Pave the way to productivity - Take inspiration for a new year ALSO THIS MONTH: Charity Finance Group
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The magazine for CFG members January 2020
Pave the way
to productivity
Take inspiration
for a new year
ALSO THIS MONTH:
WHAT NOW AFTER THE
GENERAL ELECTION?
YOUR GUIDE TO CFG
MEMBERSHIP IN 2020
IS YOUR GOVERNANCE AS
STRONG AS YOU THINK IT IS?
EDITOR’S NOTE
Is it time to put Contents
Member of the month 04
productivity at the We’re delighted to welcome Mind as our
member of the month. We speak to Chief
Operating Officer Paul Ward.
top of your New What’s the big issue?
What now after the General Election?
07
Year’s resolutions? Cover story: Pave the
way to productivity
ActionAid, British Heart Foundation, the
08
Happy New Year, Happy New Decade and National Trust and Crowe UK discuss
welcome to your first Finance Focus of 2020! approaches and tips for effective productivity.
Let’s deal with December’s General Election Caron’s Comment 10
and what the landslide Conservative victory Caron explores the history of the SORP and the
could mean for the sector. Fast forward to dilemma of public expectation vs public interest.
page 7 for our post-election analysis from Membership Focus 11
Roberta Fusco, CFG’s Director of Policy What’s in store for 2020? The CFG membership
and Engagement. team guide you through your membership.
Our cover story this month is about productivity in charities. It’s a big topic,
but if you’re not addressing it, maybe it’s time to start. David Ainsworth Governance Focus 12
talks to four people about why it’s important, how and where to start, and Is your governance as strong as you think it is?
where to make changes. Hear from John Good, COO at ActionAid, Peter Sam Coutinho shares her advice.
Vermuelen, CFO at National Trust, Stephen Baines, Director of Business
Finance at British Heart Foundation (whose continuous improvement
programme resulted in an additional £1m of value), and Naziar Hashemi Investment Focus 13
from Crowe UK. Read the full article on pages 8-9. Reserves – is it surprising some charities are
One thing that we know will be coming our way in 2020 is a new approach taking a conservative approach? Lucy Rhodes
and Laura Soley of Bates Wells explore.
to SORP. Following the SORP governance review, the next step is to develop
the new SORP for implementation in 2022. In her comment piece on page 10,
Caron Bradshaw explains where we are, what’s coming up and why you need Investment Focus 14
to be involved from the outset. Cazenove Capital’s Kate Rogers shares
CRM in a Box Affordable, expert help - when you need it Apart from a heads up on SORP, a topline on the impact of the election result,
and a fantastic piece on productivity, are you getting the most from being
findings from their latest investment report.
Selecting a new CRM system is risky. Statistically the failure rate is very high, and so, for charities with a member of CFG? Our Customer and Member Support team is working Economic Focus 15
modest resources, the prospect of implementing a new CRM system can be daunting. hard to improve the member experience and make sure it meets your needs.
Find out more about what we’ve discovered, new benefits and how to have Read a sneak preview of the CFG 2020
Economic Outlook Briefing findings.
‘CRM in a box’ is the Adapta product that opens up to give you the very best expert guidance, insight and practical your say with Jessica Meddick and Zoe Bennett on page 11.
CRM know-how. Inside the box is a collection of project templates and other practical resources, together with vouchers If you are confident that your charity has nailed governance, then you can CFG Events 16
for support from Adapta’s experts in not-for-profit CRM. All for an affordable fixed price to make sure your investment in sit back and relax with some leftover Christmas cake. But we reckon there’s
always room for improvement, and on page 12 Sam Coutinho explores some Book now for our spring events programme!
CRM is a success. of the key governance issues she’ll be talking about at our Technical Update Technical Updates in London and Cardiff, plus
Conference in London on 27 February. our Midlands and IT Conferences 2020.
CRM in a box, includes:
No surprises that when it comes to investments, charities are playing it safe,
• Half-day CRM workshop tailored to your organisation. Production and editing: Abby Warren
say Lucy Rhodes and Laura Soley from Bates Wells. In their article on page
• CRM Toolkit – templates, analysis and example documents to support your CRM project. Design: Steers McGillan Eves
13, they look at the role of reserves, how charities are damned if
• Navigating not-for-profit CRM – our very own expert guide to successful CRM in the not-for-profit sector. they have too much and damned if they have too little, and If you have any queries about Finance Focus or
• 20 hours of independent consultancy to help you through your project. why a carefully-considered reserves policy is essential. are interested in writing for us, please contact
kate.bines@cfg.org.uk
Last but definitely not least, we’ve published a summary
version of our very latest Economic Outlook Briefing. Neither CFG nor the authors of individual articles
Draw on a total of more than 250 years’ combined experience of systems selection and implementation. CFG’s Policy Manager Richard Sagar looks at the big can accept liability for errors, omissions or any actions
taken as a result of the content and advice contained
Email help@adaptaconsulting.co.uk or visit www.adaptaconsulting.co.uk/CRM-In-A-Box economic picture and the topline stats on page 15. within Finance Focus.
Happy reading! © Charity Finance Group
A Company Limited by Guarantee.
• Information Systems Strategy • Business Case Development • Process Improvement • CRM
Registered in England No. 3182826
• Programme & Project Management • Supplier Management • Project Reviews • Software Specialisms Registered Charity No. 1054914
• Outsourcing • Virtual CIO/IT Director • Data & Systems Security/GDPR • Advice & Support 15–18 White Lion Street,
Kate Bines, Head of Marketing & London, N1 9PG
Communications, Charity Finance Group www.cfg.org.uk
t: 020 7250 4788 e: help@adaptaconsulting.co.uk www.adaptaconsulting.co.uk
3
MEMBER MATTERS MEMBER MATTERS The latest updates for CFG members plus
opportunities to contribute to CFG’s policy work.
