How to run a charity : lesson 7
By clive on Dec 03, 2009
Learn to speak some accounting.
As mentioned in a previous note, the quality of governance effects the ability of the whole organization to do useful work. The quality of accounting effects the ability of the organization to exist and for the trustees to stay out of jail. I kid not.
If a charity (like a business) fails to produce accounts or produces incorrect accounts then the consequences can be very serious for the trustees. As a trustee you can be liable for financial loss if due diligence can't be shown to have been done. If the organization is not incorporated, you can be liable personally for any losses full stop.
Other than having read a book on how to understand company accounts 2 or 3 years ago, I openly admit to be hard of accounting and (yet again) been very lucky that we had 2 accountants on the Board of Trustees. Their perspective goes beyond just figures and into the legal implications of various aspects of company law. They also have vital input into producing useful future business plans which funders will always want to see.
So I have two take aways which are
- Make sure you have at least one qualified accountant as a trustee (they don't need to do the accounts themselves, just need to be there to audit them and give the bigger picture).
- Learn to speak some accountant. This is on my todo list. I have learned by immersion to speak very elementary accountant over the last 6 weeks, now need to get a bit more of the background. Working in this environment is a challenge for the hard of accounting.