Ethical and Social Investment

Introduction

A growing activity of increasing interest to voluntary groups. Charities often feel constrained to pursue ethical investment (which here is taken to mean banking, pension schemes as well as trading in stocks and shares) by believing they have to maximise financial returns.

Firstly, ethical investments have had a good track record to date, where properly managed, although there are investment funds which specifically don’t try to achieve high financial results.

Secondly, it is legitimate to take other issues into account, such as:
– investing in companies where the charity’s objectives oppose its activities is clearly counter-productive to achieving those objectives.
– where investing in a company is likely to lose members, donations or public support, that too may not be in the best interests of the charity.
– some positive investments may be of help in achieving charity objectives, and slightly lower financial performance may therefore be justified.

Since this page was created, the Charity Commission (England and Wales) has updated its investment advice. At autumn 2014, this includes the statement:

Ethical investment You can choose to only make financial investments that reflect your charity’s values and ethos. You need to be able to explain why this approach is right for your charity, even if the financial returns are less. For example, investing ethically might prevent you from losing supporters or damaging your reputation.

Sources of information

These are gradually increasing in web presence.

  • Vigeo EIRIS (was Ethical Investment Research Service, a respected researcher of social and environmental performance by companies). Has a ‘Responsible NGO‘ evaluation framework.
  • Good Finance is “a collaborative project to help improve access to information on social investment for charities and social enterprises.”
  • CharitySRI web site (from EIRIS and UKSIF) provides “clear comprehensive guidance on how charities can invest ethically” and align their investments with their mission (aka socially responsible investment).
  • Ethical Investments – How far may charity trustees go? £2, Ethical Investment – have the Church Commissioners got it right? 50p, both from Christian Ethical Investment Group. Miss P Raikes, CEIG Enquiries, 2a New High Street, Headington, Oxford, OX3 7AQ (Info may be out-of-date).
  • Ethical Investment Association (EIA) is a nationwide body of independent financial advisers (IFAs), which aims to facilitate the promotion of ethical investment by its members, and to set standards in the ethical investment industry.
  • Charities Responsible Investment Network, set up spring 2013 and managed by ShareAction. Initially for investors such as endowed trusts and foundations, to enable them to “fulfil their charitable purposes through shareholder engagement with companies”. A sister network for operational charities is expected in 2015.
  • Good Money Week (was National Ethical Investment Week) has some information and resources.
  • UK Social Investment Forum A grouping of financial advisors, fund managers, investors and others, which has the primary purpose ‘to promote and encourage the development and positive impact of Socially Responsible Investment throughout the UK’. Useful listings of members and affiliates, plus articles, newsletter items.

Investment Funds, Banks, Investment Vehicles

  • CAF (Charities Aid Foundation) has a variety of investment vehicles for charities, including socially responsible portfolios, plus ethical investment information.
  • The Ethical Partnership – independent financial advisers.
  • Ethical Property Company Invests in premises to let out to charities, community groups, social enterprises. Resource centres in London and elsewhere.
  • Co-operative and Community Finance Promote and carry out investment in the ‘social economy’. Head office: 01179 166750.
  • Shared Interest ‘Our funds come from our members, thousands of ordinary people who have pooled their savings to provide the finance that Third World Producers need’.
  • Social Investment Business.
  • Triodos Bank ‘One of Europe’s leading ethical banks, draw on 20 years experience financing social and environmental charities.’ Brunel House, 11 The Promenade, Clifton, Bristol, BS8 3NN, phone 0800 328 2181 or 0117 973 9339, email: mail@triodos.co.uk
  • Community Investment Trusts, or Community Development Finance Institutions, have sprung up around the country. (There are tax breaks for these.) See Community Development Finance Association.
  • Some local or regional trusts: Community Finance Ireland. Impetus – Shropshire, Herefordshire, Worcestershire.
  • Pension providers are included on Banking, Investment page.


Credit Unions

Credit Unions are mutual financial (and democratic) organisations, particularly promoted by community, coop and trade union movements. Members are individuals, rather than organisations, but are part of the ‘social investment scene’.

  • Association of British Credit Unions. Holyoake House, Hanover Street, Manchester, M60 0AS, phone 0161 832 3694, email: info@abcul.org
  • SCVO is developing its own credit union for those involved with its member bodies. Phone 0131 556 3882, email: credit.union@scvo.org.uk
  • Unity Trust Bank offers a Credit Union Development Fund which helps fund a credit union grant programme as well as paying high interest.

