Managing People


It is intended that most of this can be applied to volunteers as well as paid staff and covers management concepts relating to people issues. Please note, though, that you really need to do some serious reading, course work or gain experience ‘on the job’ if you want to develop people management skills properly.

Also see People Management Resources page.

Team building

Belbin is the name often bandied about here. He has developed the concept of Team Roles, with everybody having their own preferred role(s). You need a reasonable understanding of the overall idea before you can apply it fully, otherwise you will be reducing people to being pre-programmed robots. He describes 8 roles (below) which a team must fill, plus that of the subject Specialist (expert). Precise terminology can vary, but you can use these headings to consider how your team manages to cover the roles as a ‘simple’ starter.

– Chair (co-ordinator and social leader)
– Shaper (gives drive and impetus)
– Plant/Innovator (ideas person)
– Monitor/evaluator (stopping over enthusiasm, missing key points)
– Resource investigator (delicate external negotiations)
– Organiser/company worker (implementer – turns ideas into practical action)
– Team worker (diffuses friction)
– Completer/Finisher (progress chaser)

Lifecycle of teams A real team (rather than just a group of individuals) will go through 4 identifiable stages:
– Forming. Often initially seemingly a very straightforward, uneventful activity. But sooner or later, any team which is going anywhere much has to address:
– Storming. Getting all the differences out in the open, leading to:
– Norming. Agreeing who is doing what, modes of behaviour etc., leading to:
– Performing
For a project team which performs well, there is likely to be another stage – mourning – when it comes to an end.

What is perhaps worst to realise is that in a typical small to medium you will not get much choice in team membership, and each time a member changes (leaves, gets promoted or has job re-defined) the team lifecycle is likely to get knocked back a stage (or thereabouts).

These concepts help you appreciate the problems, but don’t lose sight of the power of good teams or the fact that everything doesn’t have to be perfect. Just remember some attention to how the team operates is as important as being clear on what its real tasks are.


Herzberg splits motivation into 2 key areas:

1. Hygiene factors. These don’t motivate, but inadequate fulfilment here could be de-motivating. Includes working conditions, working relations, pay, technical supervision, company policy. Good hygiene can help prevent illness, but doesn’t improve your health!

2. Satisfiers/motivators. Achievement, responsibility, recognition, advancement, work itself.

Appraisal and Supervision

Appraisal ideally contributes to both organisational and personal learning, plus achieving the organisation’s objectives.

It works best if there are regular supervision sessions during the year, picking up and dealing with minor issues on both sides, and establishing a level of understanding between the superviser and supervisee. How and when supervision happens will vary immensely between and within different organisations – for instance residential care staff working with ‘challenging’ clients will need greater support and guidance than office staff dealing with more predictable duties.

Our sample Appraisal Form/Checklist rather assumes that positive relationships and attitudes are the norm. Questions on ‘why things didn’t work out’ will need to be expressed more diplomatically if this is not generally the case in your organisation, otherwise there is a tendency to get into apportioning blame rather than being focused on ways forward.

Most small to medium size voluntary organisations will want to keep things simple, but it is possible to have very sophisticated performance assessment models developed, which at least in theory take away some of the subjective value judgements which tend to creep in.

If a lot of work is done in teams, has this been taken into account when appraising an individual? How well have they contributed to the team’s goals, is it actually impossible with current management style to tell?

Job design, Person Spec

Job descriptions and recruitment

Before recruiting to a post, you need to (re-)design the job! A checklist :

  • what, why, when, where, how is it done?
  • what are the responsibilities (people, budgets, resources)
  • define working relationships
  • requirements for the job – skills, education, motivation, level of performance expected
  • describe conditions of work
  • check whether this all stacks up (with current job-holder, line manager)

Then draw up the job description. You should be able to draw out most of the person specification too – what are the essential or desirable skills, experience, attitudes, knowledge? How will you recognise and judge these – application form (or CV), interview, written or practical test? There is a Person Specification in our collection of sample documents, but please note that this is NOT a model, but a guide for your thoughts.

Note: it is very common for recruitment to be done looking backwards, at addressing what was missing/went wrong with a previous post occupant. Try looking forwards, at current and future needs, instead.

Sample job descriptions may be found on some websites of sector support bodies, such as CharityComms for communications roles (e.g. Head of Digital Communications article, published 2012).

Chartered Institute of Fundraising published ‘Managing Fundraisers: The essential guide to recruiting, developing & retaining fundraising talent’ in 2012 – no longer online at Oct. 2018?

Providing Training

Organising and putting on your own training course is an attractive proposition for many voluntary organisations, given that they may be dealing with an unusual combination of staff, activities or clients, and not be able to afford expensive commercial trainer/consultants. Our advice would be to check out what standard and tailored training can be provided by those specialising in the voluntary sector first – see Training page. There are many pitfalls which could turn an in-house production into a negative rather than positive force for change. Here are a few ‘train the trainer’ tips – see also our Training Resources page.

Development / Training Needs Assessment

Can be part of Appraisal process. The idea is to identify what training is needed to do the job well, and works best if the job is well-defined with specific requirements (skills etc.). This will not always be possible, as many voluntary sector jobs are very fluid, particularly in smaller organisations.

Training Needs Assessment Before signing up for courses, an assessment of what the job involves (purpose, responsibility, key activities – should have some match to job description!), what skills and knowledge this requires (essential v. desirable), assess the gap between this and the existing position.

Training Objectives

  • What are the intended learning outcome(s) of the training sessions?
  • What will the participant be able to DO as a result of the sessions?
  • What observable activity will show what ability has been gained by the trainee as a result?Additional Key questions: How have you identified this training need? Why do you think the training would be be carried out in this way?

Another issue is trying to align the potentially conflicting wishes/abilities of an individual with the demands/possibilities of the current job and also the future needs and prospects of the organisation (which may be emerging out of the mists). Perfection here is impossible – as in much of working life where people are involved (ie most of the time) a good enough or reasonableness test has to be applied.

Have you considered …….

