How improved finance management could save you more than money

 

Bridging the funding gap

 

The total addressable market of funding available to charities (through both government grants and private donations) post-COVID-19 is expected to be lower than before.

 

This means that charities will face increased pressure in securing vital funding.

 

It is important to demonstrate that your funding is being spent effectively. Clear and detailed impact reporting will help you to show funders how their money is being spent. Greater transparency ensures greater trust. Trust in charities has actually risen during COVID-19. But with a shrinking donation pool, charities that can prove to funders they are spending money effectively will be in pole position to secure further funding.

 

 

Risk Management

 

A risk is anything that prevents a charity from achieving their aims.

 

More specifically, financial risk management refers to a decision-making process by which a charity ensures that it has the resources to continue operations in the wake of unforeseen events. For example, a global pandemic.

 

Effective charity leaders must identify key risks and take decisions that will avoid, reduce or mitigate them. Trustees of charities with an income exceeding £500,000 a year are required to issue a ‘risk statement’ in their annual report. This statement should outline the key risks that they have identified, as well as to provide details of contingency plans and other methods for avoiding or mitigating these risks.

 

 

Two Main Types of Risk

 

Broadly speaking, risks fall into two primary categories: strategic risks and operational risks.

 

• Strategic risks - risks that you cannot control and are significant enough to undermine or prevent your efforts to achieve your goals
• Operational risks - risks that you can control and which are to be expected as part of your day-to-day operations

 

Recapping The Key Benefits:

 

The key benefits of proper finance management for charities are as follows:

• Increased understanding of your organisation’s income and expenditure
• Greater transparency for funders and stakeholders
• Increased ability to bid for and secure funding
• Increased ability to plan for and mitigate both strategic and operations risks

 

Accounting Software

 

To many smaller charities, particularly those without a dedicated finance role, or with limited understanding of financial practices, this can all seem a bit daunting.

 

Luckily, there are digital solutions to make things easier. There are a number of products out there, including some available at discounted charity rates.

 

Sage Intacct is a cloud-based financial management system designed for small to medium-sized organisations. It allows you to easily consolidate information across multiple business units and conduct real-time financial analysis.

 

Sage Intacct has a number of tools to make financial reporting simpler, including a built-in role-based dashboard that instantly captures financial and operational information from across your organisation.