Charity Bulletin - UNW · 2020. 5. 11. · UNW Charity Group Bulletin October 2019 Welcome to our Autumn Charity Bulletin In this edition, we are focusing on looking forwards –

Charity Group BulletinOctober 2019

UNW’s regular update about topics of financial interest to charities and not-for-profit organisations

UNW’s Charity Group

Charity Bulletin

SJOG appoints brand new executive team with help from UNW

Responsibilities of a charity during a general election

How to best prepare your charity for an audit

The Alnwick Garden spreads its roots with help from UNW

Preventing fraud in the charity sector

Charity briefing: Diversifying Your Income Stream

October 2019 // What’s inside?

UNW Charity Group Bulletin October 2019

Welcome to our Autumn Charity BulletinIn this edition, we are focusing on looking forwards – firstly with a reminder on the responsibilities of a charity in the event of a general election, which looks at the fine line (at times) between campaigning for your cause and stepping into the political arena.

We also look at preparing for an audit – the audit threshold for charities (as I am sure some of you are aware) is much lower than their corporate counterparts and it can be a daunting prospect if you approach or cross the threshold and trip from the relatively light touch regime of independent examination into full blown statutory audit. Hopefully this will reassure you that with a little forward planning it will not be a huge headache for your teams, and remind you that we are here to help, not hinder.

We have two great case studies from two very different charities – SJOG, based in Darlington but operating nationally, and The Alnwick Garden. Both are very different in what they do but united in their purpose to make a difference to the lives of the people who they work with.

Fraud remains topical with charities often targeted, and sadly still all too often caught out by scams perpetrated externally, and so we look at some of the easy wins to put in place in the fight against ever more sophisticated attacks.

Finally, we wanted to remind you about our forthcoming Charity Briefing on diversifying income, which has already proved so popular we are on the verge of moving it across the road to accommodate more people. If you haven’t already signed up, then please do so!

As always, please get in touch if there is anything in the bulletin that catches your eye that you wish to follow up for more information or advice and I look forward to seeing at least some of you at the event in November.

Anne Hallowell

How to best prepare your charity for an audit

Below are some suggestions for how your organisation can best prepare for an audit, in order to achieve the most value from the process.

Planning

The planning meeting gives your auditors the chance to gain as much information about your organisation as they can. By ensuring you take the latest copy of your management accounts with budget information to the meeting, your auditors will be able to ask detailed questions and receive well-informed answers. During this stage, ask your auditors for a list of everything that they will need from you to make sure you’re properly prepared.

Availability and fieldwork

Ensure that all relevant individuals are available during the audit, as this helps to make the process more effective. The finance team giving your auditors their time when needed will help efficiency, and allows any queries that arise as the procedure is ongoing to be answered in a prompt manner.

Communication

During the audit, several queries may arise. Make your audit team aware of how you’d like to work – some

people prefer to deal with issues and queries as they take place, therefore free time in their diaries during the process. On the other hand, some may prefer to take note of them, send across a blanket list, and set aside a specific time to deal with them. This helps you to resolve any queries quickly, and helps to move the process along to the reporting stage.

Reporting

Your auditor will then be ready to report on their findings. When presenting to the board, the auditor will cover any matters arising from their work and essential compliance issues, and you will have an opportunity to talk about any updates in the sector, responsibilities of trustees, and to have wider discussions covering issues such as investments.

Following this, you will need to finalise the Trustees’ Report; your audit isn’t complete until this has been finished. In our previous Bulletin, we offered insight into how to build an effective report, which can be found here: https://www.unw.co.uk/news/build-effective-trustees-report/

Charity and not-for-profit organisations can make their audit smoother by better preparing for the process. By ensuring adequate preparations are in place, they can make the most of their audit and use it to benefit their organisation. The process can constructively contribute to charities and help identify any issues requiring attention in a timely manner, with guidance and support provided to the trustees.


SJOG appoints brand new executive team with help from UNWSJOG Hospitaller Services has enjoyed growth over the past nine months following the appointment of an entirely new executive team, in a search led by UNW’s Strategic Talent service.

