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Help to run your charity efficiently and effectively

Governance

General guidance on 'good governance'.

Governance is a term used to describe the charity's governors' role in:

 -the long term direction of the charity, including its objectives or purposes; 

-implementing policies and activities to achieve the objectives;

and

- accountability to those with an interest or 'stake' in the charity.

The AJC offers training on governance issues - see here for up coming training: /about-us/training

The NCVO offer articles and training on governance

Charities' Law

Guidance and Legislation can be found on the Charity Commissioners website and we would recommend checking here https://charitycommissioner.je/for-charities/guidance-and-legislation/ to ensure you have up to date and comprehensive information.

Charity accounts

General guidance on maintaining charity accounts.

 

Charities, like businesses, need to produce clear and accurate sets of annual accounts.  These are a formal necessity and, as such, require precise information about the transactions in and out of the charity’s accounts as well as a snapshot of the total financial position of the charity at the end of each financial year.

Financial Records

All organisations, whether they are commercial or charitable, require procedures for monitoring their financial situation.  In their most basic form, they may consist of manual records of the credits and debits in and out of the bank account(s). For a charity, the need is especially important since it is handling money that has been donated by others for the purposes of furthering the aims of that organisation. 

It is usual for the members of a charitable organisation to elect a treasurer whose job it is to take care of the day to day transactions of the charity, and who will also be responsible for the preparation of the end of year accounts.

The organisation needs to agree on an acceptable method for keeping the records.  This may entail manual bookkeeping or, as is becoming increasingly common, maintaining records on computer, using either a standard spreadsheet program, or one of the many popular finance packages available for either personal or small business use. 

Whichever method is used, it is important to record details on each and every transaction, including the date, payee, and amount. In addition, it is often helpful to categorise each transaction so that a summary may be more easily produced at a later date.

As transparency is vitally important, the treasurer should keep a file of evidence for receipts and payments. Being able to substantiate the transactions will assist an independent inspection of the accounts at the end of the financial year. This would include invoices, receipts, letters of acknowledgement, etc.

End of Year Accounts

The charity’s governing document (i.e. constitution, trust deed, etc.) will stipulate the financial year for the organisation, and will indicate the necessary procedures for independent inspection of the accounts records, and presentation of accounts (e.g. to members). 

At the end of the financial year, the treasurer will need to prepare a set of accounts to show:

        a) a summary (by category) of all of the transactions in and out of the organisations accounts.

        b) the overall financial state of the organisation. This must include a total of all bank accounts, as well as other assets.

Income and Expenditure Account

An Income and Expenditure Account is a standard accounting document that is produced to show a summary of all the money paid in and out of the organisations accounts during the financial year. It is split in to two sections: the first showing income, and the next showing expenditure. Each entry is a total of the money received or spent in a specific category (e.g. the total money received for membership subscriptions, or donations, or the total spent on postage, etc.). The income and expenditure sections are totalled and then the total expenditure is subtracted from the total income to show a “net total”. This could be a positive or negative figure.

If these were company accounts, this would indicate a profit or loss; however as these are charitable accounts (and therefore cannot show a “profit”) the term used is “Excess of Income over Expenditure”.

This is an example of an Income and Expenditure Account. In this example the expenditure exceeds the income:

XYZ Charitable Association

 

Income and Expenditure Account

1 January 2012 – 31 December 2012

 

 

 

 

 

 

Income

 

 

Bank Interest

26.09

 

Membership Subscriptions

60.00

 

Donations

122.78

 

Flag Day - net income (see note 1)

835.00

 

Grant from Channel Island Lottery

465.00

 

 

 

 

TOTAL INCOME

 

1,508.87

 

 

 

 

 

 

 

 

 

Expenditure

 

 

Meeting Expenses

25.00

 

Postage

43.31

 

Stationery

35.40

 

Printing

184.50

 

Provision of patient care

873.00

 

Purchase of safety equipment

367.00

 

 

 

 

TOTAL EXPENDITURE

 

1,528.21

 

 

 

 

 

 

Excess (deficit) of Income over Expenditure

 

(£19.34)

 

In this example, an account for the “Flag Day” would be given on a separate sheet.  This would show the money raised less any expenses associated with this specific event. You may also wish to include a note to give details of the “safety equipment”.