  • on the job coaching?
  • mentoring?
  • exchange visit, placement?
  • reading?
  • talking to experts?
  • a safe environment to practice?
  • how any course learning will be re-inforced or be negated back at work, will there be a chance to consolidate the learning or is it just an isolated (wasted) exercise?
  • is training actually going to solve anything? Is it actually a mis-match between person, task and organisation, poor job design, a structural problem?
  • that volunteers may have different needs – fit the job to the person rather than otherwise? Do they really want to get training from you so they can do paid work elsewhere (this may be a fair exchange in the right circumstances)?


Tell me, and I forgot
Show me, and I remember
Involve me, and I understand

We remember: 10% of what we read, 20% of what we hear, 30% of what we see, 50% of what we see and hear together, 80% of what we say, 90% of what we say while we do it.

“PowerPoint is about presentation (showing) not involvement. It is suitable for conferences but has no place in the training room.” A slightly extreme view, perhaps, but remember that technical training aids can actually divert attention AWAY from the training material if used improperly.

(Credits for this section: OUBS B789, Peter Firkin/Continuing to Learn, Henry Stewart/Happy Computers)

Learning Styles/Organisation

Kolb and Fry learning cycle

Learning and development, according to Kolb and Fry, follows the cycle illustrated here. The names outside the boxes are the descriptors (Learning Styles) for people who have a particular preference for that part of the cycle (Honey and Mumford). There are Questionnaires around designed to evaluate what your preferred Learning Style is. This is helpful to trade on strengths and minimize weaknesses, as you are likely to learn most from your part of the cycle. But there are dangers of missing out stages.

learning cycle

Characteristics of adult learning process

– Bring (their own) package of experience and values to the learning process – start from where they are.
– Usually come with set intentions – wanting to solve a particular type of problem they have encountered or anticipate
– Bring certain expectations about how the learning process works (and their capabilities).
– There are competing interests – social, work, etc
– Have preferred learning styles (see above)
– Adults by definition – treat them as such
– Engaged in continuing process of growth. It may not seem like it, but adults dont stop growing and developing, but the pace and direction varies.

Training is usually done in short bursts, with clear aims. See Training Needs above.

What is a learning organisation?

Characteristics of a learning organisation (derived from Argyris): open, exploratory, enquiring, mistakes are puzzles to be analysed.

Some barriers to being a learning organisation (from Salaman and Butler):
– formal learning doesn’t fit with informal (what actually happens day-to-day, what gets praised or recognised)
– departments, specialists, experts defend their corners, don’t accept others comments, ideas
– a political approach to controlling information, defensive
– strong group loyalties and pressures to conform/come to a consensus.

Investors in People

This is the national standard developed by a wide partnership of interests. It ‘sets a level of good practice for training and development of people to achieve business goals’. It is based on 4 key principles of Commitment (to invest in people), Planning (team, individual and skill development), Action, Evaluating outcomes.

See Investors in People UK website for more info, and our People Management Resources page  – the IiP standard was re-launched April 2000. Croners, amongst others, have produced materials (printed and online) to support this.

Running an Event

Important note: this page is definitely NOT a complete statement of the legal issues – we only give pointers. Check out our Legal Matters page for further help in this area.

Events Diaries

Year Ahead (was Awareness Campaign Register) has a calendar of all campaigns logged with them, to help avoid clashes or fit in with existing events. However, access requires a subscription.

Fundraising UK has some information on upcoming events.

Where Can We Go, while a general ‘family events’ listing site, encourages community and other charity events to be added.

General tips

‘The event isn’t over until you’ve packed up and got back to base’. Too many events fall into chaos at the end due to premature celebrations by the organisers.

Checklist from Open University ‘Winning Resources and Support’ – SCHEMES:
– Space
– Cash
– Helpers
– Equipment
– Materials
– Expertise
– Systems

Start from the event date and work backwards in planning the lead up. Can you realistically carry out several tasks in parallel, or do you need more volunteers or time (or money to pay overtime, outside agencies etc)?

Don’t forget contingency planning – ‘what if …..’ You can’t anticipate everything, but a way to deal with a broad range of problems should be thought through early on. What is crucial to success, and how do you ensure this?

If your organisation is ever going to run any other event, a ‘debrief’ is very helpful, within a few days of the event finishing. What went wrong, but also what went right – it is easy to assume that the latter happened naturally and end up not giving these items enough attention next time.

Although it is helpful to divide up the work, it also needs to be co-ordinated by one person or a very active (and small) committee.


Taking Money

Don’t forget that there are strict rules about collecting money in public places, with charities having to be particular careful. While police/local authorities may turn a blind eye to small-scale bending, it is usually better to do the homework. See Charity Commission website for leaflet CC20 – Charities and Fund-Raising.

If you are running a more sophisticated event and have the potential to process credit card payments, note that it is now possible to get hold of hand-held electronic terminals which connect via the mobile phone network. Various options out there, but changing, so best to do a web search.

A leaflet from HM Revenue and Customs, Fundraising events : exemption for Charities and Other Qualifying Bodies  – note leaflet CWL4 not available from new web section at November 2014 – sets out the conditions for direct tax and VAT exemptions that apply to fundraising events.


There are quite a few regulations around ‘public’ events. Unless your event is by invite only (and even then you ought to make sure on the exact status), it is likely to fall within this. Possible issues:

  • Sale of alcohol. Will require application to magistrates court – check out via local council. The common tactic of selling raffle tickets and winning a ‘free’ drink is legally highly dubious!
  • Public entertainment licence. Check with local authority. May also require Music licence – see Legal Matters.
  • Lotteries. You need to register with the local authority.
  • Street collections. Ditto.
  • Food hygiene registration if you are preparing food ‘on site’. Try Environmental Health section of local council.
  • Fire regulations are generally the responsibility primarily of the venue management. Hirers may be required to observe particular rules, or notify them if certain hazards are present (e.g. fuel for a barbecue?).
  • Street activities will probably need clearance from the police, and maybe the highways authority (local council) too.
  • Also see Risks below.


Village halls and the like wishing to show films need a licence from the local authority. There are a number of exemptions to this, including:

  • if there is no charge or private gain
  • if the premises are used for no more than six films a year
  • if you are a non profit making organisation with a Home Office exemption certificate
  • if you form a non-profit making film or video society whose performances are only open to members

Copyright and royalty permissions are necessary even if a licence is not required.