Environmental and Social Impact

Reuse, energy use, sustainable development

If you are concerned about means as well as ends in achieving your objectives, you can get heavily bogged down in ‘minor’ issues. In our view, you need to be pragmatic – there is no way at present that you can have no negative impact as an organisation (there always will be some waste and imperfections) but you can try to minimize these while still being effective in your chosen cause.

General environmental links

Voluntary sector web resources on this have come and gone over the years, and this page needs a revamp. Meanwhile, a link or two:

  • WRAP, a government supported waste reduction body, can help with advice – see business support section.

Reduce, reuse, recycle

The watch words in terms of resource consumption. It is better to reduce demand (eliminate need for a new fax machine) than re-use (e.g. pass on old fax equipment), which is better than recycling it for scrap.

There are various Community Recycling Networks around the country, use them to find local recycling schemes for all sorts of materials. The national website at crn.org.uk appears to have gone – CRN Scotland, London are a couple of alternatives.

WRAP (Waste & Resources Action Programme) has info on collecting, selling and buying recycled materials.

In Ireland, if you have waste materials try Wastechange, the commercial waste exchange.

Disposing of ICT

If you are upgrading old equipment, check out the following. Note that most put restrictions on what they will take – minimum quantities or specification. If you are looking to buy ‘pre-used’ kit, look at the Suppliers page.

The following list was compiled quite a while ago, and details may have changed, projects closed etc. You may be better off checking out specific directories which have been created, for example Community Recycling Network – see above.

  • 3tc is based in Merseyside. Not sure if they still recycle computer equipment for the use in communities and charities in the region.
  • ComputerAid International Recycles old stuff to developing countries. Phone 020 7281 0091.
  • Lincolnshire Contact Neil King, North East Lincolnshire Community Business Resource Centre, Margaret Street, Immingham, DN40 1LE, phone 01469 572313, email neil@cert.demon.co.uk
  • Recycle-IT Manchester.
  • Redundant Technology Initiative is an arts group based in Sheffield. It exhibits trash technology art around the UK and across Europe, and campaigns to advocate low cost access to information technology. ‘RTI is still hungry for obsolete machines and runs an ongoing campaign that asks businesses and individuals to donate computers that they no longer use.’ Phone 0114 2495522, email: rti@lowtech.org
  • Track 2000 runs Reuse IT, collecting redundant computer equipment from organisations free, Cardiff area. Service, repair and safety check are done by disabled people or unemployed youth/adults on training courses run by the charity. The serviced equipment goes to schools, community/voluntary groups and small start up businesses for a donation. Track 2000 Community Resource Centre, Resource House, Penarth House, Penarth Road, Cardiff, CF1 7YS, phone 029 2033 2533, email: t.crocker@can-online.org.uk

Printer cartridges

  • There are now quite a number of recycling facilities for old toner cartridges and the like – Dudley Stationery for instance will pick up from their customers. Most give a small charity donation per item.
  • Office Green seems to have the most comprehensive charity arrangements and wide collection, including of old office equipment, phone 0800 833480.

Recycled Supplies

See general Suppliers page.



Energy issues

Try Energy Savings Trust.

Issues in Social and Ethical Impact

Also Monitoring page re Social Impact.

Social Auditing in voluntary organisations is the title of one-day training sessions run by New Economics Foundation. Phone 020 7407 7447. There is also a book with a similar title – not sure whether this is the same as Charitable Trust? – Social Auditing with Voluntary Organisations published with ACEVO, in 2000.

Community Business Scotland Network has run a social audit programme that develops the practice of social accounting and audit with clusters of community organisations in Scotland. There is a separate web site for Social Audit Network, where you can find social audit information sheets, reports and more details on their Social Accounting and Audit: Manual, Workbook and CD.

AccountAbility is a non-profit, membership organisation established to promote accountability innovations that advance responsible business practices, and the broader accountability of civil society and public organizations.

Sustainable Development

Aimed more at commercial companies but may be of wider interest, Sustainable Development in Action, from Association for Management Education and Development (AMED), a 50 page booklet published Dec 99 (£16 non-members). (NB may no longer be available, March ’07)

SustainAbility The consultancy run by John Elkington has various reports available.