MEMBER OF myCFG How are
THE MONTH
we doing?
Manage your CFG membership more effectively online Find out what we’ve been working on
for your membership on page 11 – in the
In case you’ve missed it so far, we’ve We have a handy guide to read so find meantime, we’ve created a quick, open
introduced a new suite of features through out how to make the most of myCFG survey which you can fill out with all your
your website login, in the new CFG user – www.cfg.org.uk/GuideMyCFG. feedback, comments, ideas and experiences
area called myCFG. It’s available to anyone on being a CFG member. We want to
If there are colleagues or trustees in your hear from you, so please do give us your
who has set up a web account; you can organisation who haven’t registered for feedback so we can continue to improve
view and edit details we hold about your their web login yet, the primary contact in what we do for you – www.surveymonkey.
organisation, update and add contacts, your organisation can add contacts under co.uk/r/CFGfeedbackbox
With the Red January initiative kicking off the New Year, Our Red January initiative taking
place throughout the month is a great
view all the events and meetings you’ve their myCFG login, or they can email
we’re delighted to welcome Mind as our member of the opportunity for supporters to get involved
attended, and more. membership@cfg.org.uk to be added.
month for this issue. Here we speak to Chief Operating by running every day so as to both help
their own mental health as well as raising
Officer Paul Ward about Mind’s biggest achievement, much needed funds for Mind.
what changes he’d like to see from the new government, www.redtogether.co.uk
and the issues which face the mental health sector. If the government could change
one thing that would make your
Finance Count
What is your organisation’s
biggest achievement?
account more in the court of public opinion.
Whilst this can sometimes feel uncomfortable
charity’s life easier, what would it be? The next steps
This would have be to effectively tackle
Mind’s biggest achievement is leading the it nevertheless highlights the importance of
austerity, as too many charity beneficiaries
change in public attitudes and understanding maintaining strong governance, management,
of mental health in the UK. Thirty years ago, and accountability to both beneficiaries and experience the day to day impact of
society held prejudicial and discriminatory supporters. It also emphasises the centrality austerity causing them to seek support
attitudes towards mental health and people of quality of our work as a sector and of being from charities. Thanks to everyone who has participated Agenda Consulting are hard at work
with mental health problems. able to demonstrate impact. in Finance Count in 2019. We have been right now analysing the results for your
Since then attitudes have changed hugely
What positive changes has your
organisation seen in your sector? delighted with the response! This organisation, and your personalised Our flagship event
benchmarking tool will help you to measure scorecards will be available in March.
and mental health is now much better There have been many positive changes
in the mental health sector. There are two
your financial performance against other If you have any questions about Finance
is back for 2020!
understood and talked about. However organisations you have selected. The theme this year is Creating a better
there’s still a lot to do to further improve I would highlight. Firstly, the increasing role Count or your submission please do get
of people with mental health problems in in touch at policy@cfg.org.uk. future and is promising to be a fantastic
understanding and reduce stigma but day for all, whether you’ve just joined CFG
we’ve made a lot of progress and are the work of mental health charities. This
or are one of our experienced members.
continuing to do so.
The government need has been a real force for change and has
helped add real quality to all aspects of the Find out more about the programme
What is the largest source of support
to effectively tackle sector’s work, especially service delivery,
CFG
for the day and book your place now
your organisation has gained from service development and influencing www.cfg.org.uk/ac20
CFG membership?
The largest source of support is drawing on austerity, as too many work. It has also had real strategic impact
ensuring that our organisations remain
the expertise and experience of other CFG
charity beneficiaries
Awards
grounded in the needs of the people
members. There are seldom organisational who are the reason for our existence.
issues which occur which have not been
previously addressed by another CFG experience the day to Secondly, the increasing impact which
Welcome
member. This presents a great opportunity
day impact causing many mental health charities are now able
to learn from others as well as contribute
our own learning to the CFG pool. them to seek support
to have in influencing decision making in
health and social services. This isn’t always
easy to do, but it is certainly the case that Well done to our wonderful • Inspirational trustee award – David Turner,
to our new
What have been the biggest
changes to the charity sector
since you started working in it?
from charities. mental health charities are now managing
how best to respond to funder requests for
members in their success in
The Cystic Fibrosis Trust
• Inspiring Financial Leaders – Hamilton
members
There have been many changes. There What is the biggest issue facing
advice, whereas fifteen years ago it was our inaugural Awards Gitau, Who Cares? Scotland; Peter
are two in particular which I would highlight. your sector right now? often the case that charities struggled to The first CFG Awards were held in The Knight, Westminster Drug Project;
Firstly, the trend over many years towards The single biggest issue facing the mental get funders interested in mental health. Gherkin in London in December, and Irene Sobowale, The Disabilities Trust The Fifth Trust Gloucestershire
consolidation between charities to derive health sector is managing demand for our What is the one piece of technology CFG has been delighted with the response Kindly supported by our members London Music Deaf Association
additional impact, as well as economies work and services. Although funding has your organisation couldn’t do without? from our fantastic members, and their Aberdeen Standard Capital, Blackbaud Masters West Suffolk Sight
of scale in operation, has been key to increased in recent years for many mental This would have to be a well-functioning nominations, with truly inspiring stories of and haysmacintyre, this was the first Maternal Mental ThinkForward
strengthening impact as well as longer term health charities, demand has increased customer care database. excellence in charity finance being shared. CFG Awards and we hope it will grow Health Alliance
sustainability. This brings with it challenges significantly more. This presents a real need Quintin Hogg
Well done and congratulations to all our from strength to strength and continue Westminster Trustee Company
in so far as it is important to remain rooted to continue to drive efficiency so that we can to encourage our fantastic finance
in the communities which many of us serve. meet as many of these demands as possible, nominees! The 2019 winners are: Drug Project School for Social
professional and team members to
as well as continuing to make the case to • Innovation in the finance team award Richard Ludlow Entrepreneurs
Secondly, the shift in media and political Find out more about Mind, the share the excellent and vital work
opinion towards charities in recent years individual and institutional supporters to – Citizens Advice you all do for your organisations. The Labrador The Access Project
important work they do, and Red Rescue Trust
with much greater scrutiny of the sector’s continue to donate and support mental January at www.mind.org.uk • Embracing digital in reporting award World Horse
work and with charities being held to health work. – Shelterbox ASDAN Welfare
4 5
ON OUR RADAR CFG’s policy work: representing your views to decision makers,
plus research, guidance and news from around the sector.