UNW Charity Group Bulletin

PHOTO: (Standing L-R) Peter Neal (Head of Strategic Talent at UNW), Dr. Lisa Alcorn (COO at SJOG), Paul Bott (CEO at SJOG), (Sitting L-R) Leanne Welford (CFO at SJOG), Laura Dean (Strategic Talent Senior Manager at UNW)

First established in the United Kingdom in 1880, the registered charity SJOG has grown from its North East base to offer support to those in need across 35 locations in the United Kingdom.

We recently sat down with Paul Bott, who joined the organisation as Chief Executive in October 2018, to discuss the work they do, his experience working with UNW, and how the new executive team have dealt with the challenges that they faced. When we spoke with him, the organisation was in the midst of a relocation to its new headquarters at Lingfield Point in Darlington.

When discussing the services that SJOG offer, Paul is particularly keen to point out the variety of support provided. He said, “We have a whole range of services across the country that support people with learning disabilities and complex physical impairments. It’s very skilled work with people that have high levels of need. We also provide support to the elderly, and are currently working with partners like the Salvation Army to deliver a number of services related to victims of human trafficking and modern-day slavery.”

Paul was appointed as Chief Executive of SJOG after a recruitment process led by UNW’s Strategic Talent team, a niche service specialising in board level and

senior finance recruitment. “I initially became involved with Strategic Talent as a candidate,” he explains. “I established a relationship with both Peter Neal and Laura Dean, and found the entire process to be very personal. They were very knowledgeable and kept me well informed throughout, and we had very frank conversations about what the challenges would be.”

Following his appointment, Paul worked closely with Strategic Talent to fill the remaining vacancies on SJOG’s executive team. “UNW completely understood what it was that we were looking for,” he comments. “They were fantastic at getting down to the core of what our challenges were, and encouraged us to reflect on our options. We wouldn’t have been able to access the wide range of credible and quality candidates we received without their skillset. We could have hired any of the candidates the team found us, but two particularly stood out as a great fit for the organisation.”

Leanne Welford and Dr Lisa Alcorn then joined as Chief Finance Officer and Chief Operating Officer, respectively. Paul observed, “I spoke with Leanne about UNW and we both had a similar experience. As a candidate, the level of communication we had with the Strategic Talent team was of a different calibre to what we received elsewhere. They’re very human, and they make you feel like you’re important to them, rather than that you’re just a number needed to fill a vacancy. There’s a huge art to that, in terms of recruitment.”

“Having the frank conversations about the issues that were affecting SJOG with Peter and Laura really helped us from the outset, because we knew what we were coming into,” Paul noted. “They helped recruit a team with clear strengths and a wide range of experience. Leanne previously worked for a private equity backed engineering

October 2019


firm, so was able to offer a level of rigour and reporting that was missing in the charity. Lisa brought an established track record in care and support in both charities and private sector organisations.

Paul is adamant that the recruitment process was not about filling vacancies, but finding candidates with the correct expertise to address the challenges facing the charity sector. Reflecting on the transparency of Strategic Talent’s approach, he adds, “The three of us came in with a clear understanding of the issues, and that was really useful in dealing with them quickly. What we achieved in two years in my previous organisation, we have done in six months here. We’ve refocused, rebranded, and restructured the organisation. We have a good plan and good people delivering on it.”

“We’ve also organised our finance team and, through re-establishing relationships with the bank and amending our own reporting systems, have been able to address the financial challenges,” Paul noted. “For the first time in six years, SJOG is starting to make small surpluses, and we’ve achieved that in a relatively short space of time.”

Now that there is a clear strategy in place for SJOG, the team are looking

to the future. On this subject, Paul said, “The quality of our services is continuously improving, and we’re now better able to evidence that quality. This is supported by

the development of our culture, concentrating on our five core values through our ‘LOVED’ programme – Living Our Values Every Day. By really considering how we can better support our staff and helping them to develop their skills, they will be able to support those in need better.”

“Our mission is to effectively meet and address need where we find it, and we can’t do that alone so we’re continuing to build our partnerships and networks,” Paul commented. “We’re quite happy to work with people, or for people to get in touch with us, if they have any interests in

the three main areas of work that we do: supporting older people, those with complex physical impairments, and people affected by human trafficking and modern-day slavery,

which will be a huge area of growth for us.”

