Facilitating a smooth audit process

News

Facilitating a smooth audit process

How do you run an efficient audit process? This was the subject of workshop ran by Farrah Kitabi, our Senior Audit Manager at the Charity Accountants Conference.

Farrah said, “Running an audit can be challenging for finance managers, particularly as this have to be fitted in around the day job. Managers have to ensure business as usual, but also plan effectively to ensure deadlines are met and the whole audit process is as stress free as possible.”

Farrah said audits should be treated as projects, with a system and processes in place to ensure deadlines are met, that audit fees are carefully managed and don’t escalate, the process is smooth and that a quality document is produced on time.
She explained the three components of a good project are the planning, the resourcing and the action plan.

Planning
The first step is to create a timetable, which should include key deadlines spanning the entire project. These would include planning meetings with auditors, the date of the year-end close down of the finance system, when the first draft of the accounts will be sent to the auditors and senior management team, , the start of the audit fieldwork, the clearance meeting with the auditors to review key audit issues, draft management letter and draft financial statements, the board and sub-committee meetings to approve the financial statements and the submission to Companies House and the Charity Commission.

Farrah said charities need to think carefully about the time frame, work backwards from the deadlines and be realistic about the amount of work and the resources needed. Think about who will be involved in the process and the time required for you and others to review the accounts and information given to the auditors.

Learning from experience
She said, “If you have done an audit in the past, you can learn from experience. Where were the pressure points? How long did the process take? What were the key challenges? Are there any processes that can automated this time?”

Farrah recommended establishing a timetable as soon as possible after the previous year end so lessons learned from the previous years’ experience could be incorporated. For example, could the time between the audit and final circulation of accounts be extended if needed. She said charities could organise a debrief with their auditors following an audit to see what worked well and where improvements could be made and feed that into the next audit.

Planning with auditors
It is a good idea to plan with the auditors. This could include reviewing the auditors’ information from the previous year, discussing the information required and areas where you or the auditors could do better. The planning meeting with the auditors is also the place to discuss any issues, as the audit will be far smoother if there are no surprises.

Resources
Think about who needs to be involved in the audit process and the information, training and support they might need from finance.

Key parties to involve are the budget holders throughout the organisation, the senior management team – who must take ownership of the financial statements and any issues raised by the auditors and the board of trustees – it is their report and accounts.

Other staff include the communications team, who may be able to use the statutory accounts as a communication tool, and they will be involved in developing the trustees’ report. HR and facilities also need to provide information for the notes in the statutory accounts and the auditors will need information from them and may want to talk to them during the audit.

There are also third parties to consider including bankers, outsourced accountants, legal advisers, actuaries and investment managers.

Farrah highlighted the importance of engaging staff outside of finance with the audit and this could be done by presenting the annual report to staff or preparing frequently asked questions they can access.

Detailed task list
Having a detailed action plan and to do list is essential to ensure the smooth running of the project, with tasks listed, key roles and responsibilities and deadlines included.

Farrah said it was all about being organised and automating tasks where possible. Other tips included ensuring that accounts are updated monthly, delegating responsibilities to key people and carrying out internal reviews to ensure and problems are resolved prior to the audit.

She said auditors will always ask certain questions about variances in figures year on year, they will want to see staff contracts that match costs in the accounts, bank statements, breakdowns of all balance sheet items, trial balances that reconciles to the accounts and third party information to support the figures.

At the end of they day, a smooth audit is the result of careful planning and project management and a very detailed to do list.

Making the Treasurer and the Finance Director’s relationship work

News

Making the Treasurer and the Finance Director’s relationship work

What makes an effective a treasurer? Do charities really need a treasurer?

Judith Miller, Partner at Sayer Vincent, opened this session at the Charity Accountants Conference by discussing the suggestion that the role of honorary treasurer was not needed. Some argue that having a treasurer gets in the way of other trustees taking responsibility for finance.

Judith said, “There is no legal requirement to appoint a treasurer, unless your constitution requires one. As the Charity Commission guidance (the Essential Trustee: CC3) reminds us, the trustee board are collectively responsible for the charity this includes the finances. There is a risk that treasurers will take the lead on finances and other trustees simply agree with them, but if that’s the case both parties are not fulfilling their roles.”

Judith is currently the treasurer of the Small Charities Coalition and says that if her trustees said to her, “if you are happy with the accounts, then we are happy,” she would have failed in her role. She sees being an interpreter of the numbers for her fellow board members as a key part of her role. The role is also about acting an enabler effective discussions around the finances at board level.