See also Areas of Concern page: Ethical investment and Sustainable business for other websites covering this issue, mainly from a commercial perspective.

Working Relations

Stakeholders, branch or federated, joint working, mergers, compacts

Multiple stakeholders

Voluntary organisations often have a wide range of ‘stakeholders’ – those who have an interest in its activities. Commercial businesses generally are limited to shareholders or other funders, staff, and possibly customers / clients. Charities and the like could also have:

  • trustees/committee members who may relate more to members;
  • members as a group in themselves who may also be users;
  • possibly user groupings in their own right;
  • partner organisations whether businesses which are contributing volunteers or specialist expertise, other charities with common or complementary interests, or governmental agencies.

Managers can understandably be pulled in different directions depending on the current hot issues and who they are talking to. It can be difficult to balance the varying interests. A clear steer should ideally be coming from the governing body (management committee etc) – see Governance page.

Involvement and transparency

Encouraging participation of stakeholders, and others, in decision-making may be a good idea for a range of reasons, such as user involvement giving the ‘frontline’ experience, funders explaining their priorities, greater ownership (and hopefully loyalty/giving) by members or trustees.

The International Association for Public Participation (mainly American) suggests a spectrum of participatory approaches, starting with informing and ranging through consulting, involving and collaborating to empowering (find their spectrum chart). Problems can occur if there are differences, or lack of clarity, in expectations.

Make sure that decisions ARE made, clearly communicated and also implemented. Stakeholders may well be more annoyed by lack of action after consultation than if they hadn’t been consulted in the first place and had their expectations raised!

See Planning and Monitoring page for more about strategic planning, evaluation and other times you might want to involve stakeholders.

Partnership

‘Partnership’ is something of a buzzword in regeneration and social inclusion circles. Some may see these as public sector funders/purchasers dictating the agenda in a softer guise, but it can also be about using the strengths of each organisation to get the best results. Perhaps key is everyone being willing to recognise that all partner organisations have their roles, rights and responsibilities and should be treated as equals.

OurPartnership was an online learning resource aimed at individuals and organisations involved in partnership working. Closed March 07, material may be available on NCVO web site.

Local Strategic Partnership

Local Strategic Partnerships were seen by the Labour government to 2010 “To be the partnership of partnerships in an area, providing the strategic co-ordination within the area and linking with other plans and bodies established at the regional and sub-regional and local level.” Will have changed from May 2010. (From NCVO Policy Brief, January 2006.)

Federation or branch?

Local groups may interact with a national ‘parent’ body in a number of ways. A branch structure means that local groups are actually legally part of one large organisation, with the need to respect certain legal and accounting considerations. A federation leads to the local group having its own responsibilities, but some sort of agreement on use of name, logo etc. will be required.

NCVO has resources around Collaborative Working (or “cross-sector working”).

Joint working and Mergers

Possible areas of joint working.

  • Shared buildings, often with some shared services, have been around for many years. Groups with a similar interest or geographic base join together to lease, buy (or negotiate from local council) premises.
  • Community/sector/regional hubs are an upcoming approach, often with a development or umbrella body setting up office facilities and inviting target organisations to join. Can improve networking and lobbying, training opportunities, access to expensive equipment, breaking down barriers between groups or cultures.
  • As a step short of merger, hopefully gaining many of the benefits with few of the cons. Objectives need to be clear to stop suspicions of hidden agenda (job cuts or future merger), and prevent confusion leading to abortive work, duplication of effort or unnecessary arguments. Don’t avoid conflict at any cost, though, as if handled correctly this can get sticking points out into the open.

The Charity Commission has various reports and advice on collaborating and merging. For example, Making Mergers Work, Sept 2009.

See Liverpool Law School’s Charity Law and Policy Unit, Project Reports web page for Mergers: a legal good practice guide‘ (2001), detailed but plainly written advice covering all the legal issues which need to be considered when a charity merger is proposed.

NCVO did have a Collaborative Working Unit, and still has a ‘Cross sector working‘ resource page.

Northern Ireland’s NICVA has various resources available on CollaborationNI.

Pros of mergers

Improved efficiency in ‘back office’ (admin) operations; direct access to particular specialist expertise; better public profile and/or less competition leading to improved fundraising or funder relations; a way of tackling a leadership or funding crisis.

