Informing Charities on How to Succeed Within the Operational Framework of the Voluntary Sector

November2016

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Contents

• Strategic management and planning

• KPIs

• Sector issues update

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ReviewPlan &Actions

Work of charity

Opportunities vs

ThreatsReporting

ObjectivesStrategy

RecordingMonitoring

RolesResponsibilities

Trustees Report

Action vsInaction Balanced

Considered

Measurable Clear Timely

Specific

Delegation

Strategic Management

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Performance models

Some model types

• Theory of Change - defines long-term goals and maps backward to

identify necessary preconditions

• Balanced scorecard - looks at four performance metrics:

Customers, Internal processes, Financial, Learning and growth

• Management by objectives -managers and employees work

together to set, record and monitor goals for specific period of

time

• Performance Prism- looks at five metrics: Stakeholder Satisfaction,

Strategies, Processes, Capabilities, Stakeholder Contribution

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Strategic Management

• What are your objectives?

• What is your purpose? Why do you exist?

• How will these been done?

• How will you measure success?

• Key risks summary – what will stop you

• Clear linkage of budget with strategy

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Strategic planning cycleSMT brainstorm, revise last strategic

operational plan and create new operational plan to deliver against

required strategic direction. Feed into process historical data, outcomes on key

performance indicators, key improvements required and any new initiatives

Financial modelling and stress testing of operational plan.

Include wider teams in feedback and adaption. Consider feasibility and affordability and timeframe

for delivery.

Development of planned action - both short and long term. High level key performance indicators

Build preliminary departmental /business unit budgets based on delivery of

both short and long term plan . Ensure improvements and

initiatives required fully captured and integrated

Build overall budget from departmental/business unit budgets

and consider any adjustment or realignment required. Holistic review

to ensure plan still aligned to key operational strategy. Communicate to everyone key messages and key

KPIS.

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Outcomes and key KPIs agreed

Trustee input

Continually publish KPIs and assess whether on target for delivery.

Continual communication with employees. Quarterly consider

whether any adjustment to plan required, any external influences

which have influenced or changed plan and communicate and agree any

changes at SMT and/or Trustees dependent on extent.

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Key drivers

Corporates: Charity:

1. Financial

2. Customer Stakeholders instead?

3. Internal processes

4. Learning & growth

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Key stakeholders in charities

• Beneficiaries

• Individual donors

• Funders - Trusts, Foundations, Corporates

• Institutional donors

• Media and public

• Trustees

• Staff

• Regulators

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How will you measure success?

Key performance indicators – KPIs

• Measures

• Performance against strategic goals

• Align actions of employees to goals of organisation

• Need to choose the right ones

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What can you measure?

• Inputs – data e.g. staff time, expenditure. Tends to be numerical/quantity

• Outputs – production/services offered e.g. advice, publications, visits, training courses. Tends to be numerical/quantity

• Outcomes – what has been achieved or consequence. Tends to be Quality measures

• Impact – longer term and broader effects which show a marked effect or influence. Use of baseline data/history to be able to show changes

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How can you measure?

• Quantitative

– statistical/mathematical/numericaland easier to collect

• Qualitative

– perceptions/feelings/experiences and more subjective

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How can you measure?

How to collect qualitative data:

• Surveys/questionnaires – larger data sets and need to look at

how will be interpreted

• Interviews – more time consuming but informative?

• Records and notes – what to extract and how and by whom?

• Focus groups/discussions – help with pilots/explore ideas,

gain more in - depth feedback

• Observation – from individuals like practitioner/teachers/

employers or checking results on behaviours through

observation or even collecting data

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Key on KPIs is…

S - specific

M - measurable

A - achievable

R - relevant

T - time-based

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Key on KPIs is…

Therefore ensure you know

• how reliable

• how expensive or easy to collect

• how will it aid decisions or management –

why do we need to know?

• involve others in the process/design to

ensure you have chosen the best measures

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Success behind good measures

• Ensure before you collect data/information that you

understand the purpose of it and how it will be used

• How will it influence change?

• Focus on key areas of outcomes to streamline or save

costs?

• Improve service delivery/focus or outcomes?

• Demonstrate credibility

• Use for tendering

• Needed as contractual or grant terms to report against?

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NEW SOFA

Unrestricted Funds

Restricted Funds

Endowment Funds

Total Prior year Total

Income and endowments from:Donations and legacies Charitable activitiesOther trading activities Investments Other

Total

Expenditure on:Raising funds Charitable activities Other

Total

Net income before gains and losses on investments/ Net income from operations

Net gains/(losses) on investments

Net income/(expenditure)

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NEW SOFA

Unrestricted Funds

Restricted Funds

Endowment Funds

Total Prior year Total

Net income/(expenditure)

Transfers between funds

Other recognised gains/(losses):Gains/(losses) on revaluation of

fixed assetsActuarial gains/(losses) on

defined benefit pension schemesOther gains/(losses)