She said, “A good treasurer is not just the steward of the money, but enables others to access and understand this area. They operate strategically and interpret and explain the figures and their implications to the board, whilst not getting in the way of the internal finance team.”

“Treasurers will often observe that it can be hard enough for busy trustees with a finance background to really understand what’s going on from a set of management accounts, let alone a trustee without any financial knowledge. While trustees can see how the organisation is faring compared to the budget and what’s been overspent, it can be hard to fully understand the implications, and this is where treasurers can add most value.”

“They can put the financial results into context for people, working alongside the finance team to add life to the numbers through presentations, visual images and graphs, and most importantly highlight how the financial results relate to performance and delivery so fellow board members can understand what is really happening, what’s working well and what could be done differently, as well as the longer term perspective.”

“Turning data into information that is invaluable for the board is critical. Treasurers can also help to champion a right culture around financial discussions, so there is a safe space where people feel comfortable asking what might seem a stupid question.”

Making relationships work
If a charity is small with limited internal finance resource, then the treasurer may need to have a more “hand on” role. In larger charities, the focus will be at a more much strategic level alongside the internal financial leadership. For treasurers to operate effectively, they need to have good working relationships principally with the internal finance lead – the finance director or finance manager. Mutual understanding of one another’s strengthens and where they can support each other is critical. Having good structures and processes around them is also important, such as sub-committees.

When a treasurer is appointed, they need to have an in-depth induction, so they fully understand the operating model and the risks and opportunities for the organisation.

With this insight, the treasurer can then contribute to the future development of the strategy, including the reserves policy. They may also help to develop a value for money culture, establish KPIs and contribute to risk management and assurance.

If the treasurer has a good working partnership with the finance lead, they can operate as a double act in meetings and support each other.

There are also several resources charities can given to treasurers to support them. These include:

• C25 Charity Finance: trustee essentials
• CC8 Internal controls for charities
• Honorary Treasurers’ Handbook – Sayer Vincent/Honorary Treasurers Forum
• Made simple guides – Sayer Vincent
• Rethinking Risk/Beyond Reserves – Sayer Vincent

Judith concluded by saying some may feel lonely in the treasurer role. It is a big responsibility and a treasurer may see financial issues before others and then relay the news to the board. She also highlighted that trustees and managers must not assume the treasurer has thought of everything or know everything. Constructive challenge on financial matters is as important as in other areas of governance.

She added that given the current financial situation many charities find themselves in, the role of a modern honorary treasurer as an interpreter and enabler is potentially more valuable than ever.

Providing assurance of risk

News

Providing assurance of risk

How can finance managers engage CEOs in tricky decisions about risks? How do they keep risk management on the board agenda?

These were key questions for delegates at the Providing Assurance of Risk workshop, led by Kate Sayer a Consultant at Sayer Vincent at this year’s Charity Accountant’s Conference.

Kate explained that risk registers can be helpful to start discussions on risk and raise awareness of issues, but they have flaws.

She said, “If the risk register is too long, not relevant or not being read, it’s time to do something different. Most risk registers could be reduced to six or seven key risk items.”

Effective risk registers focus on strategic and high impact risks. To work out which are the most critical, trustees could start with a blank sheet of paper and ask themselves what are the big risks that really worry them. Having fewer high impact and strategic risks means they can be more easily reviewed in greater depth at a finance and audit committee meeting or at board meetings.

Kate is a Trustee at the Association of Chairs and at each board meeting one trustee leads on one area of risk which is then analysed in depth by the trustees.

Flaws in the system
Kate highlighted that traditional risk management also has flaws because it tends to focus on the negatives, which can encourage trustees to be risk averse.

She said, “Risk Management is also sometimes viewed as a separate activity rather than integrated into the main activities of the charity, where it belongs. Also, ranking the risks by their level of gravity doesn’t always work as people have different views – it is very subjective. It is far better to have a strategic conversation about risk.”

A risk register can also never really be complete as people can’t think of everything. Effective risk management relies on people being open minded to the potential of new risks.

Different types of risks
Kate suggested another way for charities to approach risk management was to consider four different types of risks.

  1. Inherent risks
    Inherent risks are risks in the business model, for example, if a social care provider was reliant on employing European staff – their business could be at risk as a result of Brexit.To manage inherent risks, organisations need to fully understand their income and costs and the links between their income and expenditure. How do they operate? How are they funded and are there are any constraining factors?

