I know where this smell comes from – it is pure, undiluted, greed and self-interest.At CA Plus I have a rule. If I am asked to go elsewhere to deliver services, and I know that there is already a good community accountancy service in the area, I check with them first before responding. CA Plus is a charity, and as far as I recall, the greater glory of John O’Brien is not one of our objects.

So what goes on in the minds of a big national charity? Why on earth do they think it is charitable to parachute in from afar, undercut the small local charity, sack the staff and replace them with volunteers to win the contract? How exactly does this relate to their legal duty to pursue their charitable objects? Becoming the biggest provider in the country might be a strategic aim in the City, but it is has no place in the charity world. If you are the chief executive of such a charity, please go away – go and work for a hedge fund or something.

And what about the people we serve? Does it matter if help comes from a locally-based paid worker or from a volunteer managed via a laptop? Maybe the world is a better place with no corner shops – we can all drive to the supermarket. But not everyone has a car, and sometimes it’s nice to have a chat in the corner shop with someone you know will be there next week.

You know what really caused the banking crisis: we lost all the small banks, the local banks, the mutuals. The providers got bigger – they lost touch with the grassroots and they got greedy. And now they’re in a mess. They’ve stopped lending to small businesses, and put all the prices up. It could never happen here…. could it?

A big theme of course was: how do we sell what we do? It’s a question for any organisation of course as the public subsidy declines. I recall, in the days long before ‘social enterprise’ was invented, explaining to my trustees that we would use the grants to pay for the things we can’t sell, and charge a fee for the other services. So for us, annual accounts and payroll carry charges, things like giving good advice on HR and how to do budgets or cash flow are usually subsidised.

We can learn a lot from dentistry. If you ask anyone what they want for Christmas, they probably won’t put a trip to the dentist on the list, but good teeth are important. If we all had to pay the full cost for it, then the wealthy, the enlightened or those in great pain might pay, but most people, most of the time, won’t bother, until it’s too late.

And so it is with infrastructure like community accountancy. Just like having good healthy teeth, good accounting records, good reports for the board, good financial planning are all important. They underpin healthy organisations, which in turn means a better deal for the communities in which they operate.

We’ve just come through a rather gruelling competitive tendering exercise for our main funding source. Fortunately, Nottingham City Council is sufficiently wise to know that a thriving third sector is a good thing, and that sometimes, public subsidy makes sense. Our other funder, much in the news at present, is about to review its own funding for infrastructure. I fear I may need another holiday.

I still believe that the best option on things like finance and HR is to do it yourself if you can. Outsourcing the administration is OK – things like payroll are a bit like getting an electrician in and is far better than DIY. Financial management is more tricky: it’s like asking someone else to do your breathing.

But I do appreciate that there are serious pressures on groups to be as efficient as possible, and sometimes it makes sense to purchase support from outside. We used to have a member of the team to sort out our own IT issues. It soon dawned on me that paying someone else £40 an hour was infinitely more efficient.

An issue for small groups is that these finance functions are usually a small part of someone’s role. You might save a few hours a week if you outsource, but will you really then cut their hours by that amount to save costs? Maybe they will be free to do other things with those hours, but unless those other things generate income you will not be making any savings at all – quite the reverse.

And – most important of all – whoever is managing the organisation must be able to get their head round the finances. Senior staff and trustees need good information, but they need to be able to understand it.

If you don’t have good information, life can get quite painful. Last week I called someone and asked them if they wouldn’t mind paying their invoice from December. They replied that they would gladly do so, but they still hadn’t paid their own salaries for December – they have hit the cash flow wall with a bang.

Another group wants me to go to meet their trustees next week to work with them about longer-term planning – there could be a wall ahead for them as well, but at least they might put the brakes on in time, and good financial information will be the key.

And so we have many months of uncertainty ahead. Staff worried, partners worried, kids worried, plans shelved, Tupe forms to fill in (what a mess that is), redundancy policies to review, clients unsure, and lots of forms to fill in.

Of course, if you are spending public money on something, you want to make sure you’ll get value for money and the best deal you can. But what’s happened to a bit of common sense.

