Charities in the Cost of Giving Crisis: 7 CFO Solutions

Despite the extreme pressures brought on by the pandemic, we witnessed in awe the charity sector rallying together and continuing to support those in need. Barely recovered, the voluntary sector (along with everyone else) was then quickly thrown headfirst into a cost-of-living crisis which, in turn, has led to a cost of giving crisis, as people are less able to donate to charitable causes. Inflation rose to an eyewatering 11%, office rent soared, energy prices increased, and the services being met by charitable organisations continued to take a battering due to increasing demand.

Charity begins at home, understandably, but when more and more people shift their financial priorities away from charitable giving, that presents the sector with an additional layer of challenge, not least of all having to ‘do more for less’.

HOW CAN Office of the CFO Solutions HELP YOUR CHARITY NAVIGATE THROUGH THE COST OF GIVING CRISIS?

As the sector finds itself at the frontline of its own, separate, cost of giving crisis, our team at AAB remains strongly dedicated to the with which charities we work. We pride ourselves on the portfolio of clients that are in our care, and the amazing work that our charity clients continue to do in their local, national, and international communities inspires us to remain agile in these difficult times.

Our Office of the CFO services can help unlock a charity’s ability to do more with less, help reduce your costs, give you more time and resources to focus on strategic matters, and help navigate your charity through this most recent of crises to hit the sector. All that is required at this stage is to challenge your own perception of what a finance function should look like.

An example of a ‘traditional’ charity finance function no longer fit for purpose, particularly during this cost of giving crisis is illustrated below:

1. Your charity employs a finance manager to run the charity’s finance function. They’ve been employed for several years and although they look to do a quality job, most of their time is tied up with manual processing and recordkeeping.
2. The charity finances are maintained on an outdated, expensive, off-the-shelf accounting system (which can only be accessed via desktop).
3. Trying to change anything on the accounting system takes huge effort and so you ‘make do’ with the default chart of accounts and processes.
4. You need up-to-date information for an upcoming board meeting, but the finance manager is still working on the last two quarter’s management accounts. You’ve challenged this time and time again, but you struggle to obtain the information you or the board of trustees really need to make informed decisions. Instead, you receive a system-generated trial balance, without reference to budgets or comparatives.
5. The general ledger is a minefield of duplicated cost categories, old sub-departments and suspense accounts. You think decisions regarding spend are in line with budgets, but you’re not confident projects are being accurately tracked. Planning for future expenditure is difficult as a result.
6. You’re struggling to prepare a quarterly funder’s return as you can’t separately identify spend against project income. There is also confusion regarding overhead contributions and brought forward fund balances (which bear no resemblance to last year’s statutory accounts).
7. You rely on the auditors to assist with the statutory accounts, cut-off, closing restricted funds position and presentation to the board, as most of your time is spent searching for information which you hoped would be easily accessible.

SO, HOW IS the office of the CFO DIFFERENT?

Compare the above with the following seven ways that our Office of the CFO team can help your charity navigate the cost of giving crisis:

1. A bespoke, accessible accounting solution that separately tracks all project income and expenditure and integrates seamlessly with payroll, staff expenditure solutions, automatic bank feeds, approval processes and more – All managed by an expert team that cares about your charity.
2. You have the ability to view accurate, meaningful and up to date management account information, in a style that suits the user.
3. Deficit generating or fund utilising projects are easily identifiable and allow for timeous decision making.
4. The system provides better clarity relating to the charity’s future expenditure needs and income generating opportunities.
5. There is readily available and accurate data that allows you to complete funder returns with ease.
6. You have the ability for your finance team to better utilise their time supporting the SMT and operational staff with wider strategic matters.
7. A smooth audit process, focusing on the audit itself, with no time wasted digging through folders.

By providing scalable finance function solutions such as those noted above, we help take away the challenges presented by the cost of giving crisis and exacerbated by a ‘traditional’ finance function model no longer fit for purpose. In order to focus time and precious resource on your beneficiaries, during a time when charitable giving is on the decline, change needs to be embraced.

We understand that making a change to your current finance function set-up can be incredibly daunting. There are responsibilities to re-assign, new processes to understand, and not to mention the many ‘what ifs’ to consider. Often, that is enough for the board of trustees to be put off the idea.

But have you considered just how much your charity is spending on outdated accounting software? Why is it that up-to-date financial information is always so difficult to obtain? How can you find the time to upskill your employees to drive your charity forward if you’re constantly chasing your tail? And how do you future proof your charity if you are resistant to change?

HOW CAN AAB HELP?

Our bespoke Office of the CFO solutions can offer charities better visibility of their accounting data, easier sharing amongst authorised individuals, greater accuracy, and the ability to reduce costs – all of which will be hugely beneficial in navigating the current cost of giving crisis. Our team is here to help you streamline your finance function which over time, will help you utilise more of your funds for charitable purpose and spend less on continuing a finance function that is no longer fit for purpose, easing the financial pressure on you throughout these challenging times.

We are confident that in this cost of giving crisis we can give you the ability of doing more with less.

If you are a charity looking for advice on how best to navigate the cost of giving crisis please do not hesitate to get in contact with Jakub Rolinski, a member of our Not for Profit team or your usual AAB contact.