Know Your Charity’s Financial Position

Set a budget and follow it

Your charity should have a budget.  Check that it is being used.  It helps make sure you have realistic plans based on how much money your charity:

  • currently has
  • plans to raise
  • plans to spend each year

By checking how much your charity receives and spends against the budget, you can identify problems in good time and agree what to do about them.  It’s particularly important to do this where you see big differences between the budget plans and what is actually being spent.

Mr Claw Cover

 

Our publication Mr Claw in the World of Charity Accounting explains charity budgeting and planning in more detail.  We still have a few copies available, so contact us here if you would like a copy.

Get the funds you need

Your charity may get the funds it needs in different ways.

This can include:

Make sure you know what the rules are for getting funds in these ways and that your charity complies with them.

If your charity does not spend all its income

Check that your charity has a reserves policy.  This explains whether your charity is aiming to keep a reserve of unspent income, what it will be used for and why this is reasonable.  Check that your charity sticks to the policy or can explain why if it does not.

Make sure that your charity’s annual report explains the policy and says how much money (if any) it has kept in reserve, what it is for and when the charity will use it.

If you want more information on Reserves, see the Charity Commission’s guidance here