News in brief... Policy progress
Election results Research and What’s the Applications for
The election result reinforces our mission and
purpose: Read CFG’s Chief Executive Caron
Bradshaw’s response to the General Election reports big issue? development of the
next SORP
results at www.cfg.org.uk/election_
results_2019 What now after the The SORP sets out required content of
trustees’ annual reports and accounts for
Bank of England General Election? those charities preparing accounts to give
a ‘true and fair’ view in accordance with
comment on productivity UK-Irish Generally Accepted Accounting
Practice (UK GAAP). The SORP-making
measures What else could the ‘Big Issue’ be this
January than the result of the General Election
separate departments for Immigration
and Home Affairs. These radical shifts in
body is currently still accepting applications
from organisations or individuals who wish
Andy Haldane, Chief Economist at the and the new Conservative government? It’s the machinery of government will bring to apply to one of eight engagement strands
Bank of England and co-founder of Pro to become formal engagement partners in
Bono Economics has written in the
pretty major as this government will preside some disruption and signal the strategic
Report on trust in sectors Restructuring over the Brexit process, the long-awaited intent of the government. NGOs have the development of the next SORP, due
December edition of Charity Finance to come into effect in 2022. The deadline
magazine that the charity sector needs Budget, spending plans, immigration reform expressed concern at the plans for DfID
The latest Ipsos Mori Veracity Index, The third Small Charity Leaders Insight and raft of domestic legislation that has that this might signal a downgrading in the for applications is 31 January 2020. CFG
to review how it measures productivity. He
calls for an investigation into securing better published in early December, found that Report (bit.ly/LeadersInsightReport) been waiting patiently in the wings for importance of international development, encourages all members to get involved
measurement, management, financing and 45% of the 1000 people they asked say that found that more than a third of small parliamentary time and attention. You may however, the Conservative manifesto and will be keeping you up to date on
policy in the sector. David Ainsworth has they trust charity chief executives to tell the charities restructured in the last year and developments and ways to engage
think, whatever your view of the result, that included a commitment to maintain funding
written this month for Finance Focus on truth, significantly less than the 65% who that 70% of small charity leaders say there is through the process.
with such an overwhelming majority there at 0.7% of GNI. It is yet to be seen whether
the issue of productivity (pages 8-9) and trust the ‘man on the street’. This figure has more uncertainty than before. The Garfield will be some certainty and stability, but I the post of Charities Minister remains, or
Voice your views
highlights examples of where charities remained fairly stable over the last five years Weston Foundation and Pilotlight conducted
are leading the way.
wouldn’t be so sure. The year ahead is if Baroness Barran, who has so far been
however, the ‘net trust’ score, where the an online survey in autumn 2019 amongst still a rocky one and the long term impact engaged with the sector and keen to
Despite a challenging public fundraising percentage who do trust is subtracted from charity leaders running organisations with on the wider economy is uncertain. progress on elements of the Civil Society
environment, society lotteries raised £332m those who don’t, has fallen to minus three. incomes under £5m. Compliance with Strategy, will retain the position and the
for good causes last year, an increase of Despite the winning slogan of “Get Brexit Get involved with Gift Aid
Nurses, doctors and dentists took the top regulation and legal duties was cited as sector retain a champion in government.
11% on the previous year, according to done”, in legislative terms at least, Brexit Awareness Day 2020
three most trusted spots, whilst politicians, the biggest challenge of the last year,
published figures by the Gambling won’t be ‘done’ for some time yet and The Conservative Manifesto pledges set out
Commission (bit.ly/GamblingComm). This advertising executives and government while recruitment to key roles also We’ve been delighted with the response
parliamentary and public debate will still be here were somewhat policy lite, with little in
would seem to be a particular area for growth ministers were the least trusted professions. featured as a major concern for over and involvement of our members and the
dominated by negotiations on the nature of the way of spending commitments or policy wider sector in Gift Aid Awareness Day
in public fundraising for charities. However, What does this tell us about trust in charities? a third of respondents. Applications
the exit; so talk of borders, free movement detail. On the issues CFG set out in our since we launched the campaign back
over the same period, the amount raised by Very little ultimately. to the Weston Charity Awards close
and trade will still take headlines. Or at least Charity Finance Manifesto, we can expect in 2018. Our aim was to increase the public’s
the National Lottery fell by 1.5% to £1.5bn. on 10 January 2020.
I hope they will, as these issues are of vital progress. Whilst there was no specific understanding of what Gift Aid is and how
The Fundraising importance to our society and must be
subject to proper scrutiny and influence.
mention or measures for civil society, there
is a commitment for the UKSPF to match
we might encourage donors to tick the box
to help charities claim the right amount of
Regulator explores That Britain is leaving the EU is now a given,
EU funding and establishment of a new Gift Aid. CFG will be holding this day again
in October 2020 and we’re keen for our
the levy system so CFG’s attentions will now be focused on
‘Towns Fund’ and a £150m Community
Ownership Fund, something the new
members to be involved. To find out more,
Guidance
ensuring that we avoid a damaging no deal email policy@cfg.org.uk.
