'Interesting times' can be an opportunity, not a curse

Train your finance team rather than cut it if you want to survive through difficult times, says Peter Gotham of Gotham Erskine

It is said that in ancient China the phrase "may you live in interesting times" was considered a curse.

We certainly do not lack for interesting developments at the moment. The funding climate is mixed: whereas the income of the top fundraising charities fell by only 1 per cent in 2008/09, there is doubt over their ability to sustain this, and the future looks bleak for much of the sector.

In a climate where funding is hard to maintain and new donor recruitment even more so, charities and voluntary organisations need to keep a firm grip on their finances.

Failure to do so could mean the difference between the charities that survive - maybe even prosper - and those that do not. How can the finance team weather these interesting times?

When trying to cut costs, it can be a mistake to remove resources from the finance team, which is likely to have extra work producing forecasts and models, and working on fundraising initiatives. Clearly it is also essential that the finance team has the necessary knowledge and skills to engage with sector-specific issues.

The sector requires increasing professionalism from its finance staff and volunteers. Networking and teamwork help the proactive finance worker to identify not only problems that might require specialist knowledge and skills, but also opportunities. For instance, the complex VAT environment can be both negative and positive. Cost apportionment and overheads recovery are examples of areas that make finance in charities much more complex than in equivalent-sized commercial companies - and the penalties for getting it wrong can be expensive.

Working with staff who have not-for-profit experience is helpful. However, as chairman of the charity and voluntary sector group at the Institute of Chartered Accountants in England and Wales, I am also keen for the sector to develop and recognise specialist finance skills. Qualifications such as the institute's Diploma in Charity Accounting recognise accountants with the required sector experience and knowledge.

Teamwork inside the charity, with cooperation among trustees, finance staff, project staff and volunteers, can ensure a shared understanding of the issues, making the charity better able to react to issues and opportunities. Nowadays, the information to be derived from sectoral networks is also an invaluable resource.

There is great enthusiasm and skill in the sector and, if identified and utilised appropriately, 'interesting times', rather than being a curse, might simply be that - interesting.

- Peter Gotham is a partner at Gotham Erskine

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