The Charity Commission has recently refreshed its guidance called Improving your Charity’s Finances (also known as CC12). The Commission is urging all trustees, even if they are very experienced, to read the updated guidance.
The main change has been to write the document in plainer English and a more accessible format so that it can benefit as many trustees as possible. The Commission has also split the content into three separate pieces, making it easier for trustees to find the information they need. This also means it takes much less time to read the guidance.
As a general point, the Commission explains that it is vital that all trustees, regardless of whether they have financial expertise, have a clear picture of their charity’s finances, so that they can act on any ‘early warning indicators’. This is because identifying problems early gives trustees a greater range of options, which can help them manage the impact on their charity’s beneficiaries and any employees and help them recover and avoid insolvency.
The first of the three sections in the guidance is about improving your charity’s finances, which is aimed at all charities, and sets out actions trustees can take to minimise the chances of facing problems, such as active monitoring and review of their charity’s financial position. Where problems are detected, the guidance lists some options available to improve the situation and avoid short-notice issues or, ultimately, insolvency. These include launching a fundraising appeal or changing how your charity operates.
Where these steps do not resolve the problem, or the charity is already at risk of insolvency, the remaining two sections in the guidance, focus on insolvency and explain the steps trustees need to take, split according to their charity type. CC12 reiterates the importance of getting relevant professional advice and there is a checklist to help trustees understand if their charity may be insolvent or may be at risk of insolvency.
If you would like further guidance on your charity’s finances, then please contact VODA who can offer support, advice, and training to your VCSE group. Please contact our Core Services Team by telephone on 0191 643 2626 or by email at development@dev.voda.org.uk.