The Fundraising Regulator plans to review Conservative MPs now representing poorer
the levy system for charities in 2020 and exit. At the time of writing (16 Dec) there are
northern communities may be very pleased Are you making the most of
consider concerns that smaller charities pay rumours that Mr Johnson plans to abandon
to benefit from. A commitment to continue the Apprenticeship Levy?
pledges made to protect workers’ rights and
and support
more proportionally than larger ones. One of to support charities which have helped
the considerations might be whether to move environmental protections in the Brexit Bill If your organisation has a paybill of over £3m,
transform public services was made but it you will be contributing to the Apprenticeship
to a system based on the overall fundraised that will come before Parliament and it has
income of the organisation. Currently the remains to be seen what shape that support Levy. Does your organisation draw back from
been confirmed that legislation will be
will take and what the new government’s
Free webinars
levy is based on overall fundraising spend passed to ensure that an extension to the Levy funds to train apprentices? Do you
of the organisation. There are also plans approach to commissioning, contracting and have best practice you are willing to share to
transition period beyond December 2020 is help with retention and recruitment? Would
to review the operation of the Fundraising grant-making will be. There was no specific
impossible. Whilst this clearly and visibly sets you like to find out more about how your
Preference Service which accounted for mention of an improved local government
19%, or £376k of the Regulator’s budget the parameters to fulfil “Get Brexit done” it organisation can make the most of the
funding settlement. In light of the intention
despite the number of suppressions may increase concerns that leaving with a Apprenticeship Levy?
to carry out a fundamental review of the
no deal is more likely. That doesn’t mean
made through the service halving
since its launch in July 2017. Ethical and value-led Maximising charitable it’s over. The long process to disentangle
business rates system to further reduce them
for retail businesses, there is a concern about
Following our successful Large Charities
Special Interest Group meeting on this
investment practices status existing laws and rights and negotiating
new trade deals will start in earnest and
local authorities’ ability to raise income. The
commitment to fund £1bn per year for social
topic in December, we would like to
understand our members’ experiences in
Following their roundtable on responsible CFG and our corporate member BHP could take years to conclude. this area. Contact us at policy@cfg.org.uk
care and to pursue legislation for long term
investing, CFG corporate member Brooks have recorded a webinar to help charities At the time of writing, there still haven’t reform will surely involve local government
Macdonald have recorded a 30 minute make the best use of your charitable status
Covering wage costs
been many Cabinet announcements; it’s and affect charities operating in that space. CFG is interested in hearing about members’
webinar discussing ethical and value-led and ensure greater financial sustainability. widely thought that Sajid Javid will remain
investment practices. From Gift Aid, small donation schemes and The election delivered and signals a experiences in implementing the National
as Chancellor to see through the Budget in Living Wage where in receipt of grants or
increasing the value of charitable donations, shift in politics. Whilst many cited this as a
From experienced investors to those new February. More Cabinet announcements contracting with local authorities to deliver
to business rate reliefs and exemptions for Brexit election, it’s the shape and direction
to the area, this is a really useful way of are expected before Christmas with a more services. Have you had to bear the burden
primary purpose trading, there are numerous of our country post-Brexit that is of prime
updating your knowledge and getting your radical reshuffle planned after January. This of increased wages to staff or have these
ways for charities to explore and optimise importance – and the voice of civil society in increases been built into contracts? Are there
key questions answered. may include plans to abolish DExEU and roll
their status as an organisation. creating, influencing and shaping it. A shift in occasions where you have had to negotiate
it into the Cabinet Office as ‘business as
Please contact webinars@cfg.org.uk politics it may be, but the purpose and vision with local authorities and funders over staff
Contact us at webinars@cfg.org.uk usual’, removing DfID and rolling it into the
for a recording. for civil society remains as steadfast as ever. wages? Get in touch policy@cfg.org.uk
to request a recording. FCO and plans to split the Home Office into
6 7
COVER STORY COVER STORY
Pave the way is the conversation. Think ‘where is the volume
of work, and is it in the right place? What is
Could you save money – and cheer everyone
up – by buying all the staff a better computer? Getting people on board
Productivity can help your charity do better,
Burning platform?
Many charities get interested in productivity
to productivity
the cost per outcome?’ The answer will be “Make sure you’re giving staff the right tools to
different for each charity, but you should get do the job,” says Naziar. “Too often we don’t but needs the support of your staff. The because they urgently need to make cost
a sense of whether that activity is really adding equip staff with the tools they need because first step is to convince senior leaders and savings. For some reason the business
enough value. You won’t get a right or wrong it’s perceived as ‘back office’ or expensive. trustees, then employees and, if necessary, model isn’t working. This situation is
answer or mathematical certainty, but you The reality is that the staff are tied up doing volunteers; a strategy to convince key sometimes known as a “burning platform”;
will gain an understanding.” work that is not adding value and that stakeholders is essential to success. It’s change is inevitable – without it, the
expensive intelligent resource can be important that this is not perceived as an organisation will not survive. Realistically,
John Good gives three examples. ActionAid attempt to cut costs, reduce quality, or budget cuts and redundancies may be
better deployed for a better outcome.”
looked at office space, temp workers, and make people work harder for the same pay. inevitable. This isn’t an ideal situation to
the amount allocated to fundraising teams. Map your processes Staff must be confident that it’s not a tool to start thinking about productivity. It’s often
They found that they could reduce office While wholesale change is one possibility, identify underperformers, or a redundancy easier to find improvements when there’s
space, saving £10k a desk. They stopped improvement can also come from marginal exercise in disguise. If redundancies are time and space to measure and reflect.
