Marking the publication of the sixth edition of The Charity Treasurer’s Handbook in mid-September, I spoke to its author, ICAEW member Elaine Alsop, about why treasurers are so important to charities.
Connecting ambitious objectives with financial realities
Amidst economic pressures and geopolitical uncertainties, the role of the treasurer has become increasingly important to guide charity boards on the financial impact of their strategic choices, especially for small charities that cannot afford to employ a qualified accountant.
In recent years, treasurers became adept at remaining calm in the eye of the storm and adapting to changing circumstances. A good treasurer helps charities to connect financial realities with ambitious objectives and ensures that financial knowledge is shared and understood by the full board, explains Alsop.
This requires treasurers to communicate the charity’s finances to the rest of the board in a way that helps all the trustees understand the information. Alsop emphasises the importance of catering the reports to the whole board so that everyone can contribute to board discussions about the charity’s finances.
What do you need to know about charity accounting?
Many ICAEW members who become charity treasurers are new to charity accounting. Alsop recommends getting to grips with fund accounting from the get-go, “fund accounting is at the heart of charity accounting and is a fundamental difference to the way commercial operations are accounted for.” She warns that using restricted funds incorrectly could constitute a serious breach of trust.
It may take a bit of effort to become familiar with charity-specific accounting and tax, but support is available to help charity trustees and treasurers. For example, you can access a free introduction to these concepts in our Trustee Training Modules (Module 3) and more detailed guidance in The Charity Treasurer’s Handbook. These sources will also demystify the concept of ‘free reserves’ and help you lead board conversations about what level is appropriate for your charity.
Becoming a charity treasurer
At ICAEW, we have seen an increase in the demand for financially skilled volunteers. ICAEW Volunteers now hosts over 200 new volunteering roles each month, often seeking trustees with finance expertise or treasurers. That’s an increase of 50 percent and we urgently need new volunteers to step forward to meet the rising demand.
The role of the treasurer varies depending on the finance support provided by the charity’s staff team. Small charities often require their treasurers to be responsible for maintaining the charity’s financial records, banking matters and preparing annual accounts, whereas treasurers of larger charities (with finance teams) can focus on the strategic and advisory aspects of the role. It is therefore important that both the charity and the applicant for a treasurer role are clear about the time commitment and the scope of the role from the outset.
If you can help support charities with your skills, click here to find your perfect treasurer role!