. 

In order to qualify for a grant, the charity has been asked to put together a departmental cash flow forecast and some projected profit and loss accounts.  Obviously the person best placed to do this would be the Trustee as they understand the organisation and the requirements of the grant making body and have the relevant competancies, but they do not have the time.  They are in business full-time and offer their experience and personal time as a Trustee, for emotional motives. 

In the past, the Charity would have no choice but to engage an accountant to carry out this task, incurring professional fees, probably at full market rate as well as investing time to properly seek out, appoint and brief the professional.

The 2006 Act, acknowledges that it would make sense to engage the practice that their Trustee is involved with as this would be efficient and fees may well be negotiable.

In my view, this is a positive step towards making the 3rd sector more commercially aware, something I am passionate about.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

This is a very short post just to let you know that the easy-to-read guidance offered by H M Revenue & Customs on the Gift Aid scheme has been updated.

If you are, or are thinking of running a gift aid scheme for your deserving cause, I highly recommend you read this http://www.hmrc.gov.uk/charities/gift_aid/basics.htm

I would particularly like to highlight the fact that the time limit for making a claim has reduced to 4 years.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

When working with charities, the question I get asked the most is “is our TAR detailed enough?” as they naturally do not want to expose all, yet they appreciate that this is a key document that is clearly defined by the SORP 2005 and is crucial in demonstrating compliance with the public benefit tests (see previous blog post ‘Public benefit – your best defence…’)

To answer the question directly the report should:

• be about 4-6 pages of A4 print, font 11 for a small to medium sized organisation
• clearly explain how the organisation fulfils it’s objects and adheres to it’s governing document
• use plain English and refer to the accounts to which it is attached, but not regurgitate the accounting information
• use the prescribed format set out in the SORP.  i.e. use the 7 key headings.

For those who are not familiar with the SORP 2005, these prescribed headings are:

1. References and administrative details of the Charity, its Trustees and advisers
2. Structure, Governance and Management
3. Objectives and Activities
4. Achievements and Performance
5. Financial Review
6. Plans for future periods
7. Funds held as a Custodian Trustee (if appropriate)

Model reports are available on the Charity Commission Website  http://www.charity-commission.gov.uk/

Some key points that are often missed

• In paragraph 2 explain how trustees are recruited and outline the policies for induction/training of trustees.  Mapping the skills of the board and recruiting to fill skills gaps is a sign of great governance.  If your organisation has carried out this exercise, brag!
• When explaining to the reader your objectives, paragraph 3, focus on the positive impact significant activities have had and explain how they have contributed to the achievement of the stated objectives.  If the organisation is grant making, ensure the policies are explained and if volunteers are utilised, readers need to understand their role and contribution.  If possible, quantify this in terms of hours, locations etcetera
• Performance, paragraph 4, should identify milestones and KPI’s so that achievements can be benchmarked against objectives.  The public are keen to know the percentage of resources allocated to overheads, they need to understand the ROI i.e. impact per pound of funds raised.  This is obviously difficult to quantify as many of the aims are emotional, not financial, but trustees should not shy away from trying.  I have often seen larger, national charities measure their impact in terms of taxpayers money saved.
• The financial review needs to look at each fund and state the principle financial policies adopted.  Take time to clearly explain the reserves policy in particular as the Charity Commission will be monitoring this.  Make comment on how the current years performance and the current activities effect reserves.  Also, outline any financial commitments such as borrowing or obligatory grants.

This list is not exhaustive, but I hope I have set out the key points, please call me if you would like to discuss your TAR or would like me to review your draft.  Please note however, that an auditor can not write this report for you so please don’t ask!

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.