The Theatres Act 1968 states that where a local authority is satisfied that a play is to be performed for a charitable or other like purpose in respect to one or more particular occasions no fee is payable for a licence. This means in practice that if a play is to be performed for charitable purposes and if dates of performances are given in advance, no fee will be required. However, in the case of an annual licence, there would be a fee payable because it relates to unspecified performances throughout the year.

(The above two items extracted from June 01 Newsline from Community First H&W. They may well be out of date, due to the Licensing Act 2005.)


Centre for Accessible Environments has produced a guide, Make your conference accessible, but now doesn’t seem to be on the web site (March 07).

Also see Admin page on Access and other premises issues.


The usual marketing checklist – who’s the audience (people), how do you get to them (place), what is the attraction (product) and what do they have to do to participate (price)? Don’t forget to give contact details, meeting or kick offs times and how to get there. Obvious but often something is missed off – get a second person to check over what has been produced before it goes to printers/local newspaper etc.

See Marketing page.


See the Insurance information page, or go direct to Insurance Services page for brokers.

A ‘duty of care’ is placed on anybody organising an event. This means looking at activities for possible health and safety problems for participants, organisers and bystanders. While challenge and other (fundraising) physical activities have obvious risks, everything from meetings in badly maintained buildings to crushes around celebrity appearances have their own unique issues. Step back and consider the (reasonable) possibilities, and plan to prevent or manage them.

The Home Office (with wider input) produced (summer 06) ‘The Good Practice Safety Guide for small and sporting events taking place on the highway, roads and public places’ so that such events are as safe as possible for the public and participants. Its 72 pages has specific sections on charity stunts, carnivals, charity walks, cycle races and other useful material. No longer available from website, May 2010?

Do you need first aid cover? Typically provided at charity events by volunteers from St Johns Ambulance, British Red Cross etc, but there is usually some charge for the service. There may be a commercial service available e.g. Primary Ambulance Services in Essex.

Live music booking agency Function Central have put together “A Definitive Guide to Health and Safety Requirements for Event Planning“. Some of this will only apply to larger or more complex events, but plenty of food for thought.

Code of Practice

The Chartered Institute of Fundraising has various Codes of Fundraising Practice which cover running events – outdoor, charity challenge etc. They have also produced a leaflet with the Association of National Park Authorities on Charity Challenge Events but no longer on the web site?

More Resources

Society of Event Organisers run various seminars etc. on how to organise exhibitions, conferences etc. Phone 01767 316255

See Event Services page for ticketing, event booking etc.

Charity Tax Reclaims

aka Tax Efficient Giving

Gift Aid, Deeds of Covenant, Payroll Giving …..

The HM Revenue & Customs website, the key source , has been incorporated into (Jan. 2015) – check the Services and Info page.

Leaflets you might want to get:

  • Giving to charity by businesses (IR64),
  • Giving to charity by individuals (IR65),
  • Giving Shares and Securities to Charity (IR 178).

The Basics

NB Please note that rates have changed since this section was written.

The limit on Payroll Giving was abolished from April 2000 (previously £1200 per employee), and to promote the scheme the government is to add 10% on such donations, during the following 3 years. Give As You Earn (GAYE) can be operated on behalf of any non-profit organisation which has been recognised as such by the Inland Revenue. You have to operate the scheme via an approved agency.

The days are numbered for Deeds of Covenant as the revised Gift Aid system has no minimum limit (previously £250). There are potential traps and admin nightmares around values of benefits received in exchange for donations (e.g. newsletters or perhaps for larger donors, special seats at events or chances to meet celebrities) – see the guidance notes. Phone and internet giving can also be included – but you have to send a written confirmation which includes a chance for cancellation.

Reclaiming tax (which is income tax or capital gains tax) is done at the standard rate, currently 22%. It is easy to assume you claim 22% of the donation. Not so! Remember, the 22% has effectively already been deducted, so what you are claiming is 22% of the higher amount BEFORE that deduction. The maths is: tax reclaim = donation x (100/(100-22)), which is the same as adding 28% (rounded down). There are bound to be queries on this from time to time! IT for Charities have written a little bit of Javascript which you can put on your website (for free) to show how much a donation increases by.

There is a specialist Inland Revenue branch dealing with charity tax issues, in particular income tax repayment claims. Still often referred to as FICO, its now officially Inland Revenue Charities. Forms and procedures have been simplified, but with greater security, from April 2000.
– IR Charities (Repayments), St John’s House, Merton Road, Bootle, Merseyside, L69 9BB, phone 0151 472 6036/6037 (Gift Aid) or 0151 472 6029/6053/6370/6371 (Payroll Giving) or 0151 472 6046 (Giving shares).
– The reclaim work of the Scottish office is being transferred to Bootle, June 04.
– Local rate helpline 08453 02 02 03.


Please now see the official Gift Aid information from HMRC, as the following is out-of-date.

A crucial element of your systems is having an ‘audit trail‘ so that it is possible to go from the claim you submit to the original records and documents both for the money given and the Gift Aid declaration (you may have obtained a ‘global’ declaration covering any donation from 6th April 2000). See below about filling in and submitting claim forms so that Inland Revenue can process them. The new form is now available, and will be sent automatically if you submit a tax reclaim, under the ‘old’ scheme or otherwise.

Relevant extracts from the Getting Britain Gift Aid Guidance document:

“8.2 You should use the existing claim form R68 and schedules to reclaim tax for:
•Gift Aid donations and covenanted payments by individuals received before 6 April 2000
•covenanted payments by individuals received on or after 6 April 2000 but falling due before that date
•Gift Aid donations and covenanted payments by companies received before 1 April 2000.”

“8.4 You will no longer have to complete separate schedules for Gift Aid donations and covenanted payments – in future there will only be one type of schedule for all donations. You will have to enter the following details on the new schedule for each donor:
•the donor’s name
•the date of the donation, or, where the claim covers more than one donation by the donor, the date of the last donation
•the total amount of donations by the donor on which you are claiming in the schedule.

8.5 You will have to complete a separate schedule for each tax year, or part tax year, included in the claim. It will no longer be necessary, however, for you to calculate the tax relating to each donation separately. You will simply be able to calculate the total tax reclaimed for all the donations shown on each schedule.”

