How to Find Financial Expertise for Your Charity

Most people on charity boards would agree that it is useful to have someone with financial expertise also on the board, so that they can deal with the ‘finance stuff’. However, charities often struggle to recruit people with any financial know-how and charities can survive without this skill set, so does it really matter? In short, yes –  but let me explain why.

It saves money

Charities operate in a highly regulated environment, with very complex tax and accounting rules; having someone on the board who can help you navigate these will help avoid any accidental non-compliance, or unforeseen tax charges, which can save a lot of money.

Individuals with financial expertise will also be well placed to assist with the development of strategic aims of the charity, especially in relation to resources, as well as ensuring the effectiveness and robustness of the charity’s internal policies and procedures. Smaller charities in particular would benefit from this expertise as, often, they are too small to support a discrete finance function within the organisation.

In these smaller organisations the day-to-day bookkeeping is often be undertaken by an office administrator with little to no finance knowledge or training. In these circumstances, it would be especially important to plug this knowledge gap through financial expertise on the board. Ultimately the board is responsible for the charity’s finances, and it will always benefit the charity if there is someone on the board who will be able to identify potential financial risks, and ways of mitigating these risks.

Add financial expertise to your board

So, how do you find financial expertise for your charity board? A good place to start is to increase the financial literacy of the current board. Now, I don’t mean the board needs to start taking accountancy exams and become financial experts, but there are lots of excellent training sessions run throughout the year run by professional organisations: and most of these training sessions are free.

I would encourage all board members to learn more about finance matters generally. Not only will it increase the financial expertise of the board, but it will also ensure that board members are more able (and confident) to understand, scrutinise and question the charity financials, which makes for better governance and better decision making.

How to find an expert

If you want someone who is professionally qualified on your board, there are a number of options. You can ask your contacts and see if they know anyone. Professional accountancy bodies such as ICAS will have web pages dedicated for their members to find volunteering opportunities with charities, and it may be worthwhile contacting these organisations to get your job advert posted. And don’t forget your own accountants or independent examiners. They will be able to provide advice on charity matters, and they will also be able to use their networks to recommend someone outside your usual channels.

Charity Commission recommends overhaul of UK charity tax system

In this blog series, Catriona Finnie, charity tax expert at Chiene + Tait outlines the key findings of the Charity Tax Commission report into the current charity tax system and outlines how the recommendations could impact charities in the future.

Blog 1 – Gift Aid and Business Rates Relief

The Charity Tax Commission has published its report into the charity tax system. The last review of the charity tax system took place 20 years ago and this latest report had set out to assess whether the system remains fit for purpose. Perhaps surprisingly, the Commission has found it difficult to gather sufficient data and research about how the tax system currently operates and, as a result, it has been limited in its ability to make recommendations.

Despite this, the report stretches to 68 pages outlining an array of short-term reforms and long-term recommendations. If you don’t have a spare few hours to read the report, we have summarised the key recommendations which will be discussed over the next 3 blog posts.


Short Term Reforms

Gift Aid

If you have ever made several Gift Aid donations to different charities, you will have had to complete multiple Gift Aid declaration forms (one for each charity you donate to). The Commission proposes setting up a Universal Gift Aid Declaration Database (UGADD) to overcome this administrative burden. The UGADD will store Gift Aid declarations made by all donors. Under this system, donors will be able to donate to multiple charities whilst only completing one Gift Aid declaration. Charities will be able to log into the UGADD and search for a donor by searching the donors’ unique identification number (this could be anything from the donor’s national insurance number to a specific Gift Aid card number). The Commission believe that technology is such that this system is now both technologically and economically feasible.

Currently, higher and additional rate taxpayers can claim tax relief on Gift Aid donations they make to charities through their own Self-Assessment tax return. The Commission recommends that this additional tax relief is redirected to charities. You may wonder how this will work in practice, especially as some taxpayers (the self-employed for instance) may not know what their tax rate will be at the point of making a Gift Aid donation. The Commission anticipates that the UGADD will assist, as will the ability to make retrospective Gift Aid donations.