With the executive team in place for six months, Paul considered the benefits of outsourcing recruitment to the Strategic Talent team. He said, “As

a charity, using the team was an important investment for us, and it was one that really paid off. I’m not convinced that we would have been able to hire the quality of candidates that we did if it wasn’t for Laura and Peter’s vast experience and large networks across the North East. Because of their consultancy, we now have really skilled people who have helped put together a great strategy, and are delivering on that at a fast pace. I’ve already had conversations with Peter and Laura about the opportunity to do more work in the future – not just on senior posts, but to our Trustee Board as well.”

UNW completely understood what it was

that we were looking for. They were fantastic at getting down to the core of what our challenges were, and encouraged us to reflect on our options.

UNW Charity Group Bulletin

Preventing fraud inthe charity sector

The results of the survey are encouraging and demonstrate that charities have made improvements to their fraud prevention measures; however, significant threats and vulnerabilities still persist. The Commission has stated it is expected that one in every 25 charities across England and Wales will suffer fraud in the next two years.

The report states that charities should focus on preventing fraud rather than waiting until after they’ve fallen victim and notes that there is a far greater risk to a charity’s reputation in 2019 if they suffer fraud than before. 24% of charities that were defrauded reported reputational damage (up from 12% in 2009) and, as a result, the Commission has suggested guiding principles for charities to take action against fraud.

Remember that discovering fraud is a good thing

Fraud affects every organisation and the first step to fighting it is to identify where it may be occurring; this requires charities to be open and honest about it. The report found that only 9% of charities had a fraud awareness training programme in place (up from 4% in 2009), and only 30% had a whistleblowing policy (up from 18% in 2009). Because of this, 47% of charities believe they contributed in some way to the occurrence of fraud. Charities must

recognise the risk of fraud and train staff in how to adequately identify it.

Be aware of changing threats

Due to advances in digital technology, fraud methods continue to evolve. In an analysis of charities who had been defrauded in the last two years:

• 18% came from mandate/CEO fraud;

• 12% came from abuse of position;

• 11% came from cash theft;

• 10% came from a fake beneficiary;

• 9% came from “other banking;”

• 8% came from cheque fraud;

• 6% came from procurement fraud;

• 6% came from expenses/subsistence fraud;

• 5% came from other cyber fraud;

• 15% came from “other.”

As a result, charities should improve their knowledge of common fraud types and ensure they’re able to be alert, stay informed, and have the capability to adapt their defences quickly and appropriately.

Encourage robust use of fraud prevention controls

Charities who have been defrauded typically go on to review their financial controls and internal controls, as well as their physical defences. By making this an ongoing process

and continuing to strengthen your controls, you’re lowering the likelihood that you’ll be affected. It is far more cost effective to put measures in place to prevent fraud than it is to investigate it and remedy the damage that has been done.

According to the Commission, excessive reliance of trust is one of the main contributors that allows fraud to occur. Having these arrangements in place alongside ensuring that trustees, staff, and volunteers understand them fully will help to reduce the likelihood of fraud occurring. This is because everybody involved in the charity has a part to play in fighting fraud.

Report every individual fraud

Of charities that have experienced fraud in the last two years, only 29% reported the fraud to the Commission (up from 10% in 2009), and 42% reported it to the police (down from 51% in 2009). Timely reporting of fraud to police, regulators, and other agencies helps to strengthen individual charities against fraud and the sector as a whole.

The action of the charity, its staff, trustees, and volunteers remain crucial to effectively preventing fraud. The report found that 17% of fraud was identified due to whistleblowing. Ensuring that there are widely communicated controls in place for these groups to report incidents to the Board, and that the Board are aware of their responsibilities to report them to the relevant agencies, can help significantly with fraud prevention.

The full report can be accessed here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/841403/Web_CC_Fraud.pdf

A decade on from the “Fraud in the Charity Sector” study undertaken by the Fraud Advisory Panel (supported by the Charity Commission), the Commission have repeated and extended the scale of that survey. A total of 15,000 registered charities were contacted across England and Wales, with a 22% response rate – the largest ever analysis of fraud committed against UK charities.

Responsibilities of a charity during ageneral election

With the growing likelihood of a general election occurring before the end of this year, the Charity Commission has recently published guidance for charities.