8.6 ……..Remember – do not reclaim tax for any donations by companies received on or after 1 April 2000.

“8.7 You can start making your tax reclaims immediately from 6 April 2000.

8.8 In the case of covenanted payments falling due on or after 6 April 2000, you need no longer wait until after the due date has passed before reclaiming tax – you can reclaim tax at any time after you receive the payment.”

Software for claiming back tax

Although Gift Aid isn’t too complicated to administer (once you have sorted out any benefit issues), smaller charities may want help.

  • Donations Coordinator comes from Data Developments – ‘software for churches and charities’. They’ve been working to make their programs much more generic and not so church-focused. Currently more sophisticated than GATS, and has some import and export facilities. £159 at spring ’13. Data Developments, Wolverhampton Science Park, Stafford Road, Wolverhampton, WV10 9RU, phone 01902 824044.
  • Gift Aid Manager is from Orchard Software. Developed in Microsoft Access, it appears to have all the necessary features in a logical format. £99 incl p&p, including 3 months technical support. Demo version can be downloaded. Email:
  • Mijan Consulting GiftAid Recorder Keeps a record of donors and donations and automatically completes the form R68(GiftAid). £30 inc. VAT. Developed by an experienced Charity Treasurer who uses it himself. Trial version available. Email:

Many online fundraising services, if UK based, will also have Gift Aid facilities.

Other resources

We can’t cover all the possibilities for registered charities here. So, as well as HM Revenue and Customs sources:

Taxation of Voluntary Organisations

Basic issues

Many voluntary organisations assume that they are not subject to tax. Unfortunately, there is a whole bunch of stuff out there which can catch you out. With the various agencies concerned generally having targets to increase their revenue, working on the basis of ‘surely they aren’t going to be nasty to a good cause like us’ is dodgy. Don’t panic if you are just setting out – the advice lines, leaflets etc. are much more user-friendly than they used to be (although patience is often necessary). Clarifying potential pitfalls at the start will ensure you don’t end up liable, personally or as an organisation.

The HM Revenue and Customs website has a Charities section. Also see special section for Community Amateur Sports Clubs CASCinfo may also be worth a look.

Material below, especially on Corporation Tax, needs some updating of details.

Expenses (and Income Tax)

See Pay and Expenses page for how to handle staff issues on this.

Volunteer Expenses can be a trap for the unwary. Even some ‘professionals’ in this area get it wrong, and could be laying your organisation open to a tax liability, which might include Inland Revenue inspectors imposing penalties. The Inspectors themselves, who come from local offices, will often not be clear about the rules here, and should be persuaded to check them out before proceeding with an audit!

The basic point to note is that as soon as you pay volunteers more than actual costs you are entering taxable territory, and you may end up paying tax on travel costs too (employees would be taxed on any payment for travel to their regular place of work). Volunteers should produce receipts for expenses, even for such things as lunch if possible (perhaps photocopy their travel card, but get at least one original on file after it has been used). See Volunteers and Law for more on travel and volunteer drivers.

Flat rate reimbursement has led to at least one organisation being caught by National Minimum Wage legislation, such that volunteers turn into employees who have to be paid the minimum. As we type (May 02), there is still some lack of clarity around residential volunteers. Those placed via an agency appear to be most clearly OK to have accommodation costs paid, plus ‘pocket money’, though the latter should only be a ‘minor consideration’ and more appropriate when based some way from home, to allow for limited ‘social interaction’. See the Minimum Wage pages on

Trustees/Management Committee members will often be classed as Directors (particularly if it registered as a limited company) and some Inspectors will then expect annual returns. As long as they aren’t paid more than actual expenses, these should not be necessary. Note that you are likely to be obliged to declare the total of committee expenses in the audited accounts (especially for registered charities), and perhaps give more detail if there are any relationships or exceptional items.

Corporation Tax

It is generally accepted that charities don’t pay Corporation Tax, but you may need to exchange some correspondence with the tax office on this. Those using trading companies need professional advice, or to read up the literature, to get things right. Non-profits not registered as charities ought to be able to persuade the Inland Revenue just to impose it on bank interest/investment income, as long as trading (for profit) isn’t a significant activity.

The need for trading subsidiaries for smaller charities will be reduced by the Budget 2000 measures. Up to £50,000 of ‘trading’ activity by the charity will be permitted, with a new tax relief to exempt all profits of small trading and other fundraising activities. The relief will apply where the charity has a reasonable expectation that the turnover will be either
– no greater than £5,000, or
– if greater than £5,000 but no more than £50,000, less than 25% of the total gross income of the charity. For example, if non-charitable trading turnover is £45,000, to qualify for tax relief, the total gross income of the charity must be greater than £180,000.

Also from April 2000, charity subsidiary companies will obtain tax relief on Gift Aid donations they make to their parent charity, up to nine months from the date of payment. This means that the company will simply have to make a payment to the charity equal to its taxable profits, within 9 months of the end of its accounting period, and current Deeds of Covenant will disappear.

VAT Issues

This is a complex area. There has been some simplification as a result of the Charity Taxation Review, but it is still not straightforward. Those mainly relying on grants and donations will not have to worry, as this is seen as ‘non-business’ (there is no exchange of money in return for specified goods/services). See HMRC site for current level of business turnover where VAT registration becomes compulsory (was £52,000 April 2000) – as well as charging VAT on ‘sales’, you will then also be able to reclaim VAT to some extent. It is not always straightforward to identify Business Turnover, as for instance a membership subscription may include a donation element, which doesn’t count for this test.

VAT issues to check out include:

  • membership subscriptions – how much of these are for something in return (eg magazine, events)?
  • sponsorship is trading (i.e. a business activity), except in a few limited cases.
  • areas like training, publications, room hire and medical supplies have very specific rules.
  • are grants really not in exchange for any consideration? Normally a report on the project will be treated as insignificant, but it can get nasty where it starts looking like a contract to provide services.

