Everyone is responsible for staying within budget

All staff should have a grasp of the budgetary issues, says Valerie Morton

Valerie Morton
Valerie Morton

Q. How can I get my whole team to understand their financial responsibilities?

Mention finances and most people's eyes start glazing over. As we all know, however, good financial health - policy, planning and process - is essential to any successful organisation, particularly in charities, which are guardians of money given by donors and funders.

The organisation's culture is a good place to start, because it's an area that often does not receive enough attention. If an outsider asked your staff who was responsible for finance at the charity, would they automatically name the head of finance? Or would they give the correct answer, which is everybody?

Have you inadvertently neglected the responsibility to give financial issues sufficient priority in managers' objectives? Is there a culture of viewing the 'signing-off' of orders, invoices or expenses as simply a process of providing a signature, or do your staff really appreciate that they have a duty to check what they are signing and assure themselves it is appropriate?

It is easy to have policies and processes in place, but unless they are used properly they are worthless. Culture has to start from the top, so ask yourself some hard questions about the approach you take to financial issues.

Now let's look at the role of policies and processes. Managers need to play an integral part in the development of their budgets if they are to feel real ownership. If they are being asked to agree their budgets, any hint they consider them to be just formalities will have obvious consequences. Everyone understands the requirement to keep within budget, but staff must realise that underspends are just as bad if you consider the opportunity cost - what that money could have been spent on to support your beneficiaries. Similarly, meeting the bottom line is not as good as it seems if individual budget lines are all over the place but just happen to balance out. That's a sure sign of the 'finger in the air' approach to budgeting.

Look out too for the situation I have come across in a number of charities where, because of poor policies, service delivery budgets are not reduced when a gift in kind is received. The consequence is that the manager thinks they can spend the money that was budgeted for the item. In some cases, this can amount to significant amounts being spent on the basis of one person's decision.

Finally, most staff will need training at some stage in your charity's particular processes, but remember to include training in the bigger picture. All too often, managers who make financial decisions at work do not use the same rigour as they do with their personal finances. Training should address cultural issues and responsibilities as well as the facts and information.

Valerie Morton is a trainer, fundraiser and consultant

Send your questions to valerie@valeriemorton.co.uk

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