This has been issued to remind charities of their responsibilities during an election period, and to inform them of previously published guidance to help with decision making regarding political activity. The principles described in CC9 continue to apply during an election period.

The key legal principles from the Charity Commission’s guidance on political activity (CC9) that charities should remember are:

• charities cannot have political purposes, and campaigning and political activity must only be undertaken by a charity in the context of supporting the delivery of their charitable purpose

• in the political arena, a charity must stress its independence and ensure that any involvement it has with political parties is balanced; a charity must not give support or funding to a political party, candidate, or politician

• a charity may give its support to or raise concerns about specific policies advocated by political parties if it would help achieve its charitable purposes as long as it makes clear its independence from any political party

• trustees must protect their charity and not allow it to be used as a vehicle for the expression of the party-political views of any individual trustee or staff member or by a party or candidate

During an election cycle, the Charity Commission has stated that “the need for impartiality and balance is intensified, and charities must take particular care when undertaking any activities in the political arena.” The point is also stressed that the Charity Commission does not want to narrow the space in which charities can engage. This is due the history of charitable organisations participating in public debate from a variety of perspectives in order to give a voice to their beneficiaries and highlight their cause.

The recent guidance highlights six key issues that arose from charitable involvement in the 2017 general election (https://www.gov.uk/government/publications/speaking-out-guidance-on-campaigning-and-political-activity-by-charities-cc9). In the report released by the Charity Commission following the vote, it stated that they dealt with 41 cases

relating to campaigning and political activity by charities during this time; these cases dealt with concerns relating to all the main political parties. The report does not cover all electoral laws, as those are enforced by the Electoral Commission. It defines the terms:

• Political activity to refer to any activity taken by a charity that aims to secure or oppose a change in the law or in the policy or decisions of central government, local authorities, or other public bodies (whether in this country or abroad)

• Campaigning to refer to a charity raising awareness and undertaking efforts to educate or involve the public by mobilising their support on a particular issue, or to influence or change public attitudes

The key issues highlighted were:

1. Visits to charities by prospective parliamentary candidates

It is often the case that parliamentary candidates will visit a charity during their election campaign, and it was an issue that was flagged up as part of the Charity Commission’s

report. While it is okay for a charity to allow these visits, it risks being seen as endorsing that particular candidate and their party. As such, trustees should be aware of these risks in order to maintain party political neutrality by being able to justify why the visit took place, how it furthered the charity’s purposes, and how they ensured it did not result in

any perceived endorsement.

If a candidate wishes to use the facilities within a charity’s premises (such as a community centre) for a public meeting, it should be treated as a

commercial hire, and rented out at a rate decided for by the trustees. It is also within a charity’s rights to refuse to hire out its facilities to a prospective candidate or party if they have good reason to believe this might alienate their supporters, service users, or beneficiaries.

2. Publishing educational material with political commentary and analysis

It was noted that a number of ‘think tanks’ and similar charities with educational purposes had either criticised or endorsed a particular political party or its policies; the nature of these charities makes them more likely to offer commentary on such issues, and therefore they risk being seen as politically partisan.

Guidance offered by the Charity Commission states that charities should take extra care to ensure that they minimise the risk of their materials being publicly perceived as containing political bias, such as through using neutral language.

3. Providing explicit support for candidates and political parties

Charities must not express any


It is often the case that parliamentary candidates will visit a charity during their

election campaign, and it was an issue that was flagged up as part of the Charity Commission’s report.

explicit partisan support, and must not assist any candidate with their campaign – financially or otherwise. This is because it could influence their donors or beneficiaries to vote for one party or the other, which charities absolutely must not do. Charities should only engage in political activity that furthers their charitable purpose, and cannot be party political or attempt to influence voter behaviour.

4. Use of charity material by candidates and political parties

A candidate or a political party is able to use a charity’s research or other materials to support their polices or campaigns with or without prior consent. This can lead to a perception by the public that the charity endorses that candidate and/or party. The Charity Commission stated that it advised a charity that trustees should assess the reputational risk to their charities political independence, and consider how to deal with it.

