The start of April meant the start of a new financial year for many charities. To mark the occasion, the Charity Commission published a blog entitled Good Financial Health Starts With Good Financial Habits. The blog states what good financial practice looks like in charities.
It says: “For trustees, it means making sure your charity has enough money to carry out its activities and to pay its bills when they are due. Setting a realistic budget for the year ahead, and committing to reviewing it regularly against actual income and spending.
“It means having a reserves policy that your board understands and follows. It means keeping financial records that are accurate, up to date and properly approved. And it means acting quickly when the numbers start telling a different story to the one you expected.
“It also means making sure that financial information is genuinely understood around the boardroom table – not just by the treasurer, but by all trustees. Collective responsibility is a cornerstone of good governance, and that includes financial oversight.”
It acknowledges that not all trustees have a financial background but says a “willingness to engage” is crucial and that trustees should “ask questions, and seek advice when you need it”.
Clearly, the finance team can play an important role in demystifying the numbers and making them clear for all – including the board. It is important they are able to answer any questions in an accessible way – with as little jargon as possible.
The commission also has a role to play in supporting trustees around finances, and the blog reveals two tools that it may be useful to share with boards.
“We know finance can feel overwhelming, so we’ve designed a Trustee Finance Toolkit,” it says. “The Toolkit brings together the key financial guidance in one place and is designed specifically to support trustees.
“There is also a financial health checker tool which matches you with the guidance that your charity needs. With a new financial year just beginning, there’s no better time to work through it with your board.”
Even if you have a different year-end, perhaps now is a good time to revisit your relationship with the board.
Tristan Blythe is editor of Charity Finance