The Balance Sheet

A Balance Sheet is a standard accounting document that is produced to show the overall financial state of an organisation. It is produced for the end of the financial year (e.g. 31 December) and records (as at that date) the total money in each bank account as well as any other fixed or cash assets.  It would also include any liabilities, for example all cheques issued would be included in the accounts, however if a cheque had been issued but not yet cashed then it would be shown as a current liability.

The Balance Sheet provides a useful check on the figures, since it indicates an opening balance (which would obviously be the closing balance from the previous financial year) and then adds (or deducts) the “Excess of Income over Expenditure” (as shown on the Income and Expenditure Account), which gives a closing balance for the year.  This closing balance must be equal to the figure shown as net assets.

This is an example Balance Sheet:

XYZ Charitable Association

 

Balance Sheet

31 December 2012

 

 

 

 

 

 

Current Assets

Bank and Cash Accounts

 

ABC Bank

 

 

 

 

 - Current Account

45.03

 

 

 

 - Savings Account

1,968.37

 

 

 

 

 

 

 

TOTAL CURRENT ASSETS

2,013.40

 

 

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

 

TOTAL CURRENT LIABILITIES

0.00

 

 

 

 

 

 

 

 

 

 

 

NET ASSETS

 

2,013.40

 

 

 

 

 

 

 

 

 

 

 

Represented by:

 

 

 

Accumulated Fund

 

 

 

 

Balance at 1 January 2012

 

2,032.74

 

 

Excess of Income over Expenditure

(£19.34)

 

 

 

 

 

 

 

Balance at 31 December 2012

2,013.40

 

 

The Income and Expenditure Account and Balance Sheet together make up a satisfactory summary of the accounts that will enable anyone to gain a full and accurate picture to the state of the organisations finances.

Independent Inspection

Charities could be viewed as the “guardians” of public money, which has been donated for a particular cause, consequently financial matters must be treated with prudence and vigilance. The treasurer, in particular, must ensure that not only is the charity’s money handled correctly, but also it is seen to be managed appropriately.  There is great onus upon the treasurer to act with meticulous care and be seen to be trustworthy and reliable.

In addition, organisations are increasingly required to have their books independently inspected in order that, so far as is possible, the accounts can be verified. Although this is sometimes referred to as an audit, this term is not accurate as, in most cases, it is not possible to carry out the level of detail that would normally be associated with the inspection of business accounts (especially considering the likelihood of numerous donations through the year).

Charities should, therefore, seek the services of an independent accountant (i.e. who is not involved with the organisation) to inspect their records of transactions (and match these against bank statements) and check that they equate to the details presented on the Income and Expenditure Account and Balance Sheet. If they are satisfied that they present an accurate record, they will provide a statement to show that they have inspected the records and accounts.

It is currently not necessary for a charity to 'employ' an independent auditor, however the new Charities Law may set a provision for an audit to be carried out for those charities raising over a certain amount. If this is the case, the auditor must be totally independent of the charity and will require payment for this work.

This information is offered to assist charitable organisations.  It should not be regarded as comprehensive and charities should take appropriate advice to ensure they comply with their obligations.  The Association of Jersey Charities accepts no responsibility for any person or organisation using these guidelines.

This information is supplied courtesy of The Association of Guernsey Charities

Charity hallmarks

Hallmarks of an effective charity


The UK Charity Commission has distilled "good practice" for charities into six easy to understand "Hallmarks". If you follow these "Hallmarks" you, your supporters and beneficiaries, and the general public can have confidence that your charity is being well run and fulfilling its mission.

There are six Hallmarks, and can be summarised as follows:

-        your charity should be clear about its direction
-        your governing body should have the right mix of skills and experience
-        you should achieve your purpose and deliver your services efficiently
-        from time to time you should assess your performance to help improve your efficiency
-        you should have the financial resources to deliver your mission
-        you should be accountable and transparent

The UK Charity Commission has published a guide that explains these Hallmarks, and tells you how you can achieve them, which can be found by clicking here.