hiring temps to immediately fill vacant posts, gains – a phrase popularised by Dave inevitable (see “Burning platform”, right)
and found that more money could be Brailsford, the controversial guru behind “One thing about a burning platform,” Peter
then be honest and explain why. “When I
generated from major donors, philanthropy the success of UK cycling, who made says, “It’s easy to get people’s attention.”
did this, we made an absolute commitment
and partnerships, so investment in that changes like repainting floors white to show If you are in an emergency situation, don’t
there would be no redundancies,” says
area went up. up dust that jeopardised maintenance, and panic. There is still scope for honesty,
Peter Vermeulen. “We were confident
ensuring athletes had their own pillows when transparency, and a unified team. There is
Where to make changes that if we freed up capacity, there would
sleeping away from home. also likely to be more time to plan a solution
Start by asking staff which job they be no shortage of work. We might lock in than it may seem at first glance; the best
dislike doing the most and why, says Naziar The most famous productivity model is savings from natural turnover, but all jobs answer is likely to be to avoid knee-jerk,
Hashemi at Crowe UK, which is working with Lean Six Sigma, adopted and adapted by would be safe.” Avoid the language used short-term measures.
some large charities to produce a guide to the BHF. “It’s about spotting the changes that by business to talk about productivity,
productivity. The likelihood is, it may be an can make processes easier,” says Stephen which can carry the wrong connotations
activity or job which is wasting your charity’s Baines, Director of Business Finance, “Maybe for voluntary sector workers – a better
time and money, and hitting morale. Ideally, someone has to scan invoices. How far is term is ‘continuous improvement’.
it can just be stopped or re-designed to be the scanner from their desk? How much “It gets much easier if you say ‘We will
done more effectively. Nothing frees up time could we save if they moved desk?” do this’ and everyone believes you.”
David Ainsworth,
Sector Specialist resources like stopping doing something At smaller charities, clearing the space to
Derek Meier, Head of Continuous
which is unnecessary or can be done get started can be a challenge. Don’t focus
Improvement at BHF, when asked to look
differently. Failing that, ask if there’s a job your efforts on the parts of the organisation
at a particular part of the organisation, maps
Working on your organisation’s productivity can have which should change owners. Are senior all the processes visually on a whiteboard, where most needs to be done, but where
John Good,
staff able to delegate something? Is a there is most energy to change – it is
direct impact on your efficiency and finances. David project sitting with the wrong team?
breaking it down as far as he can. Then he
important to start with some small victories,
Chief Operating
identifies which are adding value, and which
Ainsworth speaks to John Good at Action Aid, Peter Or maybe another charity could do it better. aren’t. Of those which are not, which are says Peter: “You have to go where the
Officer, ActionAid
Vermeulen at National Trust, Stephen Baines from Peter Vermeulen cites an example where a essential steps for scrutiny – preventing value energy is. You have to get things moving.
And if you can find a few early savings, it
the British Heart Foundation, and Crowe UK’s Naziar back-to-work charity ended up spending
a lot of time on counselling and financial
from being destroyed. Code each of these
differently, and try to work out where gives you seed money for the next stage.”
Hashemi about their experiences and where to get support. This was referred on to other improvements can be made. One question is whether to tackle the
started in improving your organisation’s productivity. charities, along with office space to handle Stephen Baines says that car manufacturer problem yourself or get professional
it. The partner charities were delighted, support. At a large organisation like BHF,
Jaguar Land Rover has turned Lean Six Peter
Eight years ago, CLIC Sargent set out to organisation. You can’t improve productivity and trainers could go back to delivering it made sense to build a small continuous
Sigma into an art from: “There’s no mess on Vermeulen,
achieve more for its beneficiaries with the if you don’t know what result you’re working employment skills. improvement unit. For smaller charities,
the floor. All the necessary tools are at each Chief Finance
same funding, with fairly spectacular results. towards. John Good, Chief Operating Is it possible to replace staff time with station. There’s nothing unnecessary. There it can be worth bringing in a consultant Officer,
Faced with a gap between income and Officer at ActionAid, recently saved £1m on technology? A good mantra is that are whiteboards everywhere which explain which prevents the charity from having National Trust
required expenditure the charity implemented costs through a continuous improvement people are expensive and tools are cheap. processes. The next car arrives at just the to apply stretched internal resource,
a process improvement programme. It programme. He started by going back to his Around 5% of staff time is wasted waiting right time to work on. It’s incredibly smooth.” and offers a fresh pair of eyes.
identified activities which could be stopped, charity’s strategy. “You need to understand for computers to load, for example. Any FD interested in productivity should
found processes which could run more who your beneficiaries are and what they visit, he says. “As accountants we’re used
efficiently, and money-making activities which really need. Until you understand that, you Other times what looks like a major issue
to process, but do we ask often enough only needs a minor tweak to put it right.”
could be ramped up. The charity generated can’t know what’s essential to the whether our processes are optimised to
annual cost savings of £600k and generated organisation.” maximise value both for the organisation and The good news is that once productivity
an extra £500k a year in revenue. At the frontline, each activity is likely to the beneficiary of the process maximise value programmes have got up and running in
for those in other departments, and through other charities, staff have picked them up Stephen Baines,
It didn’t stop there. When they presented have direct costs, an allocation of staff
their work at CFG’s Annual Conference in time, associated revenues, a number of You need to understand the organisation? This will open your eyes.” and driven them. All you need to do is to be
encouraging, and generally, as measures
Director of Business
Finance, British
2015, there was a senior member of the beneficiaries helped and outcomes. Peter
finance team at the British Heart Foundation Vermeulen, Chief Finance Officer of the who your beneficiaries Look at the incentives
When you encounter a productivity issue,
become more and more common, they
will help to drive efficiency.
Heart Foundation
(BHF) in the audience. They launched thier National Trust, says don’t waste time worrying
own continuous improvement programme, about the quality of information, just use what are and what they Stephen Baines cautions against identifying
the root cause too early; this common Peter Vermeulen says charities need to
which found another £1m of additional value,
and similar programmes have also sprung
you have. “Don’t worry about perfect data.