If you start a new school, and it does a good job, you wouldn’t dream of saying after 2? years – “right, your funding ends in six months time, and if you want to carry on as a school you need to bid for the money in a competition with anyone else in Europe.” Or, how about a three-year funding deal for a hospital? It’s clearly daft. So why is it not just as daft to do this to a provider of advocacy services, or citizens advice, or, dare I say it, community accountancy services?

Of course, we need to regularly demonstrate that we do a good job. Schools have Ofsted, hospitals have inspectors, we have regular reports and monitoring.

One day, like most things, the circle will be complete, and someone will have the bright idea that grant aid is good for certain services. For now though, I’d better start filling in some forms…

Depending on who I was talking to, the main concerns ranged from the liability of the trustees to the staff losing their jobs.

Interestingly, the beneficiaries didn’t really get a mention. But these are not easy things to face.  

I have nothing but the greatest respect for licenced insolvency practitioners, but one trustee mentioned that his primary concern was to make sure that what little they had left didn’t go to “some smart **** in a suit”. I don’t think he meant me – I had jeans on at the time and my support was free.

One group wants to close down (a simple dissolution) and it appears that neither Companies House, nor the Charity Commission require sight of any ‘final’ accounts. Companies House just needs the form to remove them from the register and apparently the Commission would be happy with a copy of the final bank statement.

I’ve told the trustees that, even so, the duty to produce accounts and have them examined is still applicable; but it’s interesting that no one seems particularly bothered.

Obviously, closing down when your assets exceed your liabilities isn’t too bad. But when it’s been left too late and it’s the other way round, it isn’t good. It’s made me appreciate that in our sector, there are hundreds of people in our infrastructure organisations who are able to give support to establishing a new charity or enterprise.

However, I can’t think of anyone who helps people close down gracefully, and I realise how little I know about the subject. Maybe we could spend all this transition money on this instead.

I’m sure we all have ways of dealing with this. Leave them long enough and then press ‘delete’ is a favourite – just like the items at the bottom of the in-tray that have a built-in desire to locate the bin during that time between Christmas and New Year.

Time is a precious resource and managing it is a real skill. Like most of us in the civil society world I want to use as much time as possible doing what CA Plus exists to do. I’m constantly trying to minimise what I call the ‘down time’.

Some down time is obviously service-related and an essential part of what we do – a bit like the financial overheads. It might be indirect, but without it we could not deliver the services. This might be team meetings, meetings with trustees, or fixing the computers, but it’s so easy to fall victim to down time which is less critical.

As part of the voluntary sector infrastructure world, I receive many invitations to meetings and events. I was recently at a seminar with one of our own funders. The event itself was really important as it concerned the funding relationship – grants, contracts and all that.

While there, the subject of the Compact came up. I confess my view was that since it has clearly been consigned to the bin, it may as well stay there. I dread to think how many millions of other people’s money has been spent on compacts, with very little impact as far as I can see. I suppose others may argue that spending time, and therefore money, on the Compact will lead to a better society in the long run. I doubt may tax payers would agree.

Anyway, enough moaning. I’m beginning to sound like a certain national newspaper… back to the emails.

John O’Brien is chief executive at CA Plus 

Some of you may have had the joy of reading an independent examiner’s
report. Many years ago we used to write our report in very simple
language. Then the regulators came along, on the pretext of consistency,
and we were obliged to use the legal gobbledegook we know and love.
Yes it is consistent, but I bet hardly anyone reads it and even fewer
understand it.

There is of course a serious point to this and it’s to do with the
presentation of financial information. Shading every other row can make
it easier to follow a row of numbers across a page, or screen. Anything
we can do to make things easier to read and understand is worth thinking
about.

It doesn’t just apply to budgets (printed, or even projected on
the wall). The same is true of accounts. Small print, overly complex
spread sheets, too much detail, changing the layout from one year to the
next – none of this helps. It’s possible to go too far the other way.
Too little detail might raise questions. It is really a matter of
balance and consideration for the ‘audience’.  It’s only taken me a
minute or two to add some shading to the rows in the budget, but if it
helps trustees to focus on the numbers, then it’s well worth it.