    To mitigate such risks, charities could consider collaborating with other organisations to share risk or get funders to share risk. Alternatively, the charity’s funding model may need to change, for example, if the organisation is too reliant on contracts, they could try to introduce more grant funding.

    Some risks could be factored into the pricing. For example, if a charity is a housing provider, they could adjust their pricing to cover periods when they have empty accommodation to reduce their funding risks.

  2. External Risks
    There are many external risks including political changes like Brexit or shifts in public attitude or technological changes. Also, any funding changes, changes in the public services model and competitors new and old are all examples of external risks.External risks are hard to manage because they are ever changing, and unknown. Kate recommended that charities undertake regular PESTLE analysis to identify these risks, regularly monitor for any early warning signs that risks are escalating and report on the status of risks, so this information is fed into the decision-making process.

    It is good practice is for organisations to prepare responses and media plans to be actioned in the event of a crisis. These plans should include who will respond, the timescales for response and the key messages for all stakeholders. The organisation’s stakeholders are extremely important so thinking about their expectations and communicating to them in the right way is a major consideration.

  3. Operating Risks
    Operating risks are things that could go wrong in the day to day operations. However, these are usually known risks and can be managed effectively by having good controls, processes, systems and checks in place. Examples would include health and safety and data protection.
  4. Risk Taking
    All charities need to take risks, but boards need to discuss what level of risk is acceptable for them and how they will manage the risk-taking. Who will manage the risk? What are the resourcing and pricing implications? How will we measure success? These are all key questions to consider.

 

Three lines of defence
To provide greater assurance on risk, Kate recommended thinking about three lines of defence and applying them to each risk.

  1. Operational
    The first line of defence is operational which is ensuring the organisation is doing the right things. This means having quality processes and procedures in place, ensuring there is proper guidance, inductions and training for staff and clear roles and responsibilities, so everyone is clear on who is doing what.
  2. Management Oversight
    Managers should be responsible for managing operational risk and this is the second line of defence.Providing trustees with assurance reports to demonstrate how they manage day-to-day risk should help to build confidence across the organisation that you are doing the right things and doing them well. Assurance reporting needs to be at least annual and managers should be prepared to sign off on their own assurance report covering the areas under their responsibility.
  3. Independent Verification
    The third line of defence is independent verification. This could be in the form of audit reports or doing spot checks to identify key actions or highlight any issues.Kate recommending charities turn risk management on its head and focus on their strategic goals and what they need to get right. She said risk registers could be viewed as opportunity registers.

She concluded, “All charities must take risks – what’s important is how the risk taking is managed. As Atul Gawande, the surgeon and writer said, “discipline makes daring possible.”

Is there a golden formula in charity reporting?

News

Is there a golden formula in charity reporting?

Ensuring financial information can be used in a meaningful way to reinforce public trust in charities was the theme of this year’s Charity Accountants Conference in Nottingham.

Our guest speaker Kate Lee, CEO of CLIC Sargent, who describes herself as the ‘self-appointed fairy godmother of charity reporting’, led the opening discussion on honest and transparent reporting.

Kate said that while the importance of transparent reporting has been discussed for many years, charities still need to focus more on their external audiences and not hide anything.

Impact reports are the obvious way to do this – they should not only discuss what a charity does but how they do it. She said donors like to fund causes directly but they want to know the whole story.

Kate highlighted that impact reports have become very trendy in recent years but that many read like marketing documents. As a result, do they tell the whole story – what works and what needs to improve?

She said, “Impact reports really need a heading that says, ‘Hands up, we’re not perfect’. This is the approach taken by CLIC Sargent in its 2017 when it listed openly the things that hadn’t worked well.

The Golden Formula for generating trust?

Discussing declining public trust in charities in recent years, Kate acknowledged that the issue of Chief Executive pay will run on in the media, however, it is possible to educate people about how much of the £1 donated goes into frontline services.

For example, she said, the public needs to know that charities like CLIC Sargent invest its funding in charity shops, resources, supporting and thanking donors or they may need to buy accommodation centre for young people with cancer and they need reserves – all of which comes out of the £1.

She also said that people need to understand that comparing charity gross expenditure is misleading and too complex. There are around 185,000 different charities, all with different services and funding pressures and there is no standard way of reporting, which makes it impossible for the public to compare them.

