Select Committee on Public Administration Written Evidence

Memorandum from Richard Molineux

  We would like to bring attention to the deficit in financial management knowledge and skills in smaller and medium sized charities (TO less than £500,000).

  These charities and community programmes are funded by statutory funds to a significant extent.

  Community Accountancy Self-Help, a client, works with c500 of these a year, training people to keep books, manage accounts, and inform trustees/boards in comprehensible ways of where they are going financially.

  There is, essentially, no statutory funding earmarked for financial training to go alongside grants made for example community cohesion projects, or work with BME groups.

  There are only 109 trained community accountants in the country, largely concentrated in London.

  This is a big gap, and the result is that investment is wasted, or mis-spent, or stolen, or even not taken up, because groups are afraid to take on financial responsibility when they have no training in this field.

  We attach two examples of what is meant.[180]180

  There is research done by Sheffield Hallam University available if it would be helpful.

  Also, see


Baby & Toddlers Learning Alliance

  Baby & Toddlers Learning Alliance run nurseries, mother and toddler clubs, and summer play schemes. Their role is to provide learning environments for small children, encourage play and interaction between toddlers, reduce isolation felt by many inner city mothers and provide information on health access and other related topics for new parents. The scheme operates in outer London on council estates where low skilled workers were relocated from central London in the 1970's.

  Following a mail shot we were asked for help. On our first visit we found an organisation with very well kept books, which appeared to have five branches—nurseries and other sites for parent and toddler groups. Some funding was for specific sites and costs had to be apportioned out to different projects. The Bookkeeper used a system of coloured pens, one for each site to track the apportionment of costs. There is a certain amount of synergy between coloured felt pens for bookkeeping and pre-school learning. The problem she had was that they had received money from a government scheme Sure Start and now had 38 branches—she could not find 30 different coloured pens for allocating all the costs. Their staff had increased to 80 largely part-time workers many of whom worked on several sites. Allocating the cost of time to different sites and payroll was taking two weeks to a month.

  CASH computerised the accounts with Quick Books, set up an Excel file for allocating staff time and encouraged the charity to use a payroll bureau and pay by BACS. This reduced the two weeks spent on payroll and cost allocation to one hour a month. We set up a system to help apportionment of partial VAT exemption, which is always very complex and devised a way of getting Quick Books to produce a Charities Act SOFA (Statement Of Financial Affairs) from a profit and loss account using automatic journal entries.

  The project had experienced a huge growth in transactions, but by computerising and stream-lining procedures they managed to continue with the existing bookkeeper who later became the finance director. We worked with the project on a step-by-step basis for a year improving different aspects of the systems and training the book-keeper, we now visit occasionally if they get stuck and have a few outstanding improvements to add including—changing banks to earn more interest and computerised cheques to reduce pen-pushing. The children now keep all the coloured pens.

Outside Chance

  Outside Chance works with young offenders when they leave prison. The majority have convictions for burglary or violent crime. They come into contact with the charity while inside (prison) hence the name "Outside Chance"—a chance of surviving legally on the outside with a starting sum of £60 for food (one weeks supplementary benefit) and guidance from the charity.

  CASH was approached early on to work on the first budget. We put in a system for filing financial papers that reduced paper work. CASH drew up the early management accounts, and helped with the preparation for the Independent Examination, all the time training the bookkeeper to take over these responsibilities. We now visit twice a year.

  The Charity has now set up a book distribution company—supplying prisoners who are studying in prison.

  It also provides employment to ex prisoners.

  Outside Chance works with about 500 people a year, and has reduced significantly the number of muggings and burglaries in parts of London.

  Their Director, an ex-businessman, encourages offenders to cost their time in prison against the money they have gained from crime, and to work out the hourly rate for what they have gained. One prisoner said, "The cameras and anti-burglary devices he brought in (to prison) were good. Can't see me re-offending. Just ain't worth it."

  The director said of CASH—"Their accountant was the most significant person providing outside support. CASH has always given the right steer and been there to answer questions when needed."

  (Parts of these case studies have been changed to maintain anonymity)

February 2007

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