Gather what you can, and get started.” In the really need. Until you phenomenon is known as “solutionising”.
“Often we’re told the problem, the cause, and
watch out for gaming. “Every KPI you set can
be achieved illegitimately. You will get more
up at the National Trust and ActionAid, where
they too are seeing positive results. Despite
case of core functions such as finance there
will be similar measures, but mapping them understand that, you the solution, all at the same time. Sometimes
those answers are right, but always double
progress if you have measures in place, but
you have to check that the measures aren’t
the big gains to be made, the science of
productivity in the charity sector is still in
to beneficiaries might be harder. It might be
easier to just map each core cost onto the can’t know what’s check. Look at the data and go see the
process for yourself. Map out the whole
creating negative externalities. Remember
that if you make gains, and results improve, Nazair Hashemi,
its infancy, so where’s the place to start? number of staff who are benefiting. Once you
identify these measures then you can start to
essential to the process. Often the real cause is somewhere
else. Sometimes something that looks quite
that will be attributed to the excellent work
of the staff. But if not, that will be the fault of
Partner, National
Head of Non-Profits,
Start with strategy
First identify what’s essential to your
map out the next steps. “The important thing organisation. minor could present a very significant issue. the leader.” Crowe UK
8 9
CARON’S COMMENT MEMBERSHIP FOCUS
Keep the SORP meeting the reporting needs of a sector
that is mainly small and full of such wildly Shaping your One learning from this group and from
other discussions that we are keen to
rooted in public CFG membership
differing operating models, causes and explore is the opportunity to redefine the
types of charity? free members’ meetings by allowing more
time to troubleshoot with the speakers and
The 2019 governance review did not explore share expertise in the room. CFG will have
the make-up of the SORP-making body itself
for 2020
a role to effectively facilitate discussion and
interest
– a question that has become a matter of use these outcomes to shape future events
concern for the sector. Unlike the position for and content.
every other sector our SORP-making body is
formed of our regulators. In the early days of What’s new in your membership?
the charity SORP the sector seemed content We have recognised the increasing value of
with this arrangement. The regulators were digital learning opportunities, and have been
seen as operating with a dual function of both championing new channels, including the
regulating and supporting/representing development of our webinar production, with
charities. However the world has changed. over 14 being released this year, covering the
key topics Making Tax Digital, investment,
The confidence that the regulators are financial preparation for funding applications,
acting solely in the public interest is depleting and cash flow.
and they appear increasingly concerned with
public expectation and opinion. The CC press The CFG Podcast also launched in early
release about the panel’s report stated the 2019, featuring interviews with Nicki Deeson,
review found ‘the SORP must change if it is Finance Director at Amnesty International,
to meet public expectations’1; a phrase which Gift Aid Awareness Day ‘two part special’
Caron Bradshaw, Jessica Meddick, Zoe Bennett,
Chief Executive, did not appear in the report. This worries with Cancer Research UK’s Richard Bray
Customer and Customer and and NCVO’s Paul Winyard, and our series with
Charity Finance Group me. SORPs are not set up for the purpose Member Member
of meeting public expectations. They are Support, CFG Support, CFG
Association of Independent Museums where
there to ensure that accounting and reporting we spoke to some of our shared members
Happy New Year! It may sound extraordinary to say this requirements are translated into the context about their organisations and work.
piece will not mention the outcome of the General Election of the industry in question so that reporting Over the last year CFG has worked hard to develop We also recently launched myCFG, a new
remains in the public interest. ‘Public suite of features available through your
– but it won’t; that will be covered elsewhere in this issue. expectation’ is not ‘public interest’ or ‘public our membership, from the benefits we provide, to the website login, which will give you more control
Instead, I’m going back to basics – accounting and benefit’. There is an important distinction. way we interact with you, our valued community. We’re over your membership, so you can manage
reporting. This year signals a new approach to SORP- exploring what exactly it is that makes our members stay, your organisation’s contacts more easily
and personalise what you’d like to receive
making for our sector – and you need to be involved. what we can do to increase our value to you, and how from us. This functionality is intended to be
best we can reach our non-members in the community reflective of your needs so as it develops,
Accountants were instrumental in raising sector, and that reporting is a key part of please do feedback any requirements so
the standards of charity finance over the the puzzle which helps us communicate to support them too. that you can be a part of this process.
last three decades and have always been how we operate.
at the heart of the developing the SORP.
2010 saw the migration of UK accounting The confidence that the What we’ve learned in 2019
With the goal of gaining knowledge and
and offer so much insight into how
non-profits can apply change in their
We are very excited about the new member
benefits we have implemented over the past
Unlike other sectors, finance professionals
have driven the agenda for transparency,
standards to IFRS. This is important because
of the absence within IFRS (and IFRS for SMEs)
regulators are acting insight from our members, we have made
a considered shift to a more proactive
organisation. As such, we have made it
our priority to create more opportunities
year – and this is only the beginning.
consistency and quality in accounting
reporting and disclosures.
of the concept of public benefit – a key part of solely in the public approach in our membership strategy. The for members to meet with your peers and
The only way we can continue to strengthen
our offering and make sure our members
When CFG started in 1987, there was no
what we do. Whilst the international standards
we have to apply have private enterprise and interest is depleting and decision to alter our working style was made
alongside a lot of exciting change internally.
share expertise and knowledge across
different platforms.
are getting what they need is by hearing from
you. Our focus this year is to host more focus
SORP. Three reports, issued in 1987 and
1988 by the National Audit Office, Public
private, rather than public, benefit in their
DNA the SORP will remain essential.
