Findings from this joint research between Responsible Finance and ACCA show that there is recognition across non-profit organisations that the finance function should play a driving role, as it does in the commercial sector.
Despite this, the finance function is currently subject to under-investment, with resources directed towards short-term planning and objectives.
The findings also indicate that:
- There is a sporadic business support network for non-profits across the UK.
- The low priority given to the finance function in the non-profit sector – for reasons related to capacity, funding, staff and management skill sets, and even culture – ultimately reduces the organisation’s ability to fulfill its social mission.
- The two are closely tied, and good financial management enables and preserves the social function.
A number of factors will help non-profit organisations develop a robust and embedded finance function; proactive, internal cultural change towards prioritising finance and making management decisions that are based on financial planning is core to this.
Industry bodies can offer support, through strengthening knowledge-sharing networks and training opportunities.
Funders and government, driving much of the environmental change for the non-profit sector, could also simplify their requirements (such as reporting), to enable non-profit organisations to operate more efficiently.
Ben Hughes, chief executive of Responsible Finance, said: “Understandably, given the landscape in which they operate, simply keeping the wheels turning is the priority for most charities. With short-termism so prevalent and the fact that relatively low numbers of senior managers in the sector currently come from financial backgrounds, it will be a challenge for these organisations to grow in a structured and sustainable way.
“Unfortunately, when the role of the finance function in a charity is sidelined – be it for reasons related to capacity, funding, staff and management skill sets, or even culture – ultimately the organisation’s ability to fulfill its social mission is compromised.”