Professional help with accounting vital for charities

How can you be sure your charitable gifts are used wisely? Good accounting is key, says Keith Findlay

Good causes are increasingly focused on demonstrating responsible governance, transparency and accountability.

This is not just to satisfy regulators, but to reassure supporters their donations are being properly managed.

Whether someone is personally giving cash to charities or donations are being made from a company that supports good causes, the question that needs to be asked is: How well is this charity looking after the money and are they spending it in accordance with my wishes?

William Anderson is a partner at chartered accountancy firm Meston Reid & Co and leads its services to charities, not-for-profit businesses and social enterprises, from small organisations to those with assets of £30 million.

Mr Anderson said: “It’s probably more essential than ever that charitable organisations adhere to the principles of robust financial management and transparency.

“That not only helps them meet their professional administration and governance responsibilities but also protects their broader reputation, and that’s a key consideration for charities as they look to maintain and enhance their donor pool in the long term.”

Following the introduction of the Charities and Trustee Investment (Scotland) Act in 2005, OSCR came to the fore as the independent regulator and registrar for more than 24,000 Scottish charities including community groups, religious organisations, schools, universities, grantgiving bodies and major care providers.

“Its remit and powers underline why it’s necessary for charities to be completely open about their financial operations and to keep accounting records up to date,” said Mr Anderson.

The key to good housekeeping is the sourcing of good professional support, he said, adding: “The days of a volunteer ‘picking up’ accountancy duties at good causes are well and truly in the past.

“There are simply too many processes and hurdles to overcome, and these call for a robust and contemporary understanding of the modern accounting panoramic.

“The knowledge, insight and expertise that stem from professional support will be key in ensuring their sustainability.

“The correct mix of advice and expertise is likely to add value and save the charity costs in the long run, while also inspiring confidence among supporters that their money is being effectively deployed to help others.”

UK taxpayers can further benefit the charity by making their donation under Gift Aid. This allows the charity to claim an extra 25% from HM Revenue and Customs and if the donor pays tax at higher rates they too can reduce their tax bill for the year.

SUPPORT: The correct mix of advice and expertise is “likely to add value and save the charity costs in the long run”.