\u201cThere was a new giver who arrived on Sunday, but we couldn\u2019t give them the Gift Aid form they asked for because the caretaker went home with the (only) key to the cupboard in their pocket. Hopefully, they come back next week and still want to give \u00a3300 per month!\u201d<\/li>\n<\/ul>\n\n\n\nThese are all examples of single points of failure in financial processes. These should be avoided at all costs.<\/p>\n\n\n\n
Our experience has shown that these situations (as trivial as they may sound) often arise, particularly in smaller teams. Fixing these not only helps the organisation, but can improve the wellbeing of your team members if they no longer feel that they\u2019re carrying the weight of the “organisation’s finances” on their shoulders. Take it from my experience, being able to book your holiday without needing to consult the payroll calendar is liberating! What can you do soon to minimise the single points of failure in your finance team?<\/p>\n\n\n\n
8. Governance structures and fraud prevention<\/h3>\n\n\n\n
Managing charity finance is a huge task, and often a lot of it is done by trustees or other volunteers who have limited time available. We\u2019ve all been there, waiting for payments to be approved and feeling frustrated when it takes longer than expected. This is often because payments need two signatories or because you’re waiting for trustees to agree on an important purchase. But making decisions the right way and in line with your organisation’s policies is crucial.<\/p>\n\n\n\n
Keeping your key decision makers accountable is healthy, and cutting corners in your financial processes can lead to bigger issues later. To this end, do you have sufficient expertise to make the right decisions in your context? Now obviously, charity trustees are not expected to be accounting experts. You may need to seek external expertise for your organisation when it is required.<\/p>\n\n\n\n
Having strong processes and security around your organisation\u2019s money isn\u2019t just about accountability for postholders. It can also help prevent external fraudulent attacks. Your Independent Examiner or Auditor should ask questions about your financial procedures and controls to ensure everything is taken care of during your year-end process.<\/p>\n\n\n\n
9. Risk of doing nothing<\/h3>\n\n\n\n
We\u2019ve talked a lot about stopping disasters and keeping the proverbial ship afloat – but there is also a huge risk involved in doing nothing. We mentioned that charities don\u2019t exist to hoard money and operate huge savings accounts, but to carry out their activities for the sake of their beneficiaries. Balancing impact and financial sustainability is a tough task. A pastor\u2019s or CEO\u2019s dream might be a Treasurer\u2019s nightmare. Take the example of the leap of faith to recruit to a new staff role for a new area of charity activity or ministry.<\/p>\n\n\n\n
Just because your books are balanced and all the reports on your finance system are heading in the right direction, it doesn\u2019t necessarily mean you\u2019re achieving what you need to in the wider sense. Sometimes, therefore, rather than control and mitigate risks, we need to embrace them. Trying something new can be scary, but it can also open doors to new opportunities. How do you ensure you mitigate risk? Be clear on your vision. Hold yourselves and each other accountable to it and take the time to monitor progress. “Zoom out\u201d from the day-to-day and check where you are on your roadmap; where you want to be, and what your next steps are.<\/p>\n\n\n\n
Managing risks<\/h2>\n\n\n\n
There are many factors to consider when managing risk in your organisation, such as processes, policies, reporting lines, and risk registers. But also consider your culture – does your organisation\u2019s working style allow for healthy challenge between colleagues, staff and trustees? Are policies seen as helpful documents or as red tape which gets in the way of important activities? Are they concise and understandable enough to be useful day-to-day?<\/p>\n\n\n\n
It\u2019s always good to be honest about risk. Some risks are potentially disastrous and there\u2019s not much you can do about them. Regardless, you should still do what you can and be aware of them – even if that means your risk register has more red boxes than green. Work with your policies and risk registers, not against them. They are internal documents to safeguard and assist your organisation – why not use them in a staff induction.<\/p>\n\n\n\n
In terms of overall culture, it’s essential to make room for open conversations and to have regular reporting to those who need it. Consider your three most important metrics and how you can give the information to your audience in the best format. Additionally, it’s important to have mechanisms for healthy challenge and reporting of issues (including, perhaps, a whistleblowing procedure if more junior staff have concerns about managers or trustees).<\/p>\n\n\n\n
Lastly, ensure you have sufficient diversity of thought to bring a rounded approach to risk in your organisation and diversity of capability to cover for the single points of failure. This might include looking at succession planning as well as more day-to-day approaches.<\/p>\n\n\n\n
Team roles<\/h3>\n\n\n\n
How can different members of your team play their part in organisational risk management? Here are some suggestions:<\/p>\n\n\n\n