An article in today’s Guardian newspaper highlights a growing trend in charities of recruiting NEDs (Non Executive Directors) with commercial skills to help them negotiate their way through and ultimately, out of the current financial crisis.
Undoubtedly income generation through charity shops and social enterprise has revolutionised the way in which charities are able to increase their unrestricted income levels and engage with supporters; it’s not surprising then that charities are looking to increase alternative income streams at a time when funding cuts are starting to bite.
Some charities, however, recognise that they may not have the internal business acumen and resource to develop a strategy around income and costs and are therefore looking to NEDs to fill the knowledge gap.
This is the core of our business practice and is at the heart of what we do with our many charity clients.
We often come across a financial strategy in our charity clients that focuses on project income on one side and project costs on the other. In the middle sits a shadowy, murky, no mans land of ‘Admin/Support’ costs. ‘They are what they are,’ is the thinking, ‘and we apportion them as best we can. ‘
A good NED will want to look at all the costs your charity incurs as a way of ensuring: good financial practice, best value for your hard earned donations/income and a way of fully understanding the cost of running a project in order that its impact can be understood in as many ways as possible.
‘Support costs’ can and should be challenged, and I don’t mean by reducing the greatest resource a charity has – staff. Looking at the core costs of an organisation and really challenging the status quo can make significant savings. More importantly a good NED will also be able to manage supplier relationships and ensure good practice in tendering exercises, which should take place across all major cost areas at least annually.
This means that your staff are freed up and have time and space to do what they do best- support the end user.
If you would like to talk to Auditel about how we can help, please contact us. To read the Guardian article, please click here: http://bit.ly/K7i40J