Not for Profit

 

At Francis Clark, our Not for Profit teams act for conventional charities, academy schools, housing associations and community interest companies.

 

The common theme here is that the key measure of financial success for these clients is not profit, but nevertheless financial performance remains absolutely critical. We help our clients to present financial information in ways which not only comply with the regulators’ requirements (which can be complex), but help stakeholders to grasp the essential messages, messages which can influence decisions made by funders, donors, trustees, beneficiaries and regulators. Read more

At Francis Clark, our Not for Profit teams act for conventional charities, academy schools, housing associations and community interest companies.

 

The common theme here is that the key measure of financial success for these clients is not profit, but nevertheless financial performance remains absolutely critical. We help our clients to present financial information in ways which not only comply with the regulators’ requirements (which can be complex), but help stakeholders to grasp the essential messages, messages which can influence decisions made by funders, donors, trustees, beneficiaries and regulators.

There might not be a profit motive, but that doesn’t mean there aren’t tax issues in the Not for Profit sector. We help our Not for Profit clients manage their tax risks, in a range of areas, including Gift Aid, VAT, employee tax, property tax and tax on trading activities.

Acting for a charity is about getting the balance right between our responsibilities to trustees (and through them to beneficiaries) and the need to build strong relationships with the executive team. There are two separate partnerships working here and communicating effectively (and in the right order) is one of the keys to success. Because of this, we think that the partner responsible for all but the very smallest of charity clients should meet the trustees at least annually.

It is important that the people working on our Not for Profit clients are specialists who understand the specific requirements of the various laws and Statements of Recommended Practice applying in the sector. However we also believe that our Not for Profit clients really welcome the commercial experience we can bring to the table. Our charity specialist partners all work with commercial ‘for profit’ clients as well. This is one of our key strengths.        

Your  Experts

Charles Evans

BA FCA

Partner

T: 01752 301010

  Download Charles's contact card

Communicating the Key Messages

Your annual report is your opportunity to communicate with people and organisations who are important to you, including funders, donors, beneficiaries and regulators. It is a marketing opportunity... Read more

Your annual report is your opportunity to communicate with people and organisations who are important to you, including funders, donors, beneficiaries and regulators. It is a marketing opportunity and the financial sections are critical to this. Unlike the ‘for profit’ world, your success is not measured by the bottom line. To understand financial performance in the Not for Profit sector, it is often the narrative which communicates success or failure.

By choosing your words carefully, you can use your financial review to explain how income has been generated; what it has been spent on; what remains in reserves; whether that is enough and why.

This will:

  1. Help to convince funders and donors to keep providing the funds. If you are holding high reserves, we will help you to describe and measure those which are free to use and explain why you need them. If you are using designated funds, we will help to describe why you need them (and whether you need more) to achieve your objectives.
  2. Demonstrate to regulators and beneficiaries (existing and future) that you are spending funds wisely. We will help you to construct your accounts in a way which shows clearly what has been spent and, for example, highlight how little you spend on administration. If support costs have increased, we will help you to explain why, and whether it will continue, and to explain what value is achieved through such spending.

Our approach to our work (audit and non-audit) is to focus on the figures. This may sound obvious, but, for many accountants, compliance is king. We understand that you need to comply, but what you want is effective communication. By focusing on what the figures are telling us (rather than whether they have been put in the right boxes), we are uniquely qualified to help your organisation get your financial messages across to your stakeholders.

 

Tax Issues

Sadly for you, the Not for Profit sector is not also the Not for Tax sector, and it’s complex. If you simply collect voluntary donations and pass them on to beneficiaries, perhaps things... Read more

Sadly for you, the Not for Profit sector is not also the Not for Tax sector, and it’s complex.

If you simply collect voluntary donations and pass them on to beneficiaries, perhaps things are not too complicated. No VAT to worry about? No Corporation Tax? But what about the VAT concessions you can claim on expenditure? What about Gift Aid - do the donations qualify and how do you go about reclaiming? How about employee taxes including P11D benefits?

If it is more complicated and you have various sources of income, to start with you will need to understand whether the income is ‘trading’ income (for Corporation Tax) or ‘business’ income (for VAT). The definitions are different.

If the income is deemed to be trading, does it get taxed or is it exempt from Corporation Tax? Is it ‘primary purpose’ income or ancillary to primary purpose? What if the trading is undertaken by beneficiaries? Is there a de minimis? What about lettings income?

If, for VAT, it’s business income, is it exempt, zero-rated or taxable? If you have a mix, how much can you reclaim? If you have a capital scheme, what VAT can you claim back? What if the building is partly for charitable purpose and partly business? Is there a de minimis?

A whole series of questions, most of which don’t have a simple answer. If you get this wrong, you will end up paying more tax that you need to. We’re here to help.  

 

Helping Trustees and Executives

It is a truth universally acknowledged that most trustees have not read the Charities’ SORP. But trustees have to approve the annual accounts and so how can they do this with confidence? We... Read more

It is a truth universally acknowledged that most trustees have not read the Charities’ SORP. But trustees have to approve the annual accounts and so how can they do this with confidence? We approach our work in a way which is designed to help.

Performance measurement and risk management form the backbone of our audit approach which, from a financial perspective, is exactly what the trustees are focusing on. We believe our approach is refreshing and unique, focusing on the figures in the accounts and the risks associated in their construction, communicated transparently to the trustees through our annual report, delivered in person by the partner. We do not believe that a good audit is simply one where all the boxes have been ticked - a junior auditor can tick 100 checklists, ask any number of ill-informed questions, and achieve very little. By working closely with management, enabling us to get underneath the figures, and sharing this understanding with the trustees, we believe that we deliver a better audit and give confidence to trustees to sign the accounts. Most auditors don’t approach their work in this way.

We aim to help the trustees but, equally importantly, we also work closely in partnership with executive management. By building strong relationships with management, we make sure that the annual process works, with the minimum disruption to the smooth running of the organisation. This is achieved through careful and flexible planning processes, critically establishing who is supposed to be doing what and by when.

As we complete our work and prepare for our meeting with trustees, it is essential that the messages that we are to communicate to trustees are clearly understood by management. There might be occasions when there have been problems which, as auditors, we need to report to trustees, but never without discussing them fully with management. We operate a ‘No Surprises’ policy.

 

Who We Work With

At Francis Clark we have experience of working across the spectrum of the Not for Profit sector.

We act for charities across the region, both large and small; provide support the growing... Read more

At Francis Clark we have experience of working across the spectrum of the Not for Profit sector.

We act for charities across the region, both large and small; provide support to the growing number of other social enterprises in the South West; have a long history of working with education establishments and were at the forefront of helping academies through the transition to academy status; and, work with public bodies such as housing associations.

 

Learn more about our expertise with Charities and other Social Enterprises.

 

Learn more about our expertise with Academies and the Education sector.

 

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Call us now

  • Exeter - 01392 667000
  • New Forest - 01425 610166
  • Plymouth - 01752 301010
  • Poole - 01202 663600
  • Salisbury - 01722 337661
  • Taunton - 01823 275925
  • Torquay - 01803 320100
  • Truro - 01872 276477
 
Leading Edge Alliance Awards 2013
Taxation Awards 2014
The British Accountancy Awards 2014
South West Insider Annual Dealmaker Awards 2015
South West Insider Annual Dealmaker Awards 2016
Payroll World Awards 2016
ICAEW Chartered Accountants