Not enough focus is placed on the finance department in not-for-profit organisations, and not enough business support exists for those departments, according to a report published today.
The report, entitled State of the non-profit finance function was produced by Responsible Finance, the infrastructure body for community development finance institutions, and the Association of Chartered Certified Accountants.
The report says the failure to put enough emphasis on finance threatens charities’ ability to fulfil their mission.
From the report: key findings
- "Being a finance officer in a non-profit organisation can be a lonely job. A finance officer can often feel unsupported internally and detached from the rest of the team, particularly in contexts where finance is not integrated with areas responsible for the social mission. This detachment is compounded by the complexities of a frequently changing operating environment for non-profits. Across the UK there are inconsistent peer networks and external resources for finance officers to access for sharing knowledge and filling any skills gaps."
- "There is recognition across non-profit organisations that the finance function should play a driving role, as it does in the commercial sector. Despite this, at the moment, the finance function is subject to underinvestment and is not prioritised. Instead, resources are directed towards short-term planning and objectives."
- "The findings also indicate that across the UK there is a patchy business support network for non-profits. The regulatory and reporting requirements for non-profits are complex and often changing, so when organisations do not have the in-house skills or capacity they seek external support to fill these gaps. In practice, they find business support options difficult to navigate, and the quality is inconsistent."
- "The minimisation of the finance function in the non-profit sector – for reasons related to capacity, funding, staff and management skill sets, and even culture, ultimately reduces the organisation’s ability to fulfil its social mission. The two are closely tied, and good financial management enables and preserves the social function."
The report is based on 153 survey responses from ACCA members working in charities and clients in receipt of social investment from CDFIs.
The survey was followed by six in-depth interviews with non-profit finance directors, and five interviews with representatives from non-profit funders.