This guest blog is by Gillian Benjamin of Haines Watts, a firm of chartered acountants represented on the VONNE board by our treasurer Donna Bulmer. It has been reproduced here with kind permission and the original version can be accessed at hwca.com/accountants-newcastle/coronavirus-charities-mapping-out-your-next-steps.
The last few months have been really testing for charities and not-for-profit organisations. With social distancing impacting delivery of service, fundraising events cancelled, and more than 5,000 jobs already having been cut, an enormous amount of pressure has been placed upon the VCSE sector.
Now, as local lockdown measures are being implemented and the end of governmental support measures are just months away, charities need to reset, refocus and consider what their next course of action will be. Here are some key points to keep in mind, when planning for the months ahead:
Setting out a clear and robust reserves policy is something I’d always recommend to trustees. It offers you the opportunity to be open and honest with your stakeholders, allowing you to build trust.
Right now is the perfect time for you and your board of trustees to review your policy, if you haven’t been doing so already. In normal circumstances, I’d always recommend reviewing your policy on a regular basis, but it’s even more important to do so now, when funding might be tight.
Questions you should be asking when you’re reviewing your policy are:
Do your reserves take a second wave or the implementation of local lockdown measures into consideration? These are both very real prospects at the moment and shouldn’t go unnoticed.
Where are your pinch points? Is there a point where funding becomes an issue? And if so, are you prepared in advance for this?
In today’s climate, landscapes are changing on a daily basis. It’s important to keep up to speed and make sure your reserves policy doesn’t get left behind.
Funding and forecasts
Whether it’s smaller local charities, or the more well-known names in the VCSE sector, thousands of charities have faced funding challenges in the last few months. The latest research projects that there will be a £10.1bn funding gap between now and the end of the year. And the harsh reality is, in the current climate the public might have less disposable cash to donate, and investments from grant funders may be down in the months to come.
However, this doesn’t necessarily mean all is lost, it just means that forward planning is an absolute must. Trustees need to be reviewing their cashflow forecasts in particular. Knowing where and when your money is coming in from, and where gaps in funding might occur, will allow you to make strategic decisions for your charity, and will ultimately place you in a more resilient position going forward.
Moving to the digital world
The pandemic has seen key fundraising events being cancelled and postponed. From smaller-scale events to huge dates in fundraising calendars, such as the Great North Run, the cancellation of these events can have a huge knock-on effect when it comes to fundraising.
By embracing the digital world, trustees have been able to curate online events and innovative ways of raising funds, to adapt to the times and minimise the impact of the lockdown period, in the long run.
Digital technology has also ensured that day-to-day operations continue to run smoothly whilst working from home during the pandemic, but also as we move forward. Cloud accounting software systems have been helping trustees navigate their way through the lockdown period.
I’ve spoken to trustees who have had key financial team members placed on furlough, and using cloud accounting systems enabled the wider team to access all the key information needed to continue their vital work.
As the furlough scheme draws to a close and we see charities starting to integrate their teams back into the office, I think we will see more charities utilising the technology available, given all that it has to offer. Cloud accounting in particular can give trustees all the financial information they need at their fingertips, allowing them to work in a more accurate and timely manner. This allows them to reinvest the time the have freed up back into the charity.
A final factor to bear in mind in the coming months is your risk register. Your risk register should take all aspects of your charity into account, reflecting the main risks your charity is facing, and how you plan to manage them to deliver the best outcomes for your beneficiaries.
In all likelihood, a pandemic probably wasn’t on your risk register this time last year. But going forward, while there’s still time for a second and even third wave, as well as local lockdown measures currently being put into place, this pandemic should definitely be taken into consideration and added to your register. This will show good governance and help you to clearly map out your approach when it comes to managing the risk of Covid-19 going forward.
Undoubtedly, the coming weeks and months won’t be free from new challenges, but the mood still remains positive throughout the sector. Investing time and research into planning your next steps now will stand you in good stead going forward, ensuring you get the best outcome for your charity, your team and your beneficiaries.
As always, we’re here to support you and your charity as you look to enter the recovery phase. Get in touch and see how we can help.