5 Financial Commandments for Small Charities
Ninety-seven per cent of charities in the UK are small. They face a big battle against big names with big budgets to convince donors they can make a difference. To do so, they have to make sure they’re leading the way by minimising costs and maximising funds.
But managing a team of low-paid or volunteer helpers, keeping track of complex finances, communicating with people and organisations all over the world, operating with little or no long-term financial security – and having to account for every penny you spend to do so isn’t a straight-forward affair.
After many years helping small charities like Canterbury Archaeological Trust, Concern Universal and Future Directions to streamline & grow, I’ve listed my five financial management commandments for small charities and NGOs looking to squeeze every last drop out of their hard earned donations…
- Make more time for good time management - Because not-for-profits use a lot of volunteer or low-paid labour, managing time and tasks can be complicated. It’s usually a case of putting people on a task and then getting the back office to tie up the loose reporting ends afterwards. Long hours, overtime and reworking become the norm. But an integrated Enterprise Resource Planning system which provides live information and project visibility can put an end to this. Concern Universal, a charity which supports the UK, US and EU governments in complex aid projects, implemented an online system to do just this – allowing their project managers in remote areas to easily update financial and project data wherever they are able to get internet access.
- Look, and think, beyond the short term when making investments – I’ve worked with many charities who’ve opted for the cheapest option when considering investments like a new website or business management system. But in a world where your operating model tends to be more complex and finances fluctuate dramatically, thinking long term about these kinds of decisions is even more vital. You don’t want to be held back because your business management system can’t keep up with your growth, your software is hard for you employees to use and causes more issues than it solves; or your website can’t evolve dynamically as your campaigns and donors do.
- Create a central point of truth - It’s hard to make decisions without an overview of your organisation – almost impossible, in fact. Without accurate and up-to-date data about everything that goes on, it’s tricky to plan for next week, let alone next year. If you’re one of the many non-profit organisations that still have different departments tracking different things then it’s essential to create a central, aggregated record of the organisation as a whole. It’s only when you’ve got this, that you really review the big picture, find out what the organisation is doing, where things are falling short and how to improve.
- Ensure there’s communication between departments – For any organisation to move quickly and adapt to changing circumstances, information has to be shared throughout. All too often this isn’t the case. A 2012 study about information management in the not-for-profit sector showed that poor inter-departmental communication impacted on budget tracking and forecasting. Integrating technology so departments can communicate more effectively can make a huge difference to the way your organisation works. And it doesn’t have to be a big job if you’ve got the right system in place to manage it. Greater transparency not only means faster response times and the ability to deliver your operational activity more effectively, but the heightened job satisfaction increases motivation and enables you to harness the full power of your team.
- Mine your data and make use of it - Many not-for-profits spend time and energy collecting a vast amount of data – but don’t have the ability to analyse it or put it to good use. A survey of the UK not-for-profit sector, revealed a staggering 96% of non-profit organisations reported that they were unable to make full and effective use of the data they already had access to. And many are still making decisions without them being supported by data. When your organisation is running on a tight budget – as many not-for-profits are – making good decisions is crucial. Allocation of funds, team management, PR - every decision has an impact, so accurate data and analysis is essential. Investing in systems which help you do this are vital. CORD, a UK charity focused on peace building work in some of the world’s hostile environments, uses technology to make better use of its supporter database and improve the success rates of its campaigns.