Promotion of Gift Aid and donor awareness via the following:

  • Via literature that can be sent to the general public with annual correspondence from HM Revenue & Customs, along with videos and other forms of media.
  • Government should consult with the charity sector in order to provide guidance on the audit trail requirements for text donations.
  • Review how emerging technology can make Gift Aid administration easier and more efficient.
  • Increase accessibility and reduce administration for the Gift Aid Small Donations Scheme. The Commission states that possibilities include removing the matching requirement and increasing the amount that can be claimed under the Small Donations Scheme as well as including text donations within the scheme.
  • Review corporate Gift Aid rules to ensure it continues to work to maximise the amounts received by charities.

Business Rates Relief

A common tax planning tool used by charities that wish to undertake non-charitable trading is to set up a wholly owned subsidiary. The trading subsidiary will undertake the non-charitable trade activities and then Gift Aid its taxable profit to its charity parent. This structure allows charities to raise further funds without risking their own tax-exempt status. A common example of this is charity shops. In its report the Commission noted the disparity between the treatment of charities and their trading subsidiaries when it comes to business rates relief. Under the current scheme charities are entitled to a mandatory 80% relief from business rates. Local authorities can then decide to grant additional discretionary relief of up to 20%. These exemptions are not available for trading subsidiaries despite the fact that most will Gift Aid taxable profits back to the charity. The Commission has recommended that the Government consult on extending the relief to trading subsidiaries.

  • It was recommended that the Government produce guidance to counter a misconception that charities enter into some business arrangements with the aim of avoiding business rates.
  • Criteria for discretionary relief is set by local authorities and the Commission has found that it can often be difficult for charities to find sufficient information to check whether they are entitled to any discretionary relief. To counter this, the Commission recommends that the criteria for discretionary relief be published and easily accessible on all local authority websites.
  • It is also recommended that the Government ensures that local authorities are aware that mandatory business rates relief also extends to small unregistered charities.
  • The Government should also create a standard form that can be downloaded from the website for mandatory relief. This form should be downloadable, with electronic submission, and should be recognised by all local authorities. It is hoped this will ensure standardisation of the discretionary relief application process and will be easier for charities.
  • The situation for business rates relief in Scotland is different as business rates is a devolved matter. The Scottish Government introduced a bill to the Scottish Parliament on 25 March 2019 which proposes to exclude independent charitable schools from business rates relief; except under specific circumstances.

If you have a query about charity taxes, please contact Catriona at or call 0131 558 5800.

When cash is running out, who will help the regulators to regulate?

In our day to day lives, most people make the assumption that various regulatory bodies exist to help protect our best wishes and therefore their presence is essential. OFGEM regulates the gas and electricity industry, FCA regulates the financial industry and Food Standards Agency protects public health in relation to food (a full list can be found here). But what happens when the regulators find themselves running out of funds to do the very work we want, to protect us?

This is the interesting position currently faced by the Office of the Scottish Charity Regulator (OSCR), that is reported to be looking at ways to cover rising costs, in a time of lowering Government funding.

Could Scottish charities be motivated to contribute something towards OSCR’s running costs e.g. pay a fee to register or subscription to a range of services? Or could this present a barrier that prevents charities from acting in an ethical manner that will undermine public trust in the charity sector through misappropriation of funds or other scandals? It’s a very difficult question and one that many regulatory bodies will also surely face in the coming months or years.

At a time when the third sector itself is coming under greater scrutiny after recent high-profile scandals, asking charities or the public to help pay for the administration costs of a government-created body is a challenging request and one to which there may not be an easy answer.

Regulatory bodies exist to protect the public, but without extra funding we may find ourselves without their expertise and safeguarding. This is a position that surely no one wants.

Who’d be a charity trustee?

Rory Kennedy, our Rural Estates Partner, has been a charity trustee for three different charities therefore has a wealth of charity experience, and has worked with plenty more. Here he offers his thoughts on the benefits – and drawbacks – of being a trustee.

