Measuring your financial resilience

In Advice by Static Author Display Name

As it’s #CharityFinanceWeek, now is the perfect time to refresh our memories and review the Charity Commission guidance on governance and ensuring financial resilience in your organisation.

Charity trustees need to identify critical issues around the organisation’s plans and strategy, finance, resilience and governance and to review these at regular intervals. The Charity Commission has devised 15 questions to help you do that and we’ve included some additional commentary and thoughts below to inform your discussions.

  1. What effect is the current economic climate having on our charity and its activities?
    What are the challenges, risks and opportunities? Does the current climate impact our strategy? Are we doing the right things and are we still meeting our charitable aims?
  2. Are we financially strong enough to continue to provide services for our beneficiaries?
    What is our current and projected future financial situation? Do we have any financial plans or commitments which may cause concern?
  3. Do we know what impact the social and/or economic climate is having on our donors and support for our charity?
    How secure is our funding? Do we rely on too few sources of income or are there new opportunities for fundraising?
  4. What is our policy on reserves?
    Do we have sufficient reserves and a plan for loss of income? Does our policy identify the risks of an unplanned closure, future spending commitments, potential liabilities and financial forecasts?
  5. Are we satisfied with our banking arrangements and our current and future investment policy?
    Is this regularly reviewed? Does it provide suitable access and security? Are deposits protected? Have we considered diversity, suitability and risks associated with our spread of investments? Should we consider ethical or social investment?
  6. Have we reviewed our contractual commitments?
    What are our contractual commitments? Do we record and understand them (including where early termination is possible or may lead to penalties)?
  7. Have we reviewed any contracts to deliver public services?
    What are our contractual obligations? Do we record and understand them (including where early termination is possible or may lead to penalties)? Do we rely too heavily on public service contracts?
  8. If we have a pension scheme, have we reviewed it recently?
    Is it suitable? What are the risks and liabilities and how do we manage them? Are we meeting our reporting requirements?
  9. How can we make best use of any permanent endowment investments we hold?
    Are any funds permanent endowment funds which can only be invested to produce income or used as specified by the donor? Is this too restrictive?
  10. Are we an effective trustee body?
    Do trustees understand their roles and requirements? Do we review our performance? Are we effective? Do we have oversight and knowledge? Do we manage conflicts of interest? Are we comfortable making unpopular decisions?
  11. Do we have adequate safeguards in place to prevent fraud?
    Do we have financial controls and procedures in place? Do we manage risk around finance, crime and fraud? Do we need to consider data protection and recent changes in legislation, such as GDPR?
  12. Are we making the best use of the financial benefits we have as a charity?
    Do we make use of Gift Aid and tax relief? Can we draw from wider sources of finance and advice?
  13. Are we making the best use of our staff and volunteers?
    Are we responsible employers? Do we have safeguarding policies in place? Do we have the right staff and volunteers? Do they feel empowered to make meaningful contributions and feedback to leaders?
  14. Have we considered collaborating with other charities?
    How could we work with others and share resources for our long-term benefit? What lessons can we learning from similar organisations? Should we consider a merger?
  15. Are we making the best use we can of our property?
    Do we make full use of our assets? Have we reviewed the costs and benefits of assets we hold? Do we have appropriate risk management and insurance in place to adequately protect our assets?

These questions and guidance are summarised from a document provided by the Charity Commission: Charity Trustee Meetings – 15 questions you should ask.