Posts Tagged ‘third sector’

Social Value Act

Posted on: July 31st, 2012 by SarahCase No Comments
Sarah Case, Director, MHA Broomfield Alexander

Sarah Case, Director, MHA Broomfield Alexander

This Act comes into force in January next year and is important because it enforces good commissioning practice by not letting public bodies procure solely on the basis of price. This will affect all providers whether private sector, social enterprise or charities but will present different challenges to all.

Private sector firms are increasingly active in public service provision and while there are the well publicised difficulties such as G4S and the Olympics, there are many that are running well. The Social Value Act will mean that in future, they will have to demonstrate wider value such as community engagement in addition to quality and cost. This presents a key opportunity to charities for closer engagement with private sector firms as they would often prefer to buy in the appropriate capability for the job.

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Third sector income: a changing picture

Posted on: May 18th, 2012 by Liz Mounfield No Comments

The total income of the third sector in Wales is estimated at around £1.5billion, and organisations receive funding from a wide range of sources, including public giving, grant-making trusts, trading, and a large proportion – around 45% of total income – from public bodies.

In recent years, there has been a significant shift in how third sector organisations are funded by the public sector. Where organisations may previously have received grants from local and national government or health bodies, more and more public bodies are using procurement to establish contracts with organisations.

Between 2006 and 2009, WCVA third sector funding surveys showed a sharp decrease in grant income and a corresponding increase in income from contracts. In the financial year 2009-10, over three quarters (77%) of third sector funding from Local Authorities was in the form of payments for specific services, with only 23% given in grant funding.

But grant funding and concluding contracts through procurement are very different processes, with profound implications for both the funder and the recipient.

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Warning to organisations in Wales of increasing fraud risks

Posted on: April 9th, 2012 by SarahCase No Comments
Sarah Case, Director, MHA Broomfield Alexander

Sarah Case, Director, MHA Broomfield Alexander

Companies and charities operating in Wales are being warned that they are particularly vulnerable to fraud as the faltering economy creates a combination of more desperate people and less secure organisations.

With the UK losing a staggering £38bn a year through fraud, an increase in the number of high-profile fraud cases, and a recent report which reveals that charities are foregoing 2.4 per cent of their income to fraudsters, organisations in Wales are likely to be particularly prone to becoming the victims of fraud.

The propensity of the would-be fraudster to commit their crime is largely dependent on both their motive and the existence of opportunity,

As unemployment, rates of taxation, inflation and other factors that put pressure on disposable income all rise, so to does the motivation to commit fraud.

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Accounting Standards Board publishes proposed new rules for charities

Posted on: February 8th, 2012 by Sarah Case No Comments
Sarah Case, Director, MHA Broomfield Alexander

Sarah Case, Director, MHA Broomfield Alexander

The Accounting Standards Board has released new draft accounting rules for charities as part of a consultation into new financial reporting standards for charities.

The rules include a number of changes such as incorporating a proposed financial reporting standard for public benefit entities (PBE) into the general standard.

The document confirms that the ASB will not introduce new rules requiring charities to account for all donated goods when they are received, a procedure that charity shops feared would add extra expense to their operations. Instead, charities will only be obliged to consider “whether the resources can be reliably measured and whether the benefit of recognition outweighs the costs”.

Consultation on the standards is open until 30 April 2012.

The statement of recommended practice for charities, which will be based on the PBE standard, will be drawn up and consulted on once the current rules are finalised.

Why not follow @BroomfieldWales on Twitter to keep up with the latest information on finance in the charity and the third sector and other business and financial topics, or by simply registering for our monthly newsletter.

Charity Commission places greater responsibilities on trustees

Posted on: January 27th, 2012 by SarahCase No Comments
Sarah Case, Director, MHA Broomfield Alexander

Sarah Case, Director, MHA Broomfield Alexander

The Charity Commission has recently outlined its new approach to regulation which places greater emphasis on preventing problems and identifying risks early, rather than dealing with them after they occur.

This Risk Framework explains to trustees, charity advisors and the wider public the Commission’s approach to regulation and how it assesses risks affecting charities, the wider charity sector, and public confidence.

The Commission will use the Framework to support its aims which are to assure the public that charity money is used in line with charity law, that charities are legitimate and run in line with their charitable purposes, as well as ensuring trustees carry out their duties and responsibilities and promoting high standards of accountability and governance in charities.

The document places a greater expectation on trustees to tackle risks head on, anticipating that if something goes wrong that it is their responsibility to put it right. The document also makes it clear that there will be greater expectation for trustees’ to tackle issues of potential risk to their charities.

The Commission will place emphasis not on charities’ internal disputes, but focus on a three-stage process to decide how and when to investigate charities and will focus only on cases of serious risk.

As long as trustees act lawfully and reasonably, the Commission will not intervene or overturn decisions, no matter how unpopular they may be with beneficiaries or the public. The Commission’s investigations going forward will be statutory, rather than regulatory cases.

