In our latest podcast episode of Between me&you, we had the pleasure of welcoming Darren Harding, the director and head of the charity division at Richard Place Dobson, a renowned chartered accountancy firm.
Darren brings extensive experience in helping charities navigate the complexities of accounting and auditing, turning necessary costs into valuable investments for growth. Here's a comprehensive breakdown of our conversation, offering insights into strategic financial management for charities.
Darren sheds light on the dual critiques charities face in financial management. They are often criticised for either hoarding their funds, which implies they aren't utilising resources effectively, or conversely, for not maintaining sufficient financial reserves, which could demonstrate weak financial governance. This precarious balance nudges charities to adopt a well-defined reserves policy, typically reserving six to nine months of operating costs as a safety net.
The role of audits and financial reporting
Audits may have a bad reputation, but Darren argues they provide vital financial oversight. Audits ensure that the annual reports and financial data charities present are accurate, fostering donor trust. Darren emphasises that audits should add value by bringing in external experiences and insights. Cybersecurity is a more pressing concern than traditional cash-based fraud, urging charities to stay vigilant and implement robust cybersecurity measures.
VAT regulations and implications for charities
A common misconception is that VAT does not apply to charities. Darren clarifies that VAT is dependent on the nature of supply rather than the entity type. As charities engage in activities beyond donations and grants, understanding VAT implications becomes critical. Charities can navigate VAT to not only comply but also benefit through potential recoveries.
The RPD Foundation and community support
Darren also shares the inspiring work of the RPD Foundation, which was established to complement RPD's existing charity efforts. The Foundation focuses on three pillars: augmenting current charitable efforts facilitating corporate social responsibility (CSR) through expertise contribution, and supporting sector-specific needs, such as providing governance guidance to startup charities.
Tapping into volunteering and community engagement
Charity leaders are encouraged to think beyond financial donations by leveraging skills-based volunteering. Organisations like RPD are creating opportunities for their employees to contribute their expertise, offering invaluable support to smaller charities, which may lack financial or treasury expertise.
Governance and risk management
He also underscores the importance of adhering to the governance code introduced by the Charity Commission. This framework provides guidance on setting up structures, responsibilities, and essential compliance measures that underpin effective charity operations. A well-maintained risk register is part of good governance, allowing charities to proactively manage potential operational, financial, or property risks.
Wrap-up
Darren offers a pragmatic approach to charity financial management. His admiration for the UK's robust and pioneering charity sector is evident. By fostering collaboration and embracing creative solutions like skills-based volunteering, charities can enhance their impact even amidst financial constraints.
Seeking expert advice is crucial as charities navigate new fiscal changes and opportunities, ensuring they continue to thrive in uncertain times.
With these insights, charity leaders can better equip themselves to manage financial complexities, fortify their governance frameworks, and ultimately, maximise their impact in the communities they serve.
Connect with Darren
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