Zero-rated VAT now covers (from April 2000) to all charity advertising, including recruitment, and advertisement preparation costs, and the sale or hire of donated goods. Guidance leaflet is 701/58 (Mar 02)

The Taxation Review (1999) tackled the problem of different rules on “one-off” charity fundraising events for VAT and Income/Corporation tax relief purposes. The exemptions are now extended and aligned, so that any event qualifies for exemption from VAT or income tax provided:
– the public are aware that the purpose of the event is to raise funds for charity, and
– the charity holds no more than four events of a similar type (each of which can last for up to 4 days) in the same location in any year.
A leaflet Exemption for Charities and Other Qualifying Bodies (CWL4) sets out the conditions for direct tax and VAT exemptions that apply to fund-raising events.

Reclaiming VAT on listed places of worship: an interim grant scheme has been introduced which returns in grant aid the difference between 5% and the actual amount spent on VAT on eligible repairs & maintenance to listed places of worship. This is intended to bridge the gap up to an European Union review in 2003 which will consider such a reduced rate of VAT.


Registration for VAT can end up creating a lot of extra accounting costs, with little net benefit (if any) in claiming back VAT on expenses. ‘Partial exemption’ is the name of the bureaucratic nightmare that can result – you have to apportion income and/or expenditure between different activities by their VAT status and only claim in the proportions agreed with HMRC. It is not for nothing that auditors’ specialist Charity Units have close links with their VAT experts, but some might cynically suggest that this is only so they can justify their fee, with little benefit for you. A ‘VAT audit’ may be useful, but be clear of what the motivation of those doing it is!

VAT Advice

There is quite a lot of information on VAT registration and collection online at the HM Revenue and Customs site. However the charities section of the newly combined site (spring 05) seems to be lacking specific VAT pages. So check the publications list, although you will probably have to browse through to find all the relevant ones. Most can be downloaded, and then printed off if relevant, which is quicker than ordering via local advice centres. The May 04 update of leaflet 701-1, Charities , is key and much improved.

Charity Finance Group (see Sector support bodies) has VAT advice available via its VAT Club. Also check VAT advice section of Accountancy Services for specialist firms which may have some online resources.

Accountancy Software Introduction

Starting points

Community Accountancy Projects are useful resources, where they exist. One of the most active is Community Accountancy Self-Help (CASH) which operates in west London. Its web site includes a variety of factsheets which may be helpful.

User Groups

  • Sage Charity User Group. Sage Line 50 (which used to be called Sterling) is perhaps the most widely used in the sector, with Line 100 less popular but growing (perhaps for the membership and other useful add-ons available). The User Group is independent but serviced by Intelligent Solutions, who are specialist Sage Solutions Dealers. See Suppliers for contact details.
  • Sun User Group. Special Interest Group of Charity Finance Group – see Helplines/Professional bodies.
  • Great Plains Dynamics. Charity User Group run by Tate Bramald – see Accounts Packages.

IT survey

The Charity Finance magazine/Kingston Smith IT survey, undertaken April 1999 and published July with the magazine, found that Sage had over 40% of the accounts software market for those with turnovers up to £5 million, but no distinction was made between the rather different Line 50 and Line 100 Sage products (or indeed Instant Accounting). Sun was predominant in the £5 to £10 million range (over 30%), with a good showing in even larger organisations. Pegasus got an overall 6% share. On the other hand, 46% used none of these product ranges (no other packages mentioned in the survey report). Microsoft Excel spreadsheet facilities were used by a quarter to produce management accounts (as opposed to financial accounts used for audit purposes etc.) but Sun users didn’t need to resort to such ‘add-ons’.

Accountancy Software Issues

This section (previously a separate page on the old site) is based on a paper produced for Charityfair 96 – Accountancy Software Challenge, updated and extended. It covers:

  • basic terminology
  • why accounting in the charity/voluntary sector is different,
  • why accounting packages can be a help, but aren’t always,
  • relevant trends and future developments in software,
  • dilemmas in software choice.


Every software supplier tends to develop their own use of words which can cause some confusion when discussing facilities or ease of use. In SunAccounts for instance, a Journal refers to the normal way of entering data, while this would be an exceptional item in many other packages. We prefer to refer to the process of entering a complete accounting record (e.g. NatWest cheque for £50 made payable to Kim Bloggs, for summer playscheme expenses) as a Transaction.

Chart of Accounts is the accounts structure, made up of account codes and/or names, and may incorporate further analysis (e.g. into Projects, Departments or Funds). If you are used to a Cash Book or other manual record with columns, think of them as the column headings, with Project analysis etc. requiring separate books or ledgers. Codes are usually numeric with the sequence being important in creating reports and setting a logic (although in isolation such codes can be meaningless). Some people prefer to have alphanumeric codes to make them more memorable, but not all packages will support this. Also called nominal coding.

Trial Balance If you don’t know what this is, for most packages you will need your auditor or other accounting expert to advise you on the Chart of Accounts and analysis issues.

Important charity finance terminology
– SORP (Statement of Recommended Practice). The accounting regulations as part of Charities Act 1993 brought this into effect from 1st March 1996 for all registered charities. This requires certain principles to be followed in compiling annual accounts. ‘Minor’ revisions due to be agreed summer 2000.
– SOFA (Statement of Financial Activity) under SORP replaces the Income and Expenditure Account (which was similar to, but not quite the same as, the Profit and Loss Account)
– Fund Accounting: Restricted, Unrestricted, Designated, Endowment.

What could a package do for you?

Improve reporting, and therefore financial management
The complexities of providing appropriate financial information to funders with the ‘contract culture’, mixed and multi-funded projects and so on have already pushed up the demands in reporting. Then add increasing pressure from new charity regulations and greater public exposure of ‘poor management’ at the same time as needing to get every last penny work to meet the demands on your organisation! A good accounts package implemented properly can make a massive difference.

Banish arithmetical errors

It is virtually impossible with most packages for them to get ‘out of balance’. (However, processing transactions during a thunderstorm has managed this in my experience!) Reports should always add up, too.

Make record keeping more consistent
You can still enter a transaction against the wrong code, but a good package will reduce the possibilities and ensure that there is a reference and amount for every cheque or receipt. This does not eliminate all manual records, though. All vouchers will still need to filed, in a logical order, and details of what was entered to the package (and preferably by who if there are many operators) should be written on them too. This will help in tracking errors, in the audit and if disaster strikes, requiring re-entry of transactions.

