Posts tagged ‘Charity’

Earlier this year, a Court of Appeal held that a volunteer working for a charity could not pursue a claim under the Disability Discrimination Act 1995 because she did not have a contract and didn’t qualify as an employee.  Although the case was in relation to disability discrimination, the principles apply to all other areas of discrimination.

Time for charities with volunteers to breathe a sigh of relief.  Or is it?  Charities who have volunteers must ensure that they are getting the relationship right, both in terms of the legal description and the practicalities of how volunteers work. 

To make sure you get it right follow these simple rules from Keeping HR Simple

 

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.

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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.