I like to use the phrase, ‘going beyond the numbers’. Numbers are there
to tell a story. Working in the ‘third sector’ is about doing good
things, not having nice numbers. But at least if you can understand the
numbers, there is more chance you’ll do good things.

Anyone running an organisation needs a bit
of skill. Common sense is probably about 90 per cent of it, but some knowledge and
training can help – from how to avoid an HR nightmare to how to do a cash flow.

I don’t really know how much central government funding goes to support new
businesses, but I suspect it’s quite a few quid. But I can tell you that
precisely £zero goes into supporting small charities with community
accountancy. Some local funders, like here in Nottingham, see the value of it,
but it’s not a good story elsewhere. It’s important not just so that groups can
have nice accounts, but so that they can continue to make a real difference to
peoples’ lives.

Some years ago I had the joy of doing lots
of accounting exams. Many of my fellow students were dreaming of a high
flying career in the city, saving tax for rich folk. Personally, I can’t
imagine a worse way to spend my time. To be honest, sorting out the trial
balance of a small charity this morning has not been the most exciting
experience, but I know that if this charity has good accounts, and I can help
them keep under good control, then there is more chance that they will be able to
carry on supporting the refugees they work with.

There is a new film out now called Oranges
and Sunshine. It’s about child migrants and I thoroughly recommend it. It’s a
painful story with occasional sunshine, and it happens to be based around the
people involved in a charity we have worked with over many years. The
world of community accountancy is an odd place, but stories like this remind us
why we do it.

Now, where can I buy a nice yacht?

It’s a new financial year and, as always, a bit of uncertainty is
fine. But there are limits. Trying to plan and make decisions on spending when
you have little idea of the income is quite a challenge. 

There are a few
things I rely on to get through. Having some reserves, just in case, is always
good. Keeping on top of the accounting, so that you can see problems quickly,
is essential. Many groups we work with only know they are in trouble when the
salary cheques bounce. If you deliver a training course and only charge £200,
how do you know that’s enough? Good costing and budgeting tools help me a lot
(there are some free ones on our website).

In the day job, here at CA Plus, we are
more fortunate than many in that we will continue to receive grants from the
city and county councils, albeit with a reduction. 

Our plans are in
place; some staff and salary changes sorted, the budgets approved, and we
can all get on and deliver the services our client groups are needing. We have
challenging targets as always, but it keeps us on our toes.

In my voluntary role as a treasurer, it
hasn’t been so simple. The charity is receiving news almost daily of changes to
our funding – some bad and some good. We are nowhere near setting the budget
for 2011-12 as we still don’t know what posts we will have. Meanwhile people
continue to come to the door for help. We have sorted out the management structure
and now attention is focused on other posts. There is much to do.

Last week I was in a seminar with funders
and commissioners. I shared my own dream that if a service is tried and tested
and likely to be long-term, why not give a 10 year deal with much tougher
annual reviews? They wouldn’t fund a school or a hospital for only 3 years.
From the tone of the ensuing discussion, I’ll need to keep dreaming.

John O’Brien is chief executive of CA Plus

We were discussing the potential changes to
staffing in the year ahead. Yes, trustees are ultimately responsible, but would
or should they know the details? They need to be satisfied that the finances
are sound and that the charity’s objects are not set to one side, but the
staffing arrangements?  Of course,
it’s different in every organisation. In smaller charities trustees may know a
lot more about the day to day operations. A colleague elsewhere recently had an
interview, as did all 30 staff. These interviews were with a panel of trustees
who then made the actual decision on which posts should go – most odd, in my
view.

One evening last week I was in the role of trustee of a
local charity supporting the homeless and unemployed. We met to
consider a final survival plan for next year since most of the funding will be lost in three weeks’ time (so much for the big society). As a trustee, I know about the
legal side, I know a bit about finance, but I don’t really know if we need two advisors or three, or if they
need to work 20 hours or 18. My view is that trustees need to sort out the
management structure first. The manager(s) can then propose the detail for us
to approve or not, and if they get it wrong…