Memorandum from Richard Molineux
We would like to bring attention to the deficit
in financial management knowledge and skills in smaller and medium
sized charities (TO less than £500,000).
These charities and community programmes are
funded by statutory funds to a significant extent.
Community Accountancy Self-Help, a client, works
with c500 of these a year, training people to keep books, manage
accounts, and inform trustees/boards in comprehensible ways of
where they are going financially.
There is, essentially, no statutory funding
earmarked for financial training to go alongside grants made for
example community cohesion projects, or work with BME groups.
There are only 109 trained community accountants
in the country, largely concentrated in London.
This is a big gap, and the result is that investment
is wasted, or mis-spent, or stolen, or even not taken up, because
groups are afraid to take on financial responsibility when they
have no training in this field.
We attach two examples of what is meant.[180]180
There is research done by Sheffield Hallam University
available if it would be helpful.
Also, see www.cash-online.org.uk
CASH CASE
STUDIES
Baby & Toddlers Learning Alliance
Baby & Toddlers Learning Alliance run nurseries,
mother and toddler clubs, and summer play schemes. Their role
is to provide learning environments for small children, encourage
play and interaction between toddlers, reduce isolation felt by
many inner city mothers and provide information on health access
and other related topics for new parents. The scheme operates
in outer London on council estates where low skilled workers were
relocated from central London in the 1970's.
Following a mail shot we were asked for help.
On our first visit we found an organisation with very well kept
books, which appeared to have five branches—nurseries and
other sites for parent and toddler groups. Some funding was for
specific sites and costs had to be apportioned out to different
projects. The Bookkeeper used a system of coloured pens, one for
each site to track the apportionment of costs. There is a certain
amount of synergy between coloured felt pens for bookkeeping and
pre-school learning. The problem she had was that they had received
money from a government scheme Sure Start and now had 38 branches—she
could not find 30 different coloured pens for allocating all the
costs. Their staff had increased to 80 largely part-time workers
many of whom worked on several sites. Allocating the cost of time
to different sites and payroll was taking two weeks to a month.
CASH computerised the accounts with Quick Books,
set up an Excel file for allocating staff time and encouraged
the charity to use a payroll bureau and pay by BACS. This reduced
the two weeks spent on payroll and cost allocation to one hour
a month. We set up a system to help apportionment of partial VAT
exemption, which is always very complex and devised a way of getting
Quick Books to produce a Charities Act SOFA (Statement Of Financial
Affairs) from a profit and loss account using automatic journal
entries.
The project had experienced a huge growth in
transactions, but by computerising and stream-lining procedures
they managed to continue with the existing bookkeeper who later
became the finance director. We worked with the project on a step-by-step
basis for a year improving different aspects of the systems and
training the book-keeper, we now visit occasionally if they get
stuck and have a few outstanding improvements to add including—changing
banks to earn more interest and computerised cheques to reduce
pen-pushing. The children now keep all the coloured pens.
Outside Chance
Outside Chance works with young offenders when
they leave prison. The majority have convictions for burglary
or violent crime. They come into contact with the charity while
inside (prison) hence the name "Outside Chance"—a
chance of surviving legally on the outside with a starting sum
of £60 for food (one weeks supplementary benefit) and guidance
from the charity.
CASH was approached early on to work on the
first budget. We put in a system for filing financial papers that
reduced paper work. CASH drew up the early management accounts,
and helped with the preparation for the Independent Examination,
all the time training the bookkeeper to take over these responsibilities.
We now visit twice a year.
The Charity has now set up a book distribution
company—supplying prisoners who are studying in prison.
It also provides employment to ex prisoners.
Outside Chance works with about 500 people a
year, and has reduced significantly the number of muggings and
burglaries in parts of London.
Their Director, an ex-businessman, encourages
offenders to cost their time in prison against the money they
have gained from crime, and to work out the hourly rate for what
they have gained. One prisoner said, "The cameras and anti-burglary
devices he brought in (to prison) were good. Can't see me re-offending.
Just ain't worth it."
The director said of CASH—"Their
accountant was the most significant person providing outside support.
CASH has always given the right steer and been there to answer
questions when needed."
(Parts of these case studies have been changed
to maintain anonymity)
February 2007
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