Net movement in funds

Reconciliation of funds: Total funds brought forward

Total funds carried forward

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Trustees Annual ReportFor larger charity more disclosure (large is quite small!) £500K of income

Larger charity new musts or amplifications:

Aims and objectives

• Changes you will make and how

• Criteria or measures of success (and follow through in achievements in year)

• Significant activities

• Where material:

– Social investment – policy, what and why

– Grant making – policy and how

– Significant volunteers – scale and nature

• Should – specify short and long term plans

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Trustees Annual Report

Larger charity new musts or amplifications:

Achievements and performance

• Details of significant activities

• Achievements against objectives set

• Material fundraising activities against plan

• Explain significant expenditure to raise future income

• Should- consider outputs, outcomes, impacts

Structure, governance and management

• Pay and remuneration policy for senior management

• Who day-to-day management delegated to and name -CEO and/or SMT?

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Trustees Annual Report

Larger charity new musts or amplifications:

Financial review

• Principle risks and uncertainties and how managed

• Refer to going concern

• Financial effect of any significant events

• Investment policy and objectives (where material)

• Other factors likely to affect the financial position or performance going forward

• Explain reserves policy

• State the amounts of those reserves and why they are held

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So what?

Do we just list wonderful things with no context?

Or

Do we say why we have done these things, what they have achieved and what it means?

i.e. impact/outcomes/outputs

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SORP consultation!

SORP research exercise launched

Closes on 11 December – so there is still time

Five specific areas for potential SORP development:

• The SORP’s structure, format and accessibility

• Implementation issues that require improvements to the SORP

• SORP Committee member suggestions for changes to the SORP

• Charity regulator themes for making changes to the SORP

• Your ideas for items to remove, change or add to improve the SORP

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Charity Commission – public trust and confidence28 June 2016 - Charity Commission released report on findings

Findings, based on a telephone survey of 1,085 adults in E &W, saw a decline in public trust and confidence in charities to a score of 5.7 (on a scale of 0 – 10), down from 6.7 in 2012.

Overall 33% had declining trust in charities since 2012 (whilst 66% has stayed of the same opinion).

Events affecting the public perceptions were:

• Adverse media stories about charities (specific and general cases);

• Media coverage regarding how charities spend their donations;

• Concerns over where the money goes and;

• Concerns of pressuring fundraising techniques

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Charities (Protection and Social Investment) Act 2016New powers:

1. Official warnings by the Commission

2. Investigations and power to suspend

3. Range of conduct to be considered when exercising powers

4. Power to remove trustees etc following an inquiry

5. Power to remove disqualified trustee

6. Power to direct specified action not to be taken

7. Power to direct winding up

8. Power to direct property to be applied to another charity

9. Automatic disqualification from being a trustee

10. Power to disqualify from being a trustee

11. Records of disqualification and removal

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Charities (Protection and Social Investment) Act 2016Fundraising

The requirement is that the agreement must with commercial participator/professional fundraisers specify all of the following:

a) any voluntary scheme for regulating fund-raising, or any voluntary standard of fund-raising, that the professional fund-raiser or commercial participator undertakes to be bound by for the purposes of the agreement;

b) how the professional fund-raiser or commercial participator is to protect vulnerable people and other members of the public from behaviour which is as below bullets, in the course of, or in connection with, the activities to which the agreement relate:

• unreasonable intrusion on a person’s privacy;

• unreasonably persistent approaches for the purpose of soliciting or otherwise procuring money or other property on behalf of the charity;

• placing undue pressure on a person to give money or other property

c) arrangements enabling the charitable institution to monitor compliance with above by reference to the agreement

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Charities (Protection and Social Investment) Act 2016Fundraising continued - Audited charities must report in accounts on:

a) approach taken by the charity for the purpose of fund-raising, and in if used a

professional participator/ commercial fundraiser;

b) chosen to be bound to be bound by any voluntary scheme for regulating fund-

raising, or any voluntary standard of fund-raising, and, if so, what scheme or

standard. Eg. IOF/Fundraising Regulator;

c) any failure to comply with a scheme or standard mentioned under above para;

d) whether charity monitored activities for the purpose of fundraising, and, if so,

how;

e) the number of complaints received

f) what the charity has done to protect vulnerable people and other members of the

public from behaviour on previous slide

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Charities (Protection and Social Investment) Act 2016Fundraising continued

Reserve power in relation to fund-raising regulators:

1. May impose on charities to do any of the following:

a) to comply with requirements imposed by a regulator;

b) to have regard to guidance issued by a regulator;

c) to pay fees to a regulator of an amount determined by the regulations

or determined by the regulator in accordance with the regulations;

d) to be registered with a regulator for the purpose of its regulation of

charity fund-raising.

Regular here is non statutory.

