Using software to develop understanding in charities

Finance staff have too often been ensconced in ivory towers where they work their magic, says Peter Gotham

Peter Gotham
Peter Gotham

I was speaking at a Charity Finance Group members meeting last month about managing risk and uncertainty, and several people asked questions about IT. These included whether the 'cloud' can be used to good effect, and which software package best facilitates project management for small charities.

My initial response to the first question was that we should think of the cloud as facilitating an extension of the data-sharing and back-up functionality one might get from good manual record-keeping. But I then thought that IT can be much more of a game-changer in risk management. Most importantly, it can be used to ensure that the finance department and the rest of the charity each understand what the other is doing.

It's important to make information accessible to trustees, and this requires effective communication. In the past, finance staff have too often been ensconced in ivory towers where they work their magic - a cross between wizard and warlock. This can mean that they do not properly understand the dynamics of the project activity, and also that trustees might not properly understand the information that they receive.

It is surprising how often auditors flush out significant accounting adjustments because we are looking at project and fund figures with fresh eyes. Sometimes this is good news - when we identify funding that has not been claimed, for example. But sometimes a serious problem is unearthed. When I come into charities as an insolvency practitioner, I often find that trustees have a limited understanding of a developing crisis.

This problem arises because the underlying data might not be robust, or timely, but also because it is not conveyed to the trustees in a helpful format. Software can help.

Sage Line 50 is a particular example of software that has often not moved with the times to include, for instance, universal 'drill-down', where extra detail is available with a double-click. Another example is landscape displays, where project activity is shown across the page, and one can easily see how salaries and other costs are allocated. Then add the fact that Sage reports will not change if there is a change in the underlying data, unless you rerun the relevant reports.

It is helpful if reports can be condensed to show key totals. I find that finance staff tend to use Excel to present management figures on Sage-based systems. There is a Sage Excel add-on that can assist, but generally there is additional work, and the end result is more error-prone. That said, many people are happy with Sage.

Other packages, such as Quickbooks and Xero, have many or all of the above features. This means reports can be used by project staff, who can understand the data being collated on their project. The trustees can be given reports directly from the software. And cloud-based accounting can add an additional level of shared access.

There is also the more sexy stuff to consider when thinking about IT: reducing administrative costs, improving knowledge management and making use of social media. But perhaps I have already given you enough to chew on.

Peter Gotham is a partner at MHA MacIntyre Hudson

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