The not-for-profit sector faces many challenges. The financial climate is an on-going concern, as income from local and national government continues to decline. Yet the provision of services by the sector continues to grow, partly due to demand, and partly due to government policy. The success of not-for-profit organisations ultimately relies on their reputation and good governance, but transparency and effective regulation of the sector all have a role to play.
Key challenges for the Not-for-profit (charity) sector
Funding / Fundraising
Austerity continues apace within public sector budgets. The NFP sector has to develop new, innovative ways to raise funds. Although income grew by £4.6bn in 2015, this was all due to voluntary donations and trading activities. We advise on funding issues, interpreting Charity Commission guidance, opportunities for diversifying sources of income, setting up trading subsidiaries, investing charitable funds, control of expenditure and the use of reserves.
With the increased pressure on funding and the Charity Commission’s continued focus on public benefit, charities must be clear in their objectives and provide demonstrable and objective outcomes to their stakeholders.
We independently review how well an organisation is performing against its objectives, helping verify the content of their Annual Report. We also help clients explore mergers with similar organisations, advising on both the strategic and operational issues, including due diligence.
A total of nearly one million people work in the UK charity sector, a small increase on previous years. Retaining good quality staff has long been a key concern for many charities. Trustees and managers have extra obligations placed on them by the Charity Commission. We advise and also help to train new trustees, help on employment issues, including those affecting volunteers and executives, and can assist with pension auto enrolment.
Annual spending by UK charities rose to £66.2 billion in 2015 and, with the pressure on income; charities must demonstrate value-for-money with a real grasp of the “Three Es”: economy, effectiveness and efficiency.
Risk and reputation
There have been a number of high profile charities in the spotlight for financial mismanagement (at worst) or ineptitude (at best). Charities operate under increasingly stringent financial and trading regulations and any breach can have a long-term damaging effect on public reputation. We can assist by giving assurance to boards of trustees that these are complied with, as well as identifying activities where there is risk to any stakeholder.
Menzies Not-for-profit & charity accounting services
The not-for-profit sector encompasses a wide range of entities carrying out diverse activities. Our not-for-profit sector experts understand the issues facing both trustees and executive management, supporting them with a range of services.