Reduce audit fees
The above items should mean audit work is reduced, although how easy it is to extract detailed information from the package at the year-end will also make a difference (in either direction). And any hidden problems (see below) will count against this.

Add another layer of mystification/hurdle to get over
Aren’t finance matters bad enough without having to learn how to use a computer too? With packages like QuickBooks aiming clearly at the non-accountant, the problem is much reduced. However, it still helps that you have some idea about how your finances work, and what end-result you are expecting to get out of the system. If this applies to you, crack financial confidence first.

Hide problems
Computerisation by itself won’t solve all accounting problems. If the person doing the books doesn’t understand what cheques have been written for, or how to do a bank reconciliation, this won’t help. The spurious authority of computer generated reports makes people more reluctant to challenge figures or ask what may seem a silly question. It is easy to produce SOME figures with an accounts package, but are they up-to-date, understandable, complete and based on reality?

Use scarce resources
See issues on cost. Buying, installing and setting up systems are obvious costs, but what about continuing support? Does this mean you have to pay for upgrades to keep up-to-date? Will you need expensive consultants if you change your organisation structure, to make the accounts fit?

Lock you into an unsuitable system
This is the one which should terrify you if you have started computerisation without adequate preparation. A badly set up system is worse than useless. It can make data entry complex, slow and inconsistent; reports misleading (without all the relevant data) and late; and mask the underlying problems, making them difficult to spot, clarify and correct. Huge sums of money can be lost, due to knock-on management inefficiency and in resolving the issue.

Make you dependent on software and hardware
Regular back-ups are essential, in case of computer failure, fire, theft, thunderstorm (see above) and sheer human stupidity. Make sure the package you select is easy to back-up, and institute a clear procedure immediately.
Once you’ve computerised, it is very difficult to go back to manual records if disaster strikes. You need to be able to get your accounts system reconstituted as soon as possible – do you have another machine you can use, or are you reliant on the insurers coughing up eventually?

How does the voluntary sector differ?


Tracking Restricted Funds and reporting in SOFA rather than Profit and Loss format are key needs for registered charities, while project or grant management and measures of success not reducible to a ‘bottom line’ are common complexities. Concentrating on Cost of Sales and Gross Profit before Overheads in reporting structures, typical in accounts software, is not a helpful approach. What flexibility is there in report formats, and/or what facilities to produce reports to charity requirements?
To be able to report on Funds, projects etc.. it is necessary to have been able to have analysed the transactions to this level of detail, preferably as you enter them. Are there facilities to do this, outside of the basic account codes, or do you have to have a very long chart of accounts, which is difficult to manage and familiarise?
Can the package meet the SORP requirements, and can reports during the year reflect the principles where appropriate? This requires good analysis facilities to feed into the report ‘extraction’ routine. Or in practice, do you produce monthly management accounts in a way which makes sense to your budget managers and only want to produce to SORP format at the year-end, in which case getting the precise layout is less important.


Import facilities: There are a number of packages around dealing with specialist income areas: covenants, membership, relationship fundraising, rent accounting, investments. Transferring data directly to the accounts prevents errors in re-keying as well as saving time. However, you may not want a ‘live’ link, as it is good practice to do checks on data brought in to the accounts package from elsewhere (e.g. membership income by batch controls).
Export facilities: This is closely linked to reporting. If a package has enough analysis available, but not the reports, a spreadsheet (or possibly database) can solve this as long as the data can be transferred to it easily. This can also be useful in building cash-flow projections and ‘what-ifs’ around changing budgets or establishing new projects.


Credit control and sales invoicing are generally much less important. Some packages have limited options – will grant income have to be entered as a paid Sales Invoice, or as an ‘exceptional item’ through a journal?


VAT is not relevant to the majority, but is often a compulsory feature – work-round required (suggestions: ignore this data item; if not allowed to, treat everything as zero rated or exempt).
Where VAT is relevant, organisations often have to deal with ‘partial exemption’, where only some VAT on expenditure can be reclaimed. This means that VAT on central costs can only be claimed in proportion to VATable activities. Generally, an adjustment outside the accounts package will have to be made before the VAT return is completed.


Commercial companies have finance as a central concern, so accounts software can easily be seen as an investment. For the charity trying to squeeze every drop of benefit from its income, this is harder. Also, resources to buy new, higher specification, computers are becoming scarcer for many smaller groups. There are less likely to be in-house computer or finance experts, increasing costs where the package requires a lot of setting up.


Utilities such as wizards incorporated with spreadsheets and databases make it tempting and quite easy for small organisations to do all their accounting and reporting within these, without the cost of an accounts system. The downside comes when dealing with growth and changes of personnel – such an approach may be unable to cope or impossible to understand, with resulting disruption and costs of starting again from scratch. Usable package start at £99, making this problem avoidable, although unexpected growth may still require upgrading software (and probably hardware if you need to get into the high-end client/server arena).

Crystal Reports, a powerful but fairly inexpensive (from approx. £100) report designer, provides extended capabilities for many packages. It can link data from a variety of databases and bring it onto one sheet, but does require a knowledge of the source data structure and is likely to be overwhelming to the novice.

Developments in Job costing/project management add-ons could help in project accounting, but can be complex to set up and use, and so tend not to be suitable for use by project workers looking to manage their own costs.

Looking ahead

With continuing efforts to topple Sage from its dominant market position, and the gradual exploitation of connectivity and 32-bit benefits of Windows, analysis and reporting should continue to improve gradually for the cheaper packages. Data ‘warehousing’ and web technology are also likely to have an impact. For larger organisations, centralisation of information into database ‘warehouses’ with access via web intranets is already starting to happen.

Sage reckons it will take up to10 years for small businesses to move to ‘online’ processing and filing of data – with the accounts package no longer sitting on your machine, but accessed via a (customised) web browser. Other suppliers have already demonstrated practical use of XML web-based protocols to do electronic processing of orders, invoicing and payments, which could quickly replace EDI (Electronic Data Interchange) whose cost and complexity has limited it to the big boys. Getting this to work initially could make those 5 page Y2K questionnaires previously required by large institutions, before you invoice for a single publication, seem trivial.