2. Additional power to give this regulation over to Charity Commission

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Charity Commission

• CC20: Charity fundraising: a guide to trustee duties

• More emphasis on legal duties of trustees in relation to fundraising

• Six key principles for trustees to consider on fundraising activities:

• planning effectively

• supervising your fundraisers

• protecting your charity's reputation, money and other assets

• Identifying and ensuring compliance with laws or regulations that apply

specifically to your charity's fundraising

• Identifying and following any recognised standards that apply to your

charity's fundraising

• being open and accountable

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Fundraising regulator

Lord Michael Grade - chair of the new Fundraising

Regulator

Stephen Dunmore- chief executive (previously chief

executive of Big Lottery Fund)

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Fundraising regulator

Role as regulator is to:

• Set and promote the standards for fundraising practice (‘the code’ and

associated rulebooks) in consultation with the public, fundraising

stakeholders and legislators

• Investigate cases where fundraising practices have led to significant public

concern

• Adjudicate complaints from the public about fundraising practice, where

these cannot be resolved by the charities themselves

• Operate a fundraising preference service to enable individuals to manage

their contact with charities

• Where poor fundraising practice is judged to have taken place, recommend

best practice guidance and take proportionate remedial action

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Fundraising regulator - levy

Charity annual spend on

generating voluntary

income based on total

spend

CharitiesAnnual

Levy £'s

12 Months

Total

Income

£'s

% of

charity

spend

£100,000-£149,999 383 150 57,450 0.10%

£150,000-£199,999 268 300 80,400 0.15%

£200,000-£499,999 677 800 541,600 0.16%

£500,000-£999,999 354 1,500 531,000 0.15%

£1m-£1,999,999 140 2,500 350,000 0.13%

£2m-£4,999,999 77 4,000 308,000 0.08%

£5m-£9,999,999 31 6,000 186,000 0.06%

£10m-£19,999,999 18 8,000 144,000 0.04%

£20m-£49,999,999 11 12,000 132,000 0.00%

Over £50m 2 15,000 30,000 0.00%

Totals 1961 2,360,450

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Kids company

• PACAC report on the collapse of Kids Company – extraordinary catalogue of

failures

• Trustees relied upon wishful thinking and false optimism and became inured

to the precariousness of the charity's financial situation

• Several Ministers authorised unorthodox payments despite auditors’

warnings about the charity’s model and the state of its finances, and against

official advice

• Charity Commission projects too limited a public profile to provide much

reassurance about charities and their regulation, and to attract complaints

• MPs called for clearer guidance from Charity Commission to auditors and

public

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Kids companyCharity Commission consultation on matters of material significance. Three

new matters:

1. Notification of the nature of any modification/qualification/emphasis of

matter or concern to the Commission along with supporting reasons and

details of action taken, if any, by the trustees subsequent to the audit

opinion/examiner’s report

2. Evidence where, without reasonable cause, trustees have not taken

action on matters identified by the auditor or examiner in their scrutiny

of accounts for a previous year

3. Conflict of interest issues, unauthorised private benefit or incomplete

disclosure of related party transactions damages public trust and

confidence and leaves charity assets open to the risk of misappropriation

Consultation has closes and waiting outcome

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Kids companyCharity Commission consultation on reporting serious incidents. The draft

updated guidance for trustees includes the following revisions:

• making it clearer what to report, how and when – encouraging reporting

at the time the incident occurs, or as soon as possible afterwards

• an updated section to help with multiple reporting for larger charities, or

those that report incidents on a regular basis, due to the risks arising from

the nature of their work

• removing the need to report some types of incident, where these are risks

rather than serious incidents, and where the relevant information about

the risk is now requested in the annual return

• adding some new types of incidents – which charities are experiencing on

a regular basis and/or struggling to manage properly

Consultation closes on 12 January 2017

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Kids company

Charity Commission guidance:

Charity reserves: Building resilience (CC19) – 29 Jan 16 (https://www.gov.uk/government/publications/charities-and-reserves-cc19)

Managing a charity’s finances (CC12) – 29 Jan 16

(https://www.gov.uk/government/publications/managing-financial-difficulties-insolvency-in-charities-cc12)

Charity governance, finance and resilience: 15 questions trustees should ask

https://www.gov.uk/government/publications/charity-trustee-meetings-15-questions-you-should-ask

Reaction to Kid’s company and not consulted on with regard to reserves

Bad press and not accepted as good guidance in the sector

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Charity CommissionStrategic plan 2015-2018:

i. protecting charities from abuse or mismanagement

ii. enabling trustees to run their charities effectively

iii. encouraging greater transparency and accountability by charities

iv. operating as an efficient, expert regulator with sustainable funding

Tougher regulator

focus on compliance, investigations and accountability

less on support and advice

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Charity Commission – horizon scanning

William Shawcross (Chair)– should be funded by charities……..

Southampton meeting (Feb 16) suggested annual levy examples:

• All charities £140

• Charities with income over £10K - £265

• Sliding scale for all charities from £50-£1,250

• Sliding scale for all charities over £10K from £140-£1500

Each of above generates approx. £23M

iXBRL consultation - Voluntary at present????

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t: +44(0)20 7065 2660m: +44 (0)7921 353540e: helena.wilkinson@pricebailey.co.uk

Helena WilkinsonHead of Charities and NFP, Partner