Charity Accounting – a chore or a tool?

By Paul Hedley, head of resources, Community Impact Bucks

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For all of us in the charitable sector, the question of money is never far from the front of our minds.  How do we deliver more with less?  Where can I raise the money to do this project, or to help that group?  What happens if my existing funding is reduced or disappears?  Such drivers, allied to the clear desire in the sector to concentrate on delivery, can easily have the effect of pushing the job of maintaining good accounts to the back of the queue.

Such a situation has two potential side effects, both of which are potentially serious for any organisation, whether large or small.  Firstly, potential funders are increasingly requiring detailed financial information to support bids: not only project based budgets, but detailed financial records of the organisation more generally.  Similarly, the reporting requirements of funded projects are becoming more stringent as the available money is squeezed, and funders have to justify their decisions to their own stakeholders.  Never has it been more important both to keep good financial records, and to use them pro-actively.

Secondly, and perhaps more significantly, good decision-making requires understanding of available resources: in short, people and funds.  Without that understanding, neither Trustees nor Management can set sensible goals, assess progress or commit to significant decisions.  Or, if they do act without that understanding, the chances of making good decisions are significantly reduced, and that affects both the organisation and its beneficiaries.

How many third-sector organisations could benefit from making a switch of mindset in this regard?  How would it look if accounting was seen not as drudgery that we could all do without, but as a positive tool for good decision-making?

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