5. Political activity by charity employees and trustees

According to the Charity Commission, “candidates who run for election often have close ties to the community” and therefore they may have current or previous involvement with local charities. While both trustees and charity employees are able to run as political candidates, this may cause the public to perceive that the charity is supporting or endorsing a certain political party. As such, trustees need to consider the potential conflicts of interest and reputational risk to the charity, and candidates who are running should explicitly state that they are acting as a parliamentary candidate and not on behalf of the charity.

For employees who are politically active, charities should consider implementing policy on how to protect their independence. This includes adopting formal rules and setting up a social media policy.

6. Links with non-charitable organisations

Issues were observed surrounding charities who have links to non-charitable organisations. In their guidance, the Charity Commission states that the charity and its trustees must take steps to ensure that they do not mislead the public over the activities of the charity and non-charitable organisation, especially when these are linked to political activity. By being clear about the separation and taking into account any risks involved, the charity is minimising damage to its reputation.

If you would like further information surrounding guidance for charities about campaigning and political activity, read the full CC9 report here: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/610137/CC9.pdf


The Alnwick Gardenspreads its rootswith help from UNW

Most recently, this has been during the development of their Lilidorei Play Village, a project which will see the organisation launch the world’s biggest wooden play structure. We spoke with Mark Brassell, Director of The Alnwick Garden, about their Lilidorei project, as well as the organisation’s involvement with UNW.

Based in Northumberland, The Alnwick Garden is an award-winning visitor attraction that operates both commercially and as a charity. Funds that are raised through ticket admission, its restaurant and cafe, retail, adventure golf, events, and hospitality functions (weddings, special occasions etc.) are reinvested back into The Garden and fund a number of community programmes, such as: Elderberries, which provides

an opportunity for the over 55’s for purposeful learning, and improving physical and mental health; and Education and Enterprise, which helps children build confidence and resilience, whilst gaining new skills

In reference to the work that the organisation does, Mark Brassell said, “We do operate on a commercial level, but fundamentally we are a charity. On the commercial side, we run The Garden, and charge people admission fees. We either use this money to invest in the development of The Garden, to ensure visitors continue to enjoy the attraction, or to support the community with a number of our hard-hitting programmes; these programmes tackle everything from childhood obesity through to social isolation in the local community.

Our heart remains entirely within the community.”

The Alnwick Garden announced plans for their Lilidorei project, which means “the children’s adventure with play at its heart,” in 2017. The development involves the construction of the world’s largest wooden play structure, and will see the creation of 57 full-time jobs, as well as 40 jobs during the building phase. It is also expected to drive further tourism and growth across the region.

“Lilidorei is going to be our newest visitor attraction, situated right in the heart of The Garden. It offers a lot in terms of childhood development for families, with a focus around both physical and imaginary play,” Mark stated. “It’s going to be open 12 months a year, which will help draw visitors to Northumberland in the winter months, creating a much-needed economic boost and jobs in the area.”

Newcastle-based chartered accountancy and financial advisory firm UNW has provided support to The Alnwick Garden across a wide range of services.


Speaking about The Alnwick Garden’s relationship with UNW, Mark commented, “I have previously attended several of the charity briefing events that the firm organises, so I was well aware of the level of charity

expertise available within UNW. After I developed a model which predicted the revenue and expenditure of the Lilidorei project over a number of years, we needed some feasibility work done on it, as well as further advice. After hearing feedback from various colleagues who had worked with UNW, and at the suggestion of our Chair of Trustees, we made contact with the firm, and they’ve been a huge support since.”

As part of UNW’s involvement with the Lilidorei project, Michael McCulloch of the firm’s corporate finance team carried out a review of the model, and assessed potential risks. Reflecting on this process, Mark said, “I was really impressed with the way the work was carried out. A ‘traffic light’ system was used, with areas of major concerns flagged as ‘red.’ It really helped me to improve the model by going back to the previous assumptions that I had made, interrogate them, and carry out more research. I adjusted it based on the feedback from Michael and, as a result, the whole model and business case for the project grew stronger.”