Cons of mergers

Loss of clear identity may worry members; can be (seen as) a distraction from core work; could change priorities or move resources away from existing activities; clash of cultures; need for change management skills which may not exist in current staffing (although short-term secondment or consultancy may help); could be (seen as) a takeover rather than a merger; some of the pros could be gained through joint working rather than outright merger; extent of legal issues, especially if a registered charity is involved.



Contracts

There are real reasons behind contract law being a speciality area. It can be tricky, both in negotiations and in writing it down, to get a contract for service delivery to work to both parties satisfaction. This is where advice and model agreements produced by umbrella bodies can really help.

Public sector partnerships

Section needs to be re-done after much change in government policy.

Public sector procurement

Another section needing replacement content!

Compacts

Compacts, which set out understandings of relations between government and the voluntary sector, have been developed nationally and are being adopted on a local level too.

National

Government agencies and offshoots have also developed specific Compacts.

Local and Regional Compacts

Governmental Sector Contacts

Accounts Packages

Introduction

Based on a round-up of software suitable for voluntary organisations which was started in 1996, updates include a major revamp in connection with an article in NGO Finance (March 2000). A lot of the issues tend to be put in terms of the charity SORP, which requires tracking of Restricted Funds plus a Statement of Financial Activities rather than a Profit and Loss account. However, most of the same issues apply to any voluntary organisation with project funding. See our Software Intro page for more explanation on this and software trends.

All software runs under Windows unless stated otherwise. Note that consolidation amongst suppliers is growing – contacts, package names and availability may have changed recently.

Also note the move to online versions. When this material was originally compiled this approach did not exist. VolResource updates are now fairly basic and the banding is getting less meaningful.

Budgeting

Many voluntary organisations will use spreadsheets to help them put together budgets. However, these do have problems (see below), and putting budgets into an accounts package is often time consuming. So there is some space for specialist software.

Checking Spreadsheets

Spreadsheets are often used for creating budgets, producing tailored management accounts (with data linking through ODBC or similar) and perhaps grant or project tracking. Not generally recommended for any but the smallest/simplest organisation for bookkeeping.

As well as the rawness of the basic screen format putting many people off , there is huge scope for errors to creep into spreadsheet design. For example summing functions which miss out lines, or links between pages which pick up the wrong figures, for instance. Error checking isn’t easy, although there are some tools available which help – we haven’t got current links so do a web search.

Accounts for the Mac

We have been asked on various occasions to provide more info on accounts packages for the Apple Mac. Unfortunately, there is a limited range available and none with a sector specialism as far as we know. You can try:

  • Do$h Cashbook – see below.
  • MYOB is no longer available. Mamut, who have bought the business, have released AccountEdge and AccountEdge Plus.
  • My Business has now got a Mac version. See Band 1.

Open Source Accounts

At time of writing (Nov ’03), there isn’t really any open source accounting software suitable for small to medium organisations. GNUCash is for personal finances, while SQL-Ledger is web/server based so for the high-end. Both are American. There are supposedly projects in progress, but its likely to be some time before anything useful appears for UK non-profits.

Update June ’06 – we note that Turbocash seems to have become a bit more established as open source – see ‘Other possibilities’ under Band 1 below.

Band 1 – Entry level

Finance Co-ordinator from Data Developments ‘software for churches and charities’, has been around since 1986. Designed to cope with Fund accounting, SOFA reporting, etc. but not VAT. The double entry bookkeeping convention is visible but doesn’t require prior knowledge. £159 for an organisation-wide licence, at autumn 2013.
– Data Developments, Wolverhampton Science Park, Stafford Road, Wolverhampton, WV10 9RU, phone 01902 824044

DO$H has become part of Mamut – their Cashbook (PC and Mac) is still available. The non-VAT Lite version appears to have gone but still provides a simple receipt and payments package, with a neat export facility (produces an exact replica of reports in spreadsheet, via CSV file) allowing report tailoring. The small business version is recommended by The Princes Trust and Lloyds TSB for commercial start-ups. £29-50 at Jan. ’09 – trial version available to download.

Kubernesis no longer supply their software, written specifically to work with Charity SORP accounting requirements, but will support existing users.

