CHARITY FINANCE DIRECTOR

Atmosphere is tense in the organisation as it is going through a major change process resulting one fouth of its staff’s redundancy. Lot of them has worked for many years and found it hard to believe the position they are in now. While, making a cup of tea in the kitchen, I over heard a discussion between two staff member. One member was telling about the organisation s/he moving on and the other person immediately enquired whether their funding is secured ! I instantly commented ‘there is nothing called secured funding” – both looked at me and nooded head with agreement. This is the third organisation, I involved in that particular point of time facing similar situation, yet peole in each organisation are in the impression that they are in unique position and sometimes consider victim of donors lack of farsightednes. One the way home, while waiting for the tube, I spotted one of my prevsious aquintance. he looked a bit pale and compared to his usual cheerfulness. We were board member in a leading charity in London and he is the CEO of another charity. After, exchnage of usual greetings, I was informed that they are going through unique (in his view) situation i.e making a large portion of their staff redundant. 

This picture is increasingly common in third sector organisations. I started asking myself why, other then the usual response you get “the funding environment is highly competetive”. The fact is that, the arrival of new generation of organisations are challenging the established organisations with traditional way of working. Ovbiously, now donor have more choice to shop around. While third sector organisations do excellent work as perceived by public but I often struggle to get a simple one sentnece response about what they do while enquiring with any specific organisation. In my view if this not availbale then the organisation should definitely face funding crisis. Charities often spread their wing too far just to fetch all the available funds, though not necessarily become successful. This certainly, put them with impossibilty to meet expectations of donors as well as the benefiniaries (if this is the right word). Focuing on what you are good at and existed for is a solid foundation for funding. As someone from a donor agency once told me that if  your are not clear about your organisation then forget any funding, let alone so called secured funding.    

Many CEOs have indicated that they often find difficult to manage FD’s and feel embarrassed to ask financial question which might reveal CEO’s lack of grasps on accounting issues. CEO has also very few place to turn up for advice or confidential discussion. Being other sides of the I would like to share following

TIPS for CEOs.

1. Do not try to be an accountant but be financial manager.
2. Have you got the right people ? You should first work out whether your FD believe the charities mission and is s/he can participate in organisational overall direction without talking too much numbers. If the FD feel superior than rest of the people – you have got a problem here.
3. Agree on Regular Reports, its formats/contents and deadlines that you feel comfortable. If you do not understand them, then there is a problem about communication and others are unlikely to understand this. The Regular reports should not be more than 5 pages and must contain 1 page narrative highlighting major issues.
4. You must insist to get a cash-flow statement, which must be rolling and at least reflect six months ahead.
5. Once you agree on the above, and then you should insist to get the report within time – no excuses should be accepted.
6. Share these reports in teams meeting and that will ensure the further checks and balances.
7. Make the best use of your Treasurer and insists that s/he presents the finance reports at trustee meeting and always spent some time with the FD before the paper goes to trustees.
8. Remember that if you can bring money then you are no less qualified to count it.

SOME USUAL SYMPTOMS

• If you hear too much reference to systems – you are likely to be assure that books are not updated regularly.
• If find too many reference of auditors – your FD is not sharing everything with you.
• If you hear that they are often working longer hours – either they are inefficient or you have to address the resources issue immediately.

Disclaimer: These are based on my experiences and not a definite suggestions for you to follow without considering you circumstance.

Location: Outside the hotel meeting room in Jinja, Uganda where Nile originated.

Scene: I organised a workshop for an NGO’s finance managers from Africa wide offices. Between sessions, I sat outside the meeting-room while I noticed that cars (almost all of them are four wheel drive) are entering the hotel, dropping passengers and leaving. Occupants of these cars are well of people that is visible immediately from their appearance, cloth and over weight. While, checking with one of my colleagues, I was confirmed that all of them work in NGOs or some kind of development projects. While all these people are meeting inside air-conditioned room, the life outside the hotel are very different – bare footed people carrying their skinny bodies with a sign of long walk.

My Thinking: I continued chatting with my colleague and we all know that they are the people with the best paid jobs the country. I found that there is a direct correlation between country’s level of poverty and pay level in international NGOs. For example, someone working in international NGOs are likely to be paid ten times of their counterpart in local government. This is something like if a homelessness charity in London pays its outreach worker £ 150,000/year and this person drive a Bently car.

International NGOs operating in third world countries always argued to appoint people with unsustainable salary structure. This has just attracted an army of NGO workers those mainly come from English/French speaking privileged class in that country. While they live in that country but far away form the reality of the poor’s life. This immediately makes average person suspicious about NGOs objective. I have yet to find an international NGOs that their financing structure survived after they left.

I often encounter the discussion about how to maximise trustees endangerment. Obviously, there is no short supply of ideas and often based on the theory and more frighteningly from the people who have no experience of being a trustee him/herself. People often miss the point by highlighting the only facts that trustees are sacrificing their valuable time on voluntary basis. However, the fact is that when anyone signs up as a trustee they have a personal objective and to gain from trusteeship. It could be just to spend time, networking to gain further contact, enhance CV, to gain access to insight knowledge of particular situation and so forth. In my view, the trustee will be only effective when organisation finds a way to meet their inner personal objective. There is nothing one way – while charity gain, trustees must get something and that does not have to be financial. As long you can strike the balance – I can gurantee from my experience that they will be engaged.

Scenario:In one of my interim assignments, I attended the trustee meeting along with the outgoing Finance Director. The Finance Director has a very uncomfortable relationship with the Treasurer and is a bit frightened of the prospect that the Treasurer is going to pick an issue to embarrass him in the meeting. Actually the meeting went well without any drama and my outgoing friend was relieved.

My Observations;

• The Finance Report given to trustees were around 25 pages which include only one page narrative.
• Treasurer did not have any advance knowledge what is being presented.
• It was not easy to reconcile the top page with the supporting pages.
• Trustees were not clear about how exactly various calculations were made and which jargon mean what.
• The discussion was quick and some trustees were keen to finish the item ASAP.

My further investigation discovered that the 25 pages are the accumulation of various points raised by trustees in meeting in the past and Finance Director tried his best to accommodate all of these views.

Steps I took: I start with the following steps to improve the situation;

1. Spent time with the Treasurer to find her personal preference regarding the structure and content of the finance report for the trustee meeting.
2. I produced a draft report based on her idea which she took to the trustees for their endorsement. While individual trustees have special preferences but they settled with a new report and they felt the ownership. It was also agreed that the Treasurer would present the report while Finance Director will be assisting and supply relevant explanation in the meeting.
3. The report was reduced to 5 pages starting with a brief highlights of issues including graphs in 1st page. In additional to budget variance reports, it also included a section highlighting major risks anticipated by the organisation in coming days.
4. Produced a brief explanation of internal jargons used in the report.
5. I agreed and scheduled time in advance with the Treasurer to go through the report before it presented to trustees.

Out Come: Treasurer felt engaged, trustees did not have to navigate through mountains of information and could grasp the broad picture of the organisation. My relationship with the Treasurer was amicable, and we still exchange emails.