they appear increasingly The introduction of the new CFG website and
CRM system presented a perfect opportunity
This insight has inspired the introduction groups, develop special interest groups and
Accounts Committee and a group led by
In 2019 the SORP-making body (now including
concerned with public to reinvent the membership team as a whole.
of a new pilot regional engagement forum
rolled out in the north. In November, a small
meet more of our members, so we can share
with you even more timely and current content
Sir Philip Woodfield, highlighted weaknesses
in charity accounts. We have come a long NICR) commissioned a governance review expectation and opinion. We wanted to align the member journey
to reflect the new infrastructure we have
group of members were invited to meet and
discuss the challenges they are facing specific
on relevant issues affecting you and your
organisation.
way since. Now, whilst the Trustees’ Annual from an ‘independent oversight panel’. Its
implemented. to the region sharing their views on their
Report and Accounts do not of themselves aims were laudable; to review who should If you have any feedback regarding any
be involved in the development of the As I said in my Annual Dinner speech in Our members are the jewel in the crown of experiences of our conferences, members’
provide everything required for our November, we should not be courting aspect of your membership or experiences
stakeholders to understand what a charity requirements under SORP and to consider CFG, we strongly believe that they should meetings, publications and membership
popularity or acting as ‘the public expect’. We with what we do, if you’d like to feature on
exists to achieve, what it did in the year and what structure would ensure that it met the not only influence, but shape our work. offering as a whole. We hope that this group
should be acting in the public interest and for a podcast about a topic you are passionate
how its finances stacked up, they are an needs of the widest stakeholders of the sector. will continue to grow and bond, and we can
the public benefit. If this agenda takes hold at A fundamental aspect of our development about, take part in editorial opportunities or
important part of the mix. Of course they expand this model for all of our regions.
This isn’t new. In 2009 Queens University the heart of our reporting framework it will take work has been investing more time into speak to us about any specific challenges
cannot offer all the answers but they do Belfast published a report, Charity Reporting us down an undesirable path. Dame Julia meeting our members face to face and your organisation is facing please get in touch.
signpost a range of questions. We should and Accounting: Taking Stock and Future Unwin said, ‘charities are born from anger and understanding the challenges in your
We’ve also opened a feedback box for you to
be proud that it is our profession who have Reform, following research commissioned a desire for change.’ She is right and that anger organisations . The unique insight not only
have your say in how we’re doing. We’d love to
pushed for accounts to be more about by the CC and OSCR (the then joint SORP- and that drive to change the status quo will not helps to expand our knowledge of the sector,
hear your views, and it can be on any aspect
accountability than technical ‘accounting’. making body). It recommended a more always be what the public expect or welcome. but also shapes the content of our events and
of your membership or experiences. Drop
The first charity SORP was published in ‘bottom up’ approach to meet the needs training, and has highlighted the importance of
your suggestions in www.surveymonkey.
1996. It has been evolving to serve the sector of smaller charities (who make up the vast
majority of the sector). Since, there has
Let’s not allow the temperature of the water
to increase around us until we become the
knowledge-sharing between members. Our
huge network of finance professionals and We have recognised co.uk/r/CFGfeedbackbox
better and better since. In many regards we
lead the world in charity reporting. CFG has been significant effort to ensure the SORP
proverbial boiled frog. Let’s get involved and
ensure that the reporting remains anchored
financial and organisational leaders are
continuously developing and implementing
the increasing value On behalf of the whole membership
team we would like to thank you for your
welcomed and pushed for change; we
advocate continued evolution because we
had a ‘small first’ mindset. So is the challenge
around getting this right less about structure
in public interest. new strategies, and driving innovation in their of digital learning continued support and we look forward
believe finance is at the heart of an effective and more about the difficulty inherent in 1
bit.ly/CCpressrelease teams. These shared experiences are one of
the most valued elements of our community opportunities. to another year spent with such inspiring
finance professionals.
10 11
GOVERNANCE FOCUS INVESTMENT FOCUS
Is your 2. Approach to risk management
Reporting on risk management in the annual Reserves – is it
surprising that some
high-profile charities choose to take a more
risk-averse approach to reserves – preparing
governance
trustees’ report is a legal and regulatory for cover in the event of a storm, and no
requirement. Therefore, most charities will longer just a rainy day?
have an effective process that it follows.
Sometimes charities may not be holding
charities are taking
Charity Commission guidance CC26:
Charities and Risk Management will identify as much in reserve as it might first appear.
Last year the Charity Commission stated
as strong as
risks, assess their impact and likelihood,
implement controls and report to the board. that over three-quarters of charities surveyed
a conservative
However, will these processes focus the by the Commission reported incorrect
organisation of the right risks, and identify reserve figures. A significant number had not
the risks that have potential to break the deducted fixed assets reserved for charity
use, designated funds and restricted funds
approach?
organisation?
you think
in their calculations.
3. Boards and effectiveness
Boards, on the whole, are not measuring
effectiveness. Is there a lack of understanding
or clarity on purpose – why do they need to
do it? I suspect most will be aware of what
it is?
they need to do and how they might do it.
Until they know why they need to do it, it is
not going to move up their agenda.
Should we be surprised
4. Financial governance if large, high-profile
In my experience, charities generally do
not review their financial governance.
charities choose to
My former audit clients will know I have take a more risk-averse
Sam Coutinho,
Director, Sam Coutinho
always challenged the effectiveness of
their financial governance which goes approach to reserves?