Paxton Charities Accounting With a background in providing accounting software for armed forces service funds, which now have to comply with the charity SORP, Paxton Computing has released a SORP accounting package for wider use, starting from £195 for single user (autumn ’07). It has some nice features, such as Gift Aid management in the Donations section, configurable ‘favourites’ buttons and up to 8 different VAT rates, as well as SORP reporting built in. Plus the type size adjusts automatically with the window size, making it good for those with poor sight. We did find some rough edges in the review copy but annoyances rather than significant issues. The lack of a sales ledger given the good VAT facilities is a bit odd (apparently on its way), and the report export functions could be easier to use (no general export function). Typical user: smallish charity with a need for Fund accounting and someone (treasurer?) trained in traditional bookkeeping.
– Paxton Computers, 15 Kingsway, Bedford, MK42 9EZ, phone 01234 216666.

Quick Books Focus now (2017) on online version, but desktop edition still available, and may be adequate for smaller charities. Following text may be out-of-date! An amazingly complete package for around £250 – just add payroll support and you have everything a small organisation could want. You can categorise costs (and income) in two ways (Customer Job, and Class) which could be adapted quite easily for SORP requirements. VAT rates can be customised. Navigator screens are easy to follow, while the alternative drop down menus suffer from too many options. Export facilities (to Excel) have been much improved in recent Pro versions. As Reports can be tweaked quite easily, most needs can be met within QB, though a SoFA would take time to set up. A customised edition for UK non-profits did appear but is probably no longer available (advanced budgeting, membership, donation tracking and fund accounting features). Don’t get confused (in non-UK reviews) by the American QB extension called Nonprofitbooks which won’t work here. Typical user: small organisation with no finance staff.
– Sales phone line 0845 606 2161. Get a demonstration version, and if you like it, phone/pay by credit card and get a code to turn it into a fully working version.

Systematics Standard edition including payroll, usual price £175, is offered free to charities and the required £95 annual support fee includes any software updates. It doesn’t have the Cost Centre analysis features of the professional edition, which many would want, but a 40% charity discount makes that only £135 for the usual set of modules (Sales, Purchase, Nominal and Cash Book). Work is being done on making SORP reporting more straightforward.

TAS Books is now part of Sage – perhaps no longer available for new customers at summer 2018 as dedicated website has gone.. Haven’t had a chance to look at the actual product for a while, but for its price, very flexible and integrates with Microsoft Office. Slightly more sophisticated than QuickBooks, and has gained various UK awards and accreditations. Started at £150 for single user (incl VAT + p&p). Typical user: Small organisation with someone doing finance part-time.
TAS Books help pages .



Other possibilities

The Big Red Book (based in Ireland and available in Gaelic). Screen layout and reports are based on the traditional manual ‘red book’, so anybody familiar with that approach will find this very easy to use. Not sure analysis will be up to the needs of many charities, but if the idea sounds attractive, take a look. Starts from £95, and have said they will give discounts to registered charities.
– 1 Clonskeagh Square, Dublin 14, Ireland, UK phone 0161 926 8822, email: bigred@iol.ie

My Business is an integrated, easy-to-use, Bookkeeping, Diary/Project and Contact Management program written for small businesses. From £39-99 to £149-99 at spring 03, plus support from £39-99 to £69-99 , it is good value. But analysis is limited, and doesn’t appear at all tailorable. May be useful to very small organisations, especially if the non-finance facilities fill a gap on your computer. Payroll module available.
– My Business Ltd, Churchill House, 12 Mosley Street, Newcastle, NE1 1DE, phone 0845 1 20 30 40, email enquiries@mybiz.co.uk

Omni Accounts no longer available in the UK? (there is a South African website).

TurboCash is released as ‘open source’. It can be downloaded from Sourceforge for free.

Band 2 – cost up to £1,000

Sage Line 50 Probably the most widely used package in the sector, but this doesn’t mean it has any particularly relevant features. It is more that it is widely known and available, and has been around for sometime in various guises. Rudimentary department analysis, still has quirks such as 3 sorts of date fields with different default values, and not very friendly report writer (at version 6). But ODBC means you can do ‘live’ links to a spreadsheet such as Excel. Typical user: ‘professional’ bookkeeper and spreadsheet capable accountant or treasurer, to do monthly reporting. Basic cost, without invoicing facility, £395. 30% charity discount.
Sage, Sage House, Benton Park Road, Newcastle-upon-Tyne, NE7 7LZ, phone 0800 447777.
– See