This information is supplied courtesy of The Association of Guernsey Charities

Improving performance

Keeping up to date and improving the performance of the charity is essential

Training on improving the performance of your charity is available from the AJC. See here for courses coming up: /about-us/training

There are many websites to help with improving performance, particularly the NCVO

Sharing knowledge & best practice

General guidance on sharing knowledge and best practice.

Voluntary organisations play an important role in Jersey society. The public expects charities to act in the best interests of their beneficiaries or users of their services (herein described as “Beneficiaries”) and to comply with minimum legal requirements. The public also expects that charities use money donated to them effectively.

These Guidelines set out basic elements of best practice, which you may find of help in running your charity

The charity’s aims - the Constitution or Governing Document

A charity should be formally set up with clearly documented aims and rules by which it will be run. This should be set out in the charity's governing document (e.g. a constitution). A Charity may be constituted in a number of ways and these guidelines do not attempt to address specifically charities constituted as a company, by way of trust deed etc.

The UK Charity Commission has some helpful guidance and some model documents on constitutions for charities which can be found by clicking here.

A charity should review its Constitution periodically to keep it up to date and to keep pace with the charity's development.

Governing committee

A charity should be run by a clearly identifiable body of people (which may be a governing committee, a board of trustees, a board of directors etc, described herein as the “Committee”) who take responsibility, and are accountable, for controlling the charity so that it is effectively and economically run.  The governing document should clearly identify who within the charity has this role. The Committee should be of a manageable size and comprise members who together have the skills, knowledge and experience needed to run the charity effectively and economically appropriate to its complexity.

Unless the charity is constituted in a way which might limit their liability, the Committee, and if relevant the members, are effectively trustees and are jointly and severally liable for any debts and claims incurred by the charity. Extra insurance cover for the committee can be obtained - officer liability insurance, available from most insurance companies/brokers.

The members of the Committee should submit themselves for re-election by the Beneficiaries periodically, and ideally annually but at least every 3 years.

Management of the charity’s activities

A charity which works effectively for its Beneficiaries takes steps to discover and understand their changing needs, and directs its charitable activity towards meeting those needs.

There should be an item in the agenda in which the affairs of the charity are discussed and managed and General Meetings where members and Beneficiaries have the opportunity to ask questions of and provide feedback to the Committee. One General Meeting in each year should be the Annual General Meeting which should deal with the election of Committee members and the presentation, approval and adoption of the annual accounts.

Integrity

No charity should use its resources on any activities which do not contribute, directly or indirectly, to achieving its stated aims. Donations which are received in response to a public appeal should be used by the Committee in accordance with the terms of that appeal. Funds donated for the general purposes of the charity may be used more generally toward achieving the charity’s aims.

The Committee should act without regard to their personal interests. They should act solely in the interests of their charity, regardless of how or by whom they were appointed.

No-one should be a member of the Committee who has been convicted of a criminal offence involving dishonesty or deception, is an undischarged bankrupt, is disqualified as a company director or has a criminal conviction inappropriate in the context of the charity’s activities.

Any monies paid to members of the Committee other than refund of properly incurred expenses should be approved at the annual general meeting.

Competence and effective management

The Committee is responsible for the charity having procedures and internal controls that are adequate for the nature and scale of the charity’s activities. The Committee should manage and account for the charity’s resources well and deploy them to the best advantage of its present and future Beneficiaries.  

The Committee should include a treasurer whose responsibility is to keep proper records of the charity’s assets, liabilities, income and expenses and prepare accounts annually. These accounts should be approved by the Chairman of the Committee and the Treasurer, and presented to and approved by the Beneficiaries at an annual general meeting.

Risk management

The Governing Committee should consider the risks of any activity in which the charity engages and should ensure that the individuals organising and involved in such activity have sufficient skills and are fit and proper persons and that any risks, either physical or financial, are minimised and properly explained, if appropriate, to others involved.