Consulting Ltd
beyond checking the finance committee
has a terms of reference and appropriate Other charities with high reserves might
Lucy Rhodes, Laura Soley,
membership. It’s important that the trustee Partner, face obstacles to spending their income,
Associate,
Sam Coutinho says few charities are publicly reporting board understands and fulfils its financial
responsibilities and ensures the charity
Bates Wells Bates Wells for example, because their charitable
objects are out-of-date or overly restrictive.
on the application of the Charity Governance Code and is compliant and financially resilient. In the Charity trustees should ensure the effective
it’s unclear how much boards are actively doing. Ahead CFG Technical Update Conference in Navigating what you should and shouldn’t do with your application of their unrestricted, as well as
February, we will talk more about the
of speaking on governance at the CFG Technical Update financial role of the board, delegation to organisation’s reserves is a thorny issue. Here specialists restricted income, funds. If they cannot find
a use for their income such as through
Conference in February, Sam shares her key advice to the finance committee and the board’s Lucy Rhodes and Laura Soley from Bates Wells take you service expansion or collaboration with
make sure your organisation stays ahead of the curve. financial oversight responsibilities.
through some key considerations. other charities within their existing objects,
5. Evidencing decisions it may be prudent to take steps to alter
The traditional approach to reviewing place significant reliance on the external Decision making in charities can be Charities face complex choices when it Determining an appropriate reserves their objects so they can use their funds
effectiveness is to benchmark organisations audit and do not fully understand what the complex and span a long timeframe. comes to reserves. By law they are required policy is a matter for trustees and involves more effectively.
against best practice. There is a plethora of audit opinion represents. The expectation Different people will be involved, significant to spend income within a reasonable period assessing the charity’s current and future If a charity anticipates significant future
guidance and checklists to use and in the gap seems to be increasing; there are recent amounts of data analysed, professional of receipt unless they can justify retaining it commitments and prospects, as well as the expenditure or threats to its future
majority of cases the output is a list of areas reports on audit failures. Increasingly, internal advisors consulted and fundamental in line with a reserves policy as being in the risks and opportunities that it faces. Given sustainability, there may be alternative
that need to be addressed. This approach audit budgets are being cut and the majority decisions made. The Charity Commission charity’s interests. the complexity of this exercise, the reality is models for raising funds available. With an
tends to be process and compliance driven. of charities do not have an internal audit issued guidance, It’s your decision: charity that some charities will set their reserves expendable endowment fund, for example,
An alternative approach is more risk-focused function whether in-house or bought in. trustees and decision making (CC27) which Working out how much income to set aside
policy at three or six months of operating a charity can grow a capital fund over time
and challenges that makes the governance The Chartered Institute of Internal Audit sets out the principles that charity trustees is not a straightforward exercise and charities
costs, which is commonly perceived as an to ensure that it has a ready source of
weak or less effective with benchmarking to describes the role of internal audit as follows: should follow to make sound decisions and can be publicly censured for holding too
appropriate yardstick. However, there is no long-term or future support. As the trustees
follow. In my view, a risk-driven assessment “to provide independent assurance that an fulfil legal responsibilities. The path to much or too little in reserve. In the 2016
legal minimum or limit to the amount of can opt to spend all the capital, if needed,
is more proactive in identifying what could go organisation’s risk management, governance decision-making is rarely straight. It may PACAC inquiry into Kids Company’s closure,
reserves that charities should hold. The they could spend out the entire fund. But
wrong and as we know, even with processes and internal control processes are operating be that decisions now need reference William Shawcross, then Chair of the Charity
appropriate level of reserves needs to they are not subject to an obligation to do
and procedures in place things can and do effectively.” If you do not have an internal to former decisions; a former decision is Commission, said “We advise charities that
reflect the circumstances of the charity. so and the capital will not form part of the
go wrong. audit resource, where are getting this being investigated; or simply understanding they should spend their money, and at the
same time they must have adequate reserves, The 2008 financial crisis led many charity’s reserves. This vehicle is particularly
independent assurance from? It is not how you arrived at the present situation.
It’s important trustees and governors so it is quite a hard act for them to follow”. charities to take a more cautious approach attractive to charities which want to raise
from the external audit. Minutes are improving in being a true
review assumptions on their governance. to reserves management so that, in times funds for major projects or to provide a
Here are five areas to be aware of that record of the meeting, but often the level More recently a number of military charities
of austerity, they might be better able to reliable long-term income stream to
could make governance weak: of detail regarding decision-making is came under the media spotlight for holding
withstand a drop in funding or increase support the running costs of charity.
deficient. CC27 clearly sets out the high levels of reserves. As David Ainsworth
1. Assuming processes and level of detail expected. in demand. High public and regulatory Whatever proportion of its income a charity
pointed out in a recent CFG blog , large military
1
procedures are sufficient expectations of charities (and trustees in decides to hold as reserves, provided that
charities often have complex, costly and
Many trustees will be reassured by particular) and a succession of recent bad a charity has a reserves policy which is
long-term commitments to their beneficiaries.
having processes and procedures in place. news stories may also play a part in this shift.
Impressive flow charts and thick procedure As we know, even with Join Sam’s session at the Technical
They also face the challenge of forecasting
the future needs of military personnel and
A regulatory inquiry or media storm can
properly considered, justified and clearly
communicated, as with other financial
Update Conference in London where have a significant, immediate impact on
manuals can give a false sense of security.
It is imperative that trustees know that the processes and procedures she’ll be exploring these questions and
their families in an unpredictable landscape.
Given the complexity of this exercise, who
the public’s confidence in the charity and
decisions, we should trust charities to be
best placed to know what is right for them.
systems are operating as prescribed and that
the systems are managing risks. So how do
in place things can and more. Book at www.cfg.org.uk/
techlondon or book for the Cardiff Tech
other than those with oversight of the charity
on fundraising income. With ‘black swan’
events in the sector now becoming more 1
www.cfg.org.uk/why_the_times_is_
can say what would be a reasonable level
they know? It is still the case that trustees do go wrong. Update at www.cfg.org.uk/techcardiff
of reserves to hold?
common, should we be surprised if large, mostly_wrong_about_charity_reserves
12 13
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