Charities – Urgency for forward planning

A lack of financial management has created a looming crisis for the UK’s charity and not-for-profit sector, according to two surveys published this week.

A study by chartered accountants Cooper Lancaster Brewers revealed charities were desperately in need of qualified financial managers to shift the organisations’ focus from ‘today’s problems’ to planning for tomorrow.

Research by the Charities Aid Foundation also revealed 57% of both large and small organisations had no access to training in voluntary sector finance.

Witold Sawin, head of CLB’s trade association team, said opportunities for administrative and financial efficiency were frequently overlooked by the sector. The firm’s survey findings also indicated charities were ‘not necessarily hiring the right type of person to do their finances’.

Sawin, who claimed over half the bodies surveyed had not capitalised on their charitable status, said: ‘The majority of these organisations are run by interested and devoted individuals whose main concern, quite rightly, is to look after the members’ interests. Rarely, however, does this brief extend to recognising looming tax or VAT problems or running a commercially viable operation.’

He added: ‘A lot of organisations have limited resources and a lot of the staff are there on a voluntary basis.’ Sawin also claimed many charities failed to take full advantage of the opportunity to make submissions to the government on its review of the sector’s taxation. Results of the review are due to be announced in the Budget.

The Charities Aid Foundation study warned that with 25% of charities experiencing problems in securing funds, the lack of financial expertise and training will threaten the future of many organisations.

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