I’ve had various roles (including trustee, chair, vice chair, and member of audit committee) of three different not-for-profit organisations over the past decade. I’ve also worked with plenty more in my professional capacity, from small local charities through to big national organisations. Each of these has given me a good insight into the benefits and drawbacks of being a trustee.


The pros of being a charity trustee

Personal development: Charitable work is very rewarding, and you’ll find that you have far more influence on strategy than in your day job. This can develop skills and experience that cross-pollinates and will help you develop in your career role (treasury, marketing, HR, legal issues etc). If you perform well on boards you are also likely to be working with high achievers who have influence and can be great people to learn from.

Motivation: Helping an organisation is personally fulfilling, and there are plenty of charities that need and value help. Change can be extremely painful, incremental and involves a lot of committee work and politicking to get anywhere, so I think it helps to have an emotional tie or clear career goal out of the trusteeship. Without this motivation you might run out of steam, and you could be taking up a board slot for someone else who might be better able to roll up their sleeves and get things done.

Board experience: Trusteeship offers great experience and a boost to your CV. The experience is wide-ranging and involves senior-level responsibility, so definitely offers good skills and learning that will challenge your skillsets. Voluntary positions can be good preparation for senior roles and other Board positions which may need leadership experience.


The cons – or what to look out for

Emotions: In the professional sphere, it’s very easy to understand people’s motivations – career advancement and paying the mortgage! It makes dealing with colleagues and staff fairly transparent. In the not-for-profit world, there are far more complex motivations at play – people can be passionate, but this passion can bring complications that are often negative or irrational (ego, control, etc). This can also apply to charity staff who are in this sector because they care, and it motivates them; charities rely heavily on staff goodwill. Any new trustee should keep in mind that charity professionals are often highly skilled in their field. Dealing with people requires a balance of emotional intelligence and professional scepticism.

Time: Being a trustee can be very time-consuming and decision-making can be slower than the private sector, requiring a consensual committee approach. The more dynamic businessperson or professional may find this frustrating and something of a cultural clash. Some of my roles have been the equivalent of a day a week, which is a lot on top of a demanding professional role.

Risk: Particularly relevant for me as a Chartered Accountant. A lot of charities aren’t best-practice in financial operations and seek a CA for the Board to guide. Beware of what you are getting involved with and do your due diligence before being flattered into the role. Being a named trustee of a failed charity can harm your professional reputation.


In summary

Trusteeship can be challenging, but if you do a good job of it then it’s very rewarding both personally and professionally. You’re there to help and that should be mutual: you’ll get out as much as you put in. Just be careful, don’t freeload, and make sure you pick the right charity for you.

Euan Morrison in Third Force News: Charities encouraged to consider greater board diversity

Chiene + Tait’s Head of Charities, Euan Morrison, appears in Third Force News advising charities to consider having a greater diversity on their board of trustees, ‘Third sector organisations need to adopt new ways of thinking if they are serious about addressing this imbalance. More young people might be attracted to a trustee role if meetings were held at weekends and not during the week, for example. With 18-24s often keen to build their CVs, marketing a trustee role as an alternative way of volunteering could also prove attractive. I’m not suggesting that currently there is an intended desire amongst trustees to deter youth and diversity, but there is a feeling that they are, quite unsurprisingly, inclined to look within their own peer groups when recruiting new people to their boards. Charities must, however, look at ways to overcome this situation or they will risk losing relevance to the people they are in post to support. Diversity across a board of trustees is an important part of good governance where people from a variety of backgrounds and ages are usually better placed to make well-rounded decisions.’

To read the article in full click here.

Catriona Finnie in Scottish Financial News: Chiene + Tait charity tax specialist appointed to UK Gift Aid group

Catriona Finnie, a key member of the Charities and Education Group at Edinburgh accountancy firm Chiene + Tait (C+T), has joined HMRC’s newly-formed working group, set up to consider increasing the effectiveness of UK Gift Aid relief. The assistant tax manager becomes one of the first Scottish-based members to join the group, while C+T is the sole accountancy firm to be represented on it.

Full details about Catriona’s appointment can be found online here –