Legal compliance

The Governing Committee should take steps to ensure it complies with the law in respect of any activities in which it engages.

Reputation

A charity should conduct its external relations, fund-raising and publicity in a way that enhances its own reputation and that of charities generally.

Self Assessment

The Association recommends that Charities assess their compliance with best practice annually.

Sharing Knowledge

The Civil Society is a very useful site for sharing knowledge and keeping up to date:  https://www.civilsociety.co.uk/

This information is offered to assist charities in adopting best practice. It should not be regarded as comprehensive and charities should take appropriate advice to ensure they comply with their obligations. The Association of Jersey Charities accepts no responsibility for any person or organisation using these guidelines.

This information is supplied courtesy of The Association of Guernsey Charities

Policies

For extra advice on a range of different polices check out advice here from:
• ‘Know how non profit
The Small Charities coalition

Below is a list of policies - further detailed information can be obtained here at Devon Voluntary Action

Policies and Procedures – quick guide
• This not an exhaustive list just a guide to some of them, to help you define, regulate and inform how you and your organisation operates.
• It’s never ‘one size fits all’ they should be appropriate to and tailored to fit your organisation.
• Several of the policies you must have in place result from your legal obligations in managing people.
• Induction is a good way of making policies known to new employees, volunteers and trustees, but they
also need to be systematically reinforced in a variety of contexts, such as included within your Staff
Employment Policy, or in your Volunteers policy, or it may be referred to in a separate policy.
• Either way they should be written in plain English that is easy to understand.

Adminstration

Child protection (and vulnerable adults).

Confidentiality.

Complaints/grievance/disciplinary

Communications policy - internal and external may cover
• Staff/volunteer/supporter newsletters
• Website/social media updates
• Newsletter contributions
• Promotional Materials

Code of conduct – for staff, volunteer (and Trustees – see below)
• Defining your 'organisational rules' covering what is acceptable and unacceptable.

Data protection and GDPR

Disability and Discrimination.

Equal Opps/diversity for example: Equal opportunities

Ethics, Empowerment, Improvement
• Corporate social responsibility
• Green Office Policy/Environmental

Finance
• Internal financial procedures including money laundering under the ‘Proceeds of

Crime Act’
• Investments and reserves
• Cash handling/petty cash

Health and Safety.

Induction.

Insurance - For example might need to cover:
• Employer’s Liability Insurance
• Public Liability Insurance
• Professional Liability Insurance
• Personal Accident Insurance
• Insurance for volunteer drivers
• Trustees indemnity insurance.

Pay/Tax/Expenses.

PR and Communications Policy for example may cover:
• Pro actively generate free coverage in local, regional and national media to promote the organisations core objectives.
• Build profile with the aim of having nominated (media trained) ‘key spokespersons’ being approached for
comment.
• Counter negative pr

PR Procedures for example may cover:
1. Encourage feedback of potential PR stories
2. Gather/make suggestions by using PR template
3. Attach picture or support material as appropriate
4. Email or mail form plus signed authorisation to PR Office
5. Draft press release issued by PR office
6. Approval by originator if applicable
7. PR office draws up distribution list & distributes press release
8. Local press monitoring done manually in Comms
9. Cuttings kept in Comms and a selection of duplicates in reception
10. Media training to be organised for key members of staff/trustees.

Records and data protection.Recruitment.

Risk management.
• Risk assessments and risk registers

Support /supervision/appraisals and performance management

Safeguarding.

Trustees responsibilities, may cover for example:
• Codes of conduct
• composition of the board and committees and the selection of new trustees
• role profiles and person specifications
• confidentiality
• speaking to the media
• conflicts of interest etc
• Sub groups – how they will operate etc

Training.

Volunteers

Whistle-blowing

Making a Complaint About a Charity

If you have a complaint about a charity, or would like to raise a concern, please contact the Charity Commission, and you can do this anonymously: https://charitycommissioner.je/for-the-public/raise-a-concern/