Looking after charity finances can feel like a daunting task, however it needn’t be. Here are 8 simple tips to help you on your journey. 01 Ensure that you know the charity’s objects, the objects are a statement of the charities purpose. For example, one of AVOWs objects is to promote any charitable purpose for the benefit of the community of Wrexham County Borough. All financial activity should be used to best advance these objects. You need to know what legal form your charity takes, be aware that your level of income may change your reporting requirements. You will also need to establish when your year end is, this may be 12 months after your activities started. Be aware, some charities will have different year end dates set by your board or your accountant. 02 If you use handwritten ledgers or excel sheets to monitor your finances, you should investigate using technology to increase your productivity. There are an array of low-cost computerised accountancy software available that are suitable for charities. Using accountancy software can streamline your processes, reduce human error, and improve reporting functions. Xero, QuickBooks, Sage and many more are available. 03 Make keeping your accounts up to date a regular thing, this will vary on the size of your organisation, it maybe every day or every week but try to ensure you balance your bank every month. Nothing is more daunting than having to catch up on 6 months of accounting invoices and transactions. Keeping up to date means you can identify issues quicker and then be able to adapt if necessary. 04 Check, check, and triple check. Human error is natural, and dealing with numbers constantly does make you go number blind. So, make sure you check your figures when inputting into your accounting system, when writing cheques and when making payments as it’s easy to make simple mistakes. 05 Charities often receive funds by way of grants, donations or fundraising that are for a specific purpose. You will need to show these in your accounts as restricted funds, you may end up with many of these pots of funds. You will need to ensure that all receipts and income are allocated to the relevant funding pot, this is called fund accounting. Having a computerized software system will assist with restricted funds and fund allocation. 06 To avoid financial risk you need to set up and adhere to the organisations financial policies. These need to include details of petty cash limits, details of the accounting/bookkeeping processes, purchasing levels and detail the authorisation levels for staff/managers and Trustees. 07 Provide financial information to the trustees on a regular basis. Keep the reporting simple, clear and easy to understand. Not all trustees are able to understand complex excel reports, so to make financial information informative and easy to read for the non-finance person. Use graphics like a pie chart and highlight important information so the board can make informed financial decisions. 08 If in doubt, get help, you are not alone. Here are some of the useful external links: https://www.gov.uk/guidance/managing-charity-finances https://knowledgehub.cymru/app/uploads/2021/03/Basic-Bookkeeping.pdf Or, you can reach out to us for support. AVOW is Wrexham’s County Voluntary Council, and we are here to help. We’re here to help charities and charitable organisations tackle this complicated issue. We offer help, advice and support to help you succeed. For more information on how AVOW can help you today, get in touch! Top Tips for Charity Finance
Written by AVOW’s Development Manager for Volunteering, Community and Finance
Understand Your Charity
Use Software
Record All Transactions For Your Charity Regularly
Ensure Accuracy and Attention to Detail
Understand Fund Accounting
Strong Policies And Procedures
Reporting
Get Support
Top Tips for Charity Finance
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