Put the two (warehousing and web) together, and perhaps we are looking at outsourcing large parts of the finance function for the smaller voluntary organisation as the way forward. Another possibility is a revolution in inter-action with branches or supporters, with summary monthly accounts potentially easily accessed.

Striking the balance

There is a dilemma of balancing cost, ease of use, underlying strength of software company and product, and facilities written specifically for the sector. The latter don’t come cheap, although Kubernesis provides real value for money if you are happy with its lack of pretty screens, and they and Blackbaud can give good phone support on charity accounting problems. How important is SoFA reporting, if you only use this format at the year-end? Or do you really need to track balances on Funds during the year?

The newer written-for-Windows packages, such as Access, provide impressive facilities for the money and have used the operating environment to good effect. If you understand what you are trying to get out and hence can put together an effective chart of accounts and analysis structure, they will serve well. On the other hand, the security of a product from world accounts software leader Sage may be a deciding factor, and any problems in using the fundraising or member management modules are unlikely to hit the core accounting activity.

Selecting Accountancy Software


Some updating from original 1996 version.

Basics Allow yourself enough time for the process. Read this document through, and come up with a draft timetable. Then add time for slippage (sickness, holidays, staff changes etc.), and some more for luck!

1 What are you trying to achieve?
1.1 Look at our criteria (on Checklist), and decide how relevant they are. Look at reporting and analysis in particular.

1.2 Think about SORP issues if you are a registered charity. How do you want to handle the more tricky areas – will you leave it all to the auditor at the year-end? If not, here are some items to chew on:
i) Allocation of (eg) bank interest across Funds – is this significant, and do you want to do it within the accounts, or export it to a spreadsheet first?
ii) Is the SOFA of importance? Will you (or your auditor) be making so many year-end adjustments (eg via an ETB) that the SOFA produced by the accounts package won’t help?

1.3 What are the problems with your current accounts system (manual or computerised)? Make sure you address these in the approach, but don’t solely concentrate on them. You need a rounded view of where you are going as well as where you are coming from.

1.4 Compile your list of needs, and be clear what is essential, and what can be worked round.

2 How much can you afford?
2.1 Be realistic, but do view it as a relatively long-term investment, which can pay back repeatedly in years to come, by being able to use your finances better. Include future maintenance costs in the assessment.

2.2 Don’t forget to look at initial and future training. Perhaps you can use an existing training budget here.

2.3 Check that the proposed software will run on your hardware adequately. This includes when importing or exporting data, which tends to require more memory. If you have to upgrade, cost this, and add in extra to allow room for growth and increasing expectations.

3 A standard, voluntary sector or bespoke package?
3.1 Software written specifically for the voluntary sector may meet your needs most effectively. But be aware of the smaller knowledge base and that the supplier is nearly always very small (and you may be reliant on their survival), as well as cost.

3.2 Bespoke software, written for your organisation, may appear to offer advantages. However, it is likely to be costly initially, be dangerous if the author is not totally professional, and make you even more reliant on individuals. It is rare that documentation (if there is any!) is adequate for future users.

4 What packages meet the requirements?
4.1 If there aren’t any, reconsider the above!

4.2 Make sure you do a good search. Ask other similar organisations what they use, ask co-ordinating bodies, find a current computer magazine survey, re-visit the VolResource web site for updates..

5 Check them out
5.1 Arrange to see the packages in action, in a realistic setting (eg another voluntary organisation) if at all possible.

5.2 Think of difficult questions. Sales people will tend to reel off a list of features, and glibly say that they will meet your needs. Get them to tell, preferably show, you HOW they will actually do that, and have some examples to run through. Reporting and coding/analysis are the obvious tricky ones. If they can’t do it themselves, as they aren’t technical enough, get them to come back with the solution later.

6 Decide best fit
6.1 What fits your wish list best? Be prepared to compromise, but be clear what those compromises are, and why (and how you are going to cope with any rsulting complications).

7 Work out practicalities
7.1 Can you negotiate a charity discount? Be given extra time to pay? Will you in fact have the cash in the bank to pay the bill when needed?

7.2 Timing is vital (again). The obvious target is beginning of a new financial year, to start using the package in earnest (‘go live’). However, this may be a bad idea – will you be able to cope with all the year-end sorting out at the same time? It also means that there is no fall-back if something goes wrong with your timetable, unless you completely re-think. The only real rule is go live at the beginning of a month, or perhaps a quarter if that is an important time period.

7.3 Parallel runs are strongly recommended, where you run both the new computerised system, and the old one (manual or whatever) at the same time, and compare results after a month or two. In practice, this level of sophistication rarely happens, but you do need to do some sort of dummy run, and get proof that your systems will work.

7.4 Who will install the package on to the machine(s). If you have a network, who will be responsible for this aspect? The package supplier may not know enough about networks, and your network consultant may have no idea how an accounts package needs to be set up. Get them to talk to each other (easier said than done)!

7.5 Who will set up the accounts structure? Who will enter initial data? Do you need the auditor’s involvement to ensure the structure will meet their needs, and the opening data is correct? Design/adapt your paper systems to make data entry and referencing easy.

Scrutiny of Charity Accounts for the Smaller Charity

About this page

This article was originally published as part of the Management of Voluntary Organisations package produced by Croner Publications Ltd, (in 1999) and copyright resides with them. It was written by Dr Gareth Morgan, a partner with The Kubernesis Partnership, York. He works with a wide range of small/medium charities, both as an independent examiner and as a consultant on accounting and funding issues. Here he discusses and compares independent examination and audit.

Please note that this pre-dates various revisions to the charity SORP – see further resources links at the end.


Most charities now have a reasonable awareness of the new charity accounting regulations and the SORP, but are much more hazy when it comes to arranging for audit or other scrutiny of the charity’s accounts. For many trustees it is regarded as an unexciting subject and the only issue is finding someone to do it.

This is quite worrying, because the Charities Act 1993 introduced major new requirements in this area – requirements which many trustees, and even some professional accountants, have yet to address. The result is that some charities are having their accounts returned by the Charity Commission for proper independent examination or audit. Similar requirements were also introduced in Scotland, a year earlier.

The Past

Charitable companies have long been subject to audit rules under the Companies Acts, but until the Charities Act 1993 and the new regulations in Scotland, other charities were largely free to make their own choices about audit.