Instead, people could be encouraged not to compare charities by what they spend but their work and their impact to get a sense if they are honest. How do they do that? Kate recommends what she calls the ‘golden formula’: reach vs resources vs impact.

She highlights that if we want people to assess a charity in a more meaningful way than penny-in-the-pound ratios, they need to be encouraged to ask three questions:
1. How many people do we reach?
2. What sort of impact do we have?
3. How much do we spend doing that?

She said that if the answers are truthful, transparent and credible, then it’s not unreasonable to ask them in return to trust charities to work out exactly how they spend their money to get the most incredible impact for that cause they care passionately about – from cycle paths to otter conservation (or children with cancer of course). But, essentially this all comes down to honest reporting that is open both about successes but also the mistakes/areas for improvement.

Commenting on Kate’s comments, Jonathan Orchard – partner at Sayer Vincent said; ‘This is a real opportunity for charities to use the opportunity of their trustees’ annual report to answer Kate’s three golden thread questions. We do need to move the debate on charity performance forward and this is a simple yet effective way of doing that. And what’s more it is perfectly in line with what the SORP expects in these reports. The SORP says that trustees’ reports should “tell the charity’s story in a fair and balanced manner, acknowledging both significant successes and failures”.

 

2019 – the year to rebuild trust

News

2019 – the year to rebuild trust

Following the various charity sector scandals on recent years we need to make 2019 the year that the sector rebuilds public trust. At SV, we are committing to play our part in working with our clients to achieve this.
 
We believe that transparent and meaningful financial information is one way to do that. By ‘meaningful’ financial information we mean much more than SORP compliant accounts. Charities need to be thinking of their audience and tailoring their information to tell the story of how they turn the financial resources available to them into social impact. We will be supporting our audit clients to find ways of telling this story.
 
We have written and spoken a lot about fraud in the charity sector over the last couple of years. Nothing destroys trust in the charity sector more than the thought that donated funds end up being lost to fraud. We will be continuing to advocate for greater fraud awareness and effective controls in charities.
 
Finally, smart risk management processes will help build more resilient charities better placed to absorb and adapt to external shocks. We will continue to work with our clients to improve the understanding of risk and to develop more risk intelligent organisational cultures.
 
What else will be doing in 2019?
 
We are delighted to start the new year welcoming Fleur Holden as a SV partner. As many will know Fleur has been hugely successful in building our presence in the Midlands and will continue to do that in her new role.
 
Our newsletters in 2019 will continue to bring you regular updates in tax, accounting, governance and risk matters. It is entirely possible (?) that we will have a clearer idea as the year progresses on how the charity sector will be impacted by Brexit and this will surely feature in 2019 newsletters too. We are looking forward to partnering with Russell Cooke for a Brexit discussion evening in February.
 
We will soon be announcing dates and locations for 2019’s Charity Accountants Conference. We look forward to seeing many of you there and at our various training days and seminars throughout the year.

Off-payroll working in the private sector

News

Off-payroll working in the private sector

The government has announced that off-payroll working rules, known as IR35, currently only in the public sector will be rolled out to the private sector as well.

This means that the responsibility for determining whether or not a person working for your organisation should be on the payroll, rather than freelance or contracted will fall to the organisation and not the individual even if the person is hired via a personal service company.

HMRC provide an online tool to help determine if any specific person or role would be considered to be employment. The Check Employment Status for Tax service (CEST) is available here.

If you find that you should have treated persons as employed, they may then be entitled to employment benefits and both your organisation and the individual might need to pay employment taxes (income tax and NICs). As such it is important that once these rules come into effect, you are satisfied of the status of any people hired via personal service companies working for your organisation. It is already important to check this for any individuals you hire as consultants rather than as employees.

The change to include personal service companies is due to come into force from April 2020 but helpfully this will only apply if your organisation is deemed ‘non-small’.

‘Non-small’ organisations are those with two of the following:
• Income over £10.2m
• Gross assets over £5.1m (fixed assets plus current assets)
• Over 50 employees

Further guidance is expected from HMRC in due course.

