This week, we’ve discussed financial literacy. We started off with this blog, which introduced key concepts in trustee finance. In the podcast we discussed what main worries people have about finance, tips for individuals and boards, and financial risk. This final blog summarises the top tips we’ve uncovered.

Our 5 Top Tips:

1. Link finance to what you’re passionate about

By understanding that without finances you cannot achieve your true potential, it will motivate you to think about your charity’s finances. Start asking questions like:

“Why has this trust donated money to our charity?” - Ava Podgorski

By linking humanity and finances together makes it more real and encourages you to deal with them.

An alternative is to approach finance from a forward-looking perspective. Through finances, you can help secure a stable future for your organisation, allowing for the charity’s longevity. Forward-looking questions may help you to understand finances: “Why are we expecting the budget to increase/decrease by X”

2. Ask questions

Don’t be afraid to ask questions - you may have spotted something no one else has or it may be an important point! If you’re unsure about finances, talk to your fellow trustees. This doesn’t necessarily have to be the treasurer as other trustees may have valuable insights, or similar questions to you. One idea may be working through these questions together. It’s important to remember you don’t have to save questions like this for the board meeting. This can be beneficial both individually, in terms of helping you be prepared for board meetings, but also for the board as a whole, managing board meeting efficiency.

At the start of your role, ask to see the budget and other financial documents. One suggestion from my podcast is that you could even ease yourself into understanding finances by asking your work’s department for their budget, to digest and learn from, if this is possible for you.

3. Be Organised

Have your documents organised well so that you can find documents easily. For example, it can be useful to compare past and current financial documents to see what was predicted and what actually happened, as this may tell you helpful information and understand the finance history better, such as what is working and what needs changing.

4. Start small, and then build up your knowledge

You don’t need to become an expert in all things financial from the beginning. It’s okay if you are not an expert in finance.

One way to begin is to narrow down what you need to understand. For example, different charities will have different budgets, financial aims and assets. Remember that you only need to understand your charities’ finances. You don’t need to know everything about finance or be an expert in it from the get go to be responsible for the finances and understand them. Begin with the basics of finance, and build up your knowledge over time.

5. Understand your organisation

This ties into the point above. Different organisations are structured differently and have different financial needs, and as such, it’s useful to know different things for different organisations.

Find out your organisation's operating finances and learn if your organisation has any operational and financial procedures of its own. For example, “Is a full board sign off required for X expenditure?.” Learning the organisations 'money in, money out' structure is a good starting point.

Understanding your organisation, including its funding and budgets etc, is also helpful in understanding what is a financial risk to the charity. Questioning how covid has impacted your finances may be important to understanding what the improvements are needed when reviewing financial risk at board level. “How did you operate pre-pandemic and what have you learnt from the last year?”. This can allow you to understand what reserves you have,, what risks need to be reviewed and where further funding may be required.

One really helpful tip from Mike, is: if your organisation has one, you could join the finance sub-committee to help aid your understanding. You can use it as an alternative space to understand finance in more depth, outside of the board meeting. This can be useful to become more familiar with financial language.

3 Tips for Boards:

1. Brief your new trustees about where you are financially.

This will help all trustees to be on the same page in terms of finances, allowing them to be a better trustee and also for the charity.

2. Understand what skills are in the room

You can do this by learning who knows what and also letting the board know what you can do. When was the last time you did a skills assessment or review? This is useful to help understand where the gaps are on the board, and where additional training may be needed. For example, if multiple people are struggling with financial literacy, a possible team seminar on the subject may be useful.

3. If your board is struggling with something, network!

Use external organisations, e.g. those similar to your charity in different regions, partners, funders, etc, in order to gain good tips, fiscal advice, audits, etc. See the below list for useful information on this topic.

It’s no secret that finance is daunting, but breaking it down into small pieces, talking to others and reading up on specific subjects, will help you be better armoured and ready for the boardroom.

Next week we’ll discuss conflict and conflict resolution - stay tuned!

Useful Links

Paid Course from Civil Society

Financial Strategy tips

Financial Strategy and Long-term Sustainability

How to Write a Financial Strategy

Honorary Treasurers

How to Find the Right Bank Account for a Charity

A Guide on Banking (Scotland-orientated)

Overview of Charity Accounting Rules (Scotland) 

NCVO/CFG Webinar: Financial management during COVID-19

NCVO/CFG Webinar: Financial management and accessing government funding

NCVO Webinar: How to help get your board involved in fundraising

NCVO Webinar: Making the Code of Fundraising Practice easier to use