Finance: Advice line - Pesh Framjee on finance and governance

Our charity often incurs joint costs when we do mailings or publish other material. How should we account for this?

The new Sorp will clarify the treatment for such joint costs. Many charities incur expenditure that will have multiple purposes. In determining whether a multipurpose activity arises, and therefore the need to apportion costs, a distinction should be drawn between (a) publicity costs, involved in raising the profile of a charity and associated with fundraising (costs of generating funds), and (b) publicity provided in an educational manner to further the charity's objectives (charitable expenditure).

For publicity or information to be regarded as charitable expenditure, it must be supplied in an educational manner. To achieve this, information should be targeted at beneficiaries or recipients who can use it to further, in an informed manner, the charity's objectives. It should also be related to other educational activities or objectives undertaken by the charity.

Typical areas to consider are newsletters, mailshots and websites. For example, a health education charity might provide information about a particular ailment, and ways to reduce its incidence. Likewise, an environmental charity might have software on its website so that campaigners can email their MP on relevant issues. Such activity would be part of charitable expenditure. Conversely, where information provided in conjunction with a fundraising activity does not meet the criteria listed above, it is targeted at potential donors and therefore related wholly to a fundraising activity.

You should consider the purpose, content and audience of the published material. This will help you to determine the appropriate cost allocation.

- Pesh Framjee is head of the non profit unit at Deloitte and special adviser to the CFDG. No liability arises to the author, his firm or Third Sector. Send your questions to

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