Oh, what a time we’ve all been having. As I write this we are still locked down, and many charities, social enterprises and other organisations have either furloughed some or all of their staff or are considering doing so. Not all, though. Some will have seen their financially fragile but much-needed small local charity endeavour suddenly thrust to the forefront of a national support effort to keep people healthy, safe, sheltered and fed.
Whether you have had to scale up delivery and seen a growth in funding or have had to close services and use government schemes to remain viable, you will still need to do your accounts at some point. There are good reasons to focus on your finances, both for the crisis now and the recovery after. When you do return to fundraising, you need to be in the best shape to secure grants and donations.
When the Covid-19 crisis hit in February and March, many of you will have been in the final stages of completing your 2020/21 budget. The finance subcommittee will have had one of its big set-piece outings, scrutinising the figures and planning for the end-of-year accounts and audit. No one could have prepared for the financial shock of a global pandemic affecting just about every business model: I will make a small personal donation to any charity that can prove this was on their risk register.
As the crisis has deepened with an extended lockdown period, indications that physical distancing may have to continue for the rest of the year and speculation that the sector will have no choice but to give up office space and change service delivery, it is understandable if you feel overwhelmed.
Finance teams as superheroes
Everything is up in the air, and with the constant reworking of budgets and cashflows, it is important to recognise the value of your financial procedures and the skills and time of your finance staff and committee members. It’s an unassailable fact that you need good data to make good decisions. Finance may usually be parked among the less sexy back room functions, but right now it is your essential service and its inhabitants your potential superstars. It doesn’t have to be fancy to be good:
- What is coming in and what is going out? Your cash position is vital now.
- What is restricted and what is unrestricted? Your ability to negotiate use of restricted funds may be more important than trying to secure a new unrestricted grant.
- What is essential and what can be cut back? Starting that new project or redesigning your brand might be able to wait. Do consider the impact on your supply chains, particularly where these are other charities or small companies.
- Have you applied for and utilised all available government Covid-19 schemes?
- Are you tracking the deadlines for submissions to things like the Coronavirus Job Retention Scheme to ensure money arrives in time to make payroll?
- Are you working closely with your fundraisers to track which emergency funds you can apply to, and tracking receipt?
Funders are working hard to try and ensure the sector has (some) of what it needs to survive now. Some are offering immediate extensions to grants that are ending and you need to be ready with your current management accounts not to miss those opportunities.
Your 2019/20 report and accounts are vital for your future funding. They form a large part of the due diligence of whether to fund you or not. Your story of what you were able to achieve before this crisis should be accompanied by what you plan to do in the year ahead, and how you are preparing to do it. You will build on this in detail in your 2020/21 report and accounts.
Creating a budget for 12 months is probably unrealistic, so get comfortable with creating three-month budgets and cashflows for the next six to nine months. All of this will add to your story of this unusual year and help you set out why you are a viable going concern.
The Charity Commission has offered charities the option of delaying filing for three months, but I would urge trustees not to take up this option unless there is absolutely no choice. Getting these accounts right will set you up to be able to plan out this year ahead – and the one after that. You will be able to get ahead on thinking about how you present financial years where the usual comparisons will not work. You will be able to use this once-in-a-lifetime opportunity to reset what you do, why you do it and how, by being specific about how this crisis affected what you do and the adjustments you had to make. This is your new ground zero: keep what is precious and unique to you and those you seek to serve.
Elizabeth Balgobin (@Balgobinthinks) is an experienced charity interim manager and trustee