Why not follow @BroomfieldWales on Twitter to keep up with the latest information on finance in the charity and the third sector and other business and financial topics, or by simply registering for our monthly newsletter.

Charities – creating a sustainable future

Posted on: January 10th, 2012 by Sarah Case No Comments
Sarah Case, Director, MHA Broomfield Alexander

Sarah Case, Director, MHA Broomfield Alexander

Recently there have been unprecedented stresses placed on the charity sector and some organisations are facing a substantial reduction in services or even closure. However, these outcomes are far from inevitable.

Charities that have built and are building strong predictable income streams and have robust financial planning mechanisms in place, running their services in a financially sustainable manner will allow valuable services to be maintained.

Many of the steps that charities are taking – changing their operations on cost grounds and reviewing or delaying activities – will see them endure for longer as these strategies make the most of available resources.

Many find that by taking steps to ensure that they stick more closely to their core mission and adapting to a more austere funding environment that they can define more tightly the services that they deliver or are targeting their beneficiaries more precisely.

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Writing a successful funding application

Posted on: September 8th, 2011 by Liz Mounfield No Comments

There are a number of key issues to consider when preparing a strong funding application. Firstly, ask yourself, ‘Does the project deliver on the priorities set out by the funder?’ Funders are just like you; they are passionate about their issues and supporting their chosen sections of the community, the difference is that they choose to pay organisations to deliver on those priorities.  The more closely your project matches the priorities of the funder, the stronger your bid.

The second issue to consider is whether you have demonstrated that there is robust evidence of need for the project. One of the biggest fears for funders is that they will fund a project that no-one wants or needs. You may provide evidence that there is a need for this project by demonstrating ‘high rates of crime’, ‘levels of deprivation’, or ‘poor educational attainment’ using statistics you will also need to demonstrate that the proposed solution is one that the community wants.

Getting the project costs right is absolutely essential and there are a couple of rules to consider.

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Charities – Managing change

Posted on: August 9th, 2011 by SarahCase No Comments
Sarah Case, Director, MHA Broomfield Alexander

Sarah Case, Director, MHA Broomfield Alexander

Charities are currently faced with difficult economic conditions, and surrounded by many potential pitfalls. What can trustees do to secure their organisation’s future?  Here are some constructive steps that trustees can take:

Engage all the trustees – the finances need to be understood by everyone, not just the finance committee.

  • Ensure cashflow is managed efficiently – this means making sure funders – think of them as debtors – pay promptly.  And do not pay creditors prematurely.  Be careful, though, not to break payment terms.  When applied consistently, these principles have an effect equivalent to receiving additional funding.
  • Ensure budgets are accurate and up-to-date – the annual audit and production of accounts is too late to look at finances.  Charities need to constantly monitor their cash reserves against budgets, to ensure forecasts are realistic.
  • Recognise that redundancies are not the only way to cut staff costs – part time working, such as moving staff from a five to a four-day week, is often a more popular option than redundancies, and may have an unforeseen detrimental impact on the future of the charity.

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Charities online

Posted on: August 9th, 2011 by Sarah Case No Comments
Sarah Case, Director, MHA Broomfield Alexander

Sarah Case, Director, MHA Broomfield Alexander

The last few years have been difficult for organisations in the charitable sector. Caught between drops in income and funding, yet rising requirements for their services, charities are currently working to greater pressures than ever before.

According to the Charities Aid Foundation the voluntary income of the top 10,000 UK charities has halved since June 2009 from just under £14bn to £7bn, while income from legacies is also down.

In this climate charities should be utilising every innovative fund-raising option open to them, including some of the more cost-effective options that are often overlooked in the fundraisers portfolio.

As the UK society, including the older generation becomes more tech-savvy, using iPads and smart phones day to day, charities should focus on attracting donors of all ages, building their online presence to motivate individuals to donate time or money.

How charities present themselves on the web is critical to attract willing and enthusiastic potential donors. In particular, the presentation of the annual report should demonstrate innovation and the ability to cater for all donors’ online expectations.

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Community Interest Company or trading subsidiary?

Posted on: May 23rd, 2011 by SarahCase
Sarah Case, Director, MHA Broomfield Alexander

Sarah Case, Director, MHA Broomfield Alexander

The third and final post on Charities, Trading and Social Enterprise, from Sarah Case looks at the models that charities can base themselves around in order to take advantage of commercial trading.

When considering the best vehicle from which to undertake the commercial trade the extraction of profit will be relevant. By using a company limited by share capital or by guarantee under the Companies Acts gives direct access to the profits by way of a gift aid payment. The Companies Act 2006 offers up another model for us in the form of the Community Interest Company. These are companies set up for the benefit of a specific community and although they may fit the model for a pure social enterprise, the reader should be aware that they are characterised (among other things) by ‘asset lock’ which prohibits distribution of profits and assets to its members (they may pay a dividend on investment to members but this is limited to a rate determined by the secretary of state).

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