Previously, larger charities generally opted for a full professional audit, but many smaller charities chose an “informal audit” whereby someone with modest accounting knowledge was asked to look over the books, and sign his or her name at the end of the accounts. These informal audits were often very haphazard, with no indication at all of what the “honorary auditor” had actually done. Even with accounts prepared by professional accountants, the accountants’ report often said only “these accounts have been prepared from the books and vouchers presented to us” with no opinion as to their completeness or accuracy.

The New Rules

To address this confusion, the new rules brought in two options: smaller charities can opt for an independent examination; above a certain level a full audit is required. Independent examination allows smaller to medium charities to have their accounts scrutinised by a process that is less than a full professional audit, but which is nevertheless sufficiently thorough that charity trustees and supporters can have some confidence in the outcome.

Independent examination is an option for unincorporated charities with income in the following ranges. Note that these thresholds apply provided there is no other requirement for audit (for example, no requirement in the governing document or a condition of a funder for a full audit to take place). Also the largest income or expenditure for any of the last three years determines the minimum requirement.

* Note: see updated table at bottom of page

Minimum permitted scrutiny of accounts England and Wales: Income / expediture level Scotland: Income / expenditure level
Approval of accounts by trustees only £0-£10,000 Not applicable
Independent examination £10,000-£250,000 £0-£100,000
Full audit £250,000 or over £100,000 or over

Independent Examination versus Audit

Although independent examination represents a lesser form of scrutiny than a full audit, it is still much more demanding than the “informal audit” which many small charities had in the past.

The two main differences between independent examination and audit relate to (a) who can act and (b) the nature of the report. However, in both cases the framework is laid down by law, and there are many issues that must be considered in a charity audit or independent examination which would not be required in a commercial audit: for example, checking for proper use of restricted funds. As well as following the regulations, in England and Wales, an independent examiner must comply with the Directions of the Charity Commission. It follows that both auditors and independent examiners must have specific charity knowledge.

If an audit is required, the charity’s trustees must appoint a registered auditor (it is not sufficient just to use a qualified accountant). However, an independent examiner is defined as an independent person who is reasonably believed by the charity trustees to have the requisite knowledge and practical experience to carry out a competent examination of the accounts. No specific qualification is required, but clearly the person must have a good understanding of accounts and charity accounts in particular. The issue of independence is also very important: some “informal audits” in the past have been carried out by funders, landlords, or close relatives of trustees, where there is clearly insufficient independence.

As regards the report attached to the accounts, an audit report under the Charities Act 1993 will (if unqualified) confirm that the accounts give a “true and fair view” (or are “properly presented” in the case of small charities doing receipts and payments accounts).

By contrast an independent examiner’s report provides a “negative assurance”. The independent examiner declares that no evidence was found of lack of accounting records, of accounts failing to comply with the records, of accounts failing to comply with the Act, nor of other matters that need to be disclosed. However, such a declaration can only be made after following 12 stages of Charity Commission directions, so for most smaller charities, an independent examination provides a very effective scrutiny, which goes much further than the “informal audits” of the past, but which can be carried out without needing a registered auditor.

Choosing an Independent Examiner

Finding a registered auditor with charity experience is usually just a matter of approaching some suitable firms of accountants, but finding an independent examiner can be harder. Some accountancy firms offer independent examinations at slightly less cost than an audit, but there are also many other independent examiners: professionals in other fields with a good knowledge of charity finance; retired accountants; bankers; management accountants; staff of community accountancy projects and so on.

However, in each of these categories there can be certain concerns about the issues of “requisite ability” and “practical experience”. Even amongst accountants, only a few firms specialise in charities, and others can easily be caught out by all the new requirements. Where people are acting informally as independent examiners there is wide ignorance of the new regime: for example some “informal auditors” are doing just as they did in the past but simply putting “independent examiner” after their name with no reference at all to the requirements of the Act.

To help address these issues, a new Association of Charity Independent Examiners has been formed (ACIE). Founded in January 1999, ACIE aims to bring together all those who act as independent examiners of charity accounts, by providing a range of support, newsletters, training, and professional updating, as well as helping charities in the selection of examiners. ACIE is governed by a Council that brings together professional accountants and lay examiners from across the UK, and within the first six months the membership of the Association has grown to more than 180. The principles of an Association to support examiners have been warmly welcomed by the Charity Commission and various voluntary sector umbrella bodies.

The Association was founded on the basis that anyone interested in the subject can join as an associate member, but a full membership scheme has just been launched, which will allow those with appropriate experience to be awarded the qualification MACIE. In due course it seems likely that charity trustees will look for this in choosing an examiner.

Reproduced with permission from Croner’s Voluntary Organisations’ Briefing, part of the Management of Voluntary Organisations package. This is available on 10 days no obligation trial. For more details contact Croner Publications Ltd on 020 8247 1176 or see the Publishers page.

Further Information

Updated income thresholds table

With thanks to Graham Taylor Charity Finance and Management

Charity accounts regulations – gross income thresholds

Accounts regulations England & Wales
(Charity Commission
For financial years ending on or after 1 April 2009
(Office of the Scottish Charity Regulator – OSCR)
For financial years starting on or after 1 April 2008
Audit – irrespective of gross assets (including a group if its combined gross income exceeds the threshold) £500,001 or more £500,000 or more
Audit – when gross assets exceed certain thresholds £250,001 or more
(when gross assets are in excess of £3.26m)
Applicable to all
(when gross assets are in excess of £2.8m)
Independent Examination (by a person holding an appropriate professional qualification) £250,001 to £500,000 £100,000 to £499,999
Independent Examination (by an appropriate person) £25,001 to £250,000 Up to £99,999  (but must be professionally qualified for accruals accounts)
No independent scrutiny Up to £25,000 Not applicable
Receipts and payments accounts are allowed
(non-company charities only)
Up to £250,000 Up to £99,999 (£249,999 from 1 April 2011)
Accruals accounts are required (company charities) Applicable to all Applicable to all

Note: When gross income is less than the above thresholds there may still be a need for audit or/and accruals accounts because a charity’s constitution, trustees or funders requires it.