VAT and digital advertising

News

VAT and digital advertising

One of the few VAT reliefs available to charities is on advertising. Charities are able to ask their advertising suppliers to invoice them with VAT at the zero-rate rather than the standard rate. However, targeted advertising (e.g. direct mail) does not fall within HMRC’s definition of advertising. HMRC has also recently decided that adverts placed on social media platforms (e.g. Facebook and Instagram) do not qualify for the relief as they are targeted based on the individual’s browsing history. Charity Tax Group has spoken to HMRC about this, arguing that HMRC is not interpreting the legislation as it was intended. HMRC has so far refused to budge on their position. HMRC set their position out as follows:
 
We have identified four scenarios where advertising takes place online. We consider the VAT treatment to be as follows.
• ‘Natural hits’ – not supplies of advertising for the purposes of item 8 – standard rated
• Pay-per-click adverts – zero rated
• Direct placements on third party websites – zero rated
• Social media adverts – standard rated

 
HMRC say they cannot give any detail on what falls into each category. Being unable to claim the VAT relief on social media advertising will result in a significant increase in irrecoverable VAT for charities, and Charity Tax Group is continuing to campaign on this issue.

Technical updates – December 2018

News

Technical updates – December 2018

Review of charities’ reserves policies
The Charity Comission reviewed charity reserves policies from a sample of 106 accounts for charities with income over £500k. 64% fully met the requirements to explain the charity’s policy on reserves, state the level of reserves held and state why reserves are held. Only 22% correctly stated the level of reserves held. The CC will recommend to the charity SORP making body that guidance on the calculation of reserves is improved.
 
Change your charity’s financial year
New Charity Commission guidance on how to change a charity’s financial year and the restrictions on changes. There are two sets of rules (1) for CIOs and unincorporated charities (2) for incorporated charities.
 
Fraud Advisory Panel help sheet: Legacy fraud
Guide for charities on legacy fraud covering what it is (charities do not receive the correct amount due), who carries it out, how it is carried out, and the basic controls, checks and warning signs for charities.
 
NCVO: Brexit and the voluntary sector, preparing for change
Considers the risks and opportunities for charities of Brexit and includes a charity Brexit checklist. The main risks are identified as economic impact, employing EU27 nationals and EU funding. The main opportunities are reform of the VAT, state aid and public procurement rules.
 
OSCR: Changes to charity accounting requirements
The Scottish Government is to update the Charities Accounts (Scotland) Regulations 2006 to bring them into line with SORP update bulletin 2. The changes will affect larger charities (income ≥ £250,000), all charitable companies, and charities that use the Housing and Higher & Further Education SORPs. Once the changes have been made, OSCR will provide more guidance.

Charities and cyber security

News

Charities and cyber security

This summary covers the findings from qualitative research with UK registered charities exploring awareness, attitudes and experiences around cyber security. A total of 30 in-depth interviews were undertaken in February and March 2017 with a range of charities by income, location and charitable area. The research was commissioned by Department for Digital, Culture, Media and Sport (DCMS) as part of the National Cyber Security Programme and carried out by Ipsos MORI.

Awareness and attitudes
Pre-existing awareness and knowledge around cyber security varied considerably across the charities interviewed. Those in charge of cyber security, especially in smaller organisations, did not feel well informed about the topic, and several noted that they had not seriously considered it before or proactively sought out any information, often leaving it to an outsourced IT provider to deal with.
In this context, there was often a low awareness of the Government support available on cyber security. This was despite the fact that the Government and other public bodies were considered as trustworthy sources of information. Some participants assumed that if the issue was important enough for them to address, they would hear about it through their established communication channels, via the Charity Commission or voluntary support bodies, such as NCVO.

In some cases, participants assumed cyber security was more of an issue for businesses than for charities. These participant assumed that businesses would be more at risk as they would be more likely to hold customers’ financial details and generally be expected to have more cash in the bank.

On the other hand, there were several instances where charities recognised the relevance of cyber security for their organisations, and this prioritisation of the issue could be traced to many things:
• holding personal data on donors or service users
• having trustees or staff with private sector experience of the issue
• meeting the standards laid out by commissioning organisations (in cases where charities were involved in Government service provision).

Approaches to cyber security
Across the charities interviewed, it was typically the case that organisations did not have internal specialist staff with the technical skills to cover cyber security. Responsibility for cyber security internally was often held by someone with a different core role, or with multiple responsibilities, such as Chief Executives or finance staff. Competing demands on time and resources – with greater focus often given to areas such as fundraising and delivery – meant that cyber security was often deprioritised and could lack investment. As a result, there was often a reliance on outsourced IT providers, as well as informal sources of support such as friends, family or other local charities.

