Don Bawtree: The Grants Efficiency Programme and the drive for value for money

Plus: Gift Aid, guidance and buzzwords

The financial repercussions of the Kids Company post-mortem continue to reverberate across the sector. In the latest developments, the government has committed to introducing more rigour to its grant-making processes for charities.

Key finance-related elements in its response to the Public Administration and Constitutional Affairs Committee recommendations include: a presumption that all grants should be subject to competitive tender; implementing some common format or methodology for reporting on outcomes and/or impact; agreeing minimum reserve levels; greater use of benchmarking; and testing how well governed a charity is by engaging with the auditors - or at least the post-audit management letter.

To implement this, the Cabinet Office has launched a Grants Efficiency Programme. This will lead to new standards, which will come into force during the summer, and will include a focus on how to make sure grants represent value for money.

The government has also launched the formal consultation on the Gift Aid Small Donations Scheme. While there are no proposals to change the new £8,000 cap, or the eligible donation limit of £20, or the rather complicated definition of what constitutes a community building, there are some welcome changes under consideration (see main finance article on the opposite page). These include changing the requirement for a charity to have three years of successful Gift Aid claims to just one year in future.

The government has also proposed a revision to the community buildings rules so that in future charities either claim under the main GASDS arrangement or under the community buildings allowance, but not both. If a charity has several community buildings, it could therefore make several claims, but not in addition to its main GASDS claim.

The consultation also includes the potential for allowing the scheme to cover collections received outside the building, but still in the community.

The deadline for responses is 1 July.

Commission guidance

The Charity Commission has produced various pieces of finance-related guidance. Topics that are of more generic interest include the regulator's report on Age UK and, in particular, the trustees' role in relation to any trading subsidiary.

The commission says that trustees "must be prepared to assert the rights of the parent charity as shareholder and must always put the interests of the parent charity first.

"The directors of the trading subsidiary are responsible for its management, but other major decisions are for the trustees, as representatives of the parent charity."

Referring separately to financial management, the commission is equally robust with the clear recommendation that trustees review "their charity's financial position and its performance against budgets and future projections at least once a month". That would seem to imply that it should be more often than monthly for some organisations.

The commission also published the results of a review of accounts quality. The results of this survey were not too exciting, but it was useful to see what the commission considers to be the main risks, namely low charitable expenditure, high fundraising costs, solvency issues, pension scheme deficits, restricted funds used for unrestricted purposes and significant loans made by or to the charity.

The commission also focused on whether transactions involving trustees indicated that there might be conflicts of interest or personal benefit. A quarter of the accounts that the regulator reviewed did not mention trustee remuneration; and, of those that paid trustees, only half had disclosed their authority for the payments. These topics will always be obvious matters of concern for any charity regulator, and trustees should check that they are completely transparent in these disclosures.


A survey commissioned by the Association of Accounting Technicians shows that 40 per cent of respondents admitted to using business "buzzwords" despite having no idea what they meant. In a sector that is not short of jargon and obfuscation, one suspects the same would be true of many charity trustees and finance committee members.

Don Bawtree is lead partner for charities at accountants BDO LLP

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