Recently, The Alnwick Garden also hosted a round-table discussion at UNW’s offices about the Lilidorei development. The panel included Andrew Wilson, managing partner

of UNW, Mark Hetherington, VAT partner, and John Healey, corporate finance partner. Describing the event, Mark Brassell said, “We received £5 million worth of grant funding for the project, and knew that we needed to

harness some capital for it that we could invest in order to kickstart the development. We required expert financial advice on an existing loan as well, and how we should proceed. The roundtable really helped

with this; several ideas came from it that we hadn’t even considered, and it opened up avenues that we didn’t even realise were there.”

The Alnwick Garden has also utilised UNW’s audit services alongside the work completed on the Lilidorei project, after Mark selected to move their audit to the firm two years ago. On the motivations behind this, he stated, “One of the best business decisions we made in the last two years was to move our audit to UNW. We had previously been with a Big 4 firm when our audit came up for renewal, and it was decided that we should test the market and see if there was anyone better suited to our needs. After a pitching process, we chose UNW because their knowledge shone through.

It’s the firm’s expertise in the third sector that really set it apart from the other organisations we dealt with.”

“In our discussions with the firm, it was also noted that there was a direct contrast to our previous advisors,” Mark added. “What we found with them was that it took some time to get the advice we needed; we’d have to phone our account manager, and we would have to deal with a conduit of various people to get the information we needed. During the pitching process with Anne Hallowell (charity and not-for profit partner at UNW), we realised this whole process would be different. They’re very much about us being able to pick up the phone to gain access to the expertise we need, whenever we need it.”

Reflecting with The Alnwick Garden’s relationship with UNW over the years, Mark said, “Anne and her audit team are incredibly knowledgeable on the sector, and not only do they go above and beyond for us, but they’re also extremely accessible. I know if I email Anne, I will get a response quickly, and I also value that we’re able to call through whenever we need to; I know my Finance Manager has a hotline through to the team. We’re getting advice faster, and the whole attitude with the firm is about ‘How can we best help you?’”

Lilidorei is going to be our newest visitor attraction,

situated right in the heart of The Garden. It offers a lot in terms of childhood development for families, with a focus around both physical and imaginary play.


Any questions?Contact the UNW Charity Group

Charles LinakerCorporate Tax

0191 243 [email protected]

Anne HallowellAudit & Assurance


Andrew WilsonAudit & Assurance


Francesca LeslieAudit & Assurance


Hazel SmithOutsourced Accounting


Mark HetheringtonVAT


David WardCorporate Tax


Lee MuterEmployment Taxes


Peter NealStrategic Talent


Maxine FoxCorporate Finance


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In recent years, many charity and not-for-profit organisations have seen their traditional trading sources of grant and statutory funding reduce. Our next charity briefing will provide attendees with knowledge on how to utilise their assets, explore new opportunities, and innovate to boost income generation through sales or activities.

We are delighted to be joined by three guest speakers at this event: Jane Hogan, Head of Fundraising at St. Oswald’s Hospice, Mike Pratt, Chief Executive Officer at Northumberland Wildlife Trust, and Pauline Wonders, Strategic Director at Family Gateway. They will each discuss the methods they have used to diversify their income streams to build support for their organisation and engage with wider audiences.

Opening the briefing, Jane will provide insight into how St. Oswald’s “Elmer the Elephant” campaign has increased publicity, grown their reach, and boosted funds raised. Mike and Pauline will then share how their organisations have utilised assets to supplement income from new and innovative sources.

Since refurbishing its visitor centre as an environmentally friendly, straw-bale building, Northumberland Wildlife Trust has attracted more visitors than ever before. Similarly, Family Gateway has taken the opportunity to diversify income through its building space, launching a café and charity shop.

A question-and-answer session will then be opened to the floor, giving attendees the chance to further develop their knowledge on what methods can be used to diversify their organisations income.

If you would like to sign up for this event, or for further information, please contact Maxine Fox via [email protected] or on 0191 243 6259.

Charity briefing: Diversifying Your Income StreamThursday 21st November 201908:00am Registration and Breakfast / Presentation commences at 08:30am and finishes at 10:00am (approx.)

UNW Boardroom (Ground Floor), Citygate, St James’ Boulevard, Newcastle upon Tyne, NE1 4JE

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Documents

Charity Bulletin - UNW · 2020. 5. 11. · UNW Charity Group Bulletin October 2019 Welcome to our Autumn Charity Bulletin In this edition, we are focusing on looking forwards –