Various participants highlighted that more could be done to raise basic awareness of cyber security among staff and trustees. However, it was uncommon to find charities that had provided cyber security training to any of their staff or volunteers. This reflected the various barriers that charities faced to providing training. Many assumed training would be expensive, and did not prioritise spending on training above other areas that might need funding, such as IT equipment upgrades. Charities also lacked the expertise to put on training by themselves – those that had done so had typically worked with outsourced providers to run training. Smaller charities also found training hard in general given that many of their trustees and staff tended to work remotely. In this context, some were interested in free or low-cost online training options.

Cyber insurance was similarly often seen as too expensive to consider. Some charities noted that they had wider insurance policies such as public liability insurance or business continuity insurance, but were not clear on whether these would cover them in the result of a cyber attack.

Perceptions and experiences of breaches
Charities were often highly concerned with potential loss of funds or of personal data on donors or service users, and these were typically seen as existential threats that helped heighten the importance of being cyber secure. By contrast, the loss of day-to-day (non-personal data) files was less of a concern, with some charities not realising the potential implications for business continuity from losing non-personal data.

Indeed, the research came across examples of charities that had incurred cyber security breaches where non-personal data were lost, and where organisations spent considerable time getting their data restored. There were also examples where charities had incurred a sizable financial cost from a cyber security breach. In these cases, it is worth noting that the experiences of breaches often spurred charities into taking action and protecting themselves against further attacks.

Finally, the research also explored reporting of cyber security breaches. While participants were confident that they would report serious breaches with a financial impact internally to trustees and to any outsourced IT providers, they were less certain of where and when they might be required to report breaches outside of this. Some mentioned reporting breaches with a financial impact to organisations such as the Information Commissioner’s Office (highlighting again the importance placed on data protection). However, none of those interviewed had heard of the cyber crime body, Action Fraud.

Conclusions
This research has highlighted that charities often see cyber security as important, and are as susceptible to indiscriminate cyber attacks as businesses. These attacks can have serious implications for charity finances and for business or organisational continuity. However, the research also flags the many barriers that charities face when it comes to engaging with the issue, including competing priorities for time and resources, and staff not necessarily equipped with the knowledge and skills to deal with the issue.

There is a need for basic awareness raising among staff and trustees, and upskilling of those responsible for cyber security – so they know the basic technical controls they can put in place. It may also help to disseminate Government information and support via the organisations with which charities already have established relationships, such as the Charity Commission. Finally, making use of private sector expertise among trustees may also help individuals within charities to champion the issue.

New Charity Commission guidance on grant funding non-charities

News

New Charity Commission guidance on grant funding non-charities

Charities can fund private entities with grants, however doing so must further the charity’s objectives, and the CC expects the charity to have appropriate processes in place for awarding and monitoring grants. The revised guidance was originally published in draft in February 2016 and has been modified in a number of areas, including the removal of a statement that non-charity core costs cannot be met by charities.

Grant-funding can create opportunities for charities to further their purposes by reaching individuals or communities that they might not otherwise be able to reach. It can benefit causes or groups which may otherwise struggle to obtain the support they need.

This can include making grants to:
• other charities with similar or overlapping purposes
• organisations that aren’t charities including social enterprises, campaigning organisations, commercial companies or public sector bodies
• organisations based overseas

Making grants to organisations that aren’t charities may present new opportunities to further your charity’s purposes. Grants can be for specific activities or services or, in some cases, to develop the organisation’s capacity to deliver activities or outcomes that will further the charity’s own purposes. Remember though, that organisations which aren’t charities don’t have to deliver public benefit or comply with charitable purposes, and may be unfamiliar with charity law requirements.

You need to understand the relevant risks and boundaries, as well as the opportunities, before you start. Any grant your charity makes must only be used to further or support your charity’s purposes, and for no other purpose. This means there will always be limits and conditions on what you can fund.

Before you decide to make any grants, you should:
• make sure you understand your own charity’s purposes
• make sure you understand and follow trustee decision-making principles
• put in place appropriate systems and procedures for making decisions about grants

Before deciding to make a grant to a particular organisation, you should:
• consider whether that organisation is a charity or not
• take reasonable steps to assess risks and carry out appropriate checks on the organisation to ensure that it is suitable for your charity to work with
• be aware that trustees remain responsible for grant decisions even if decisions are delegated, and understand where extra care may be needed

When giving a grant to another organisation, you should:
• write appropriate terms and conditions to ensure that the grant can only be used in line with your charity’s purposes, and ensure that the organisation understands and accepts them
• put appropriate monitoring arrangements in place
• know what to do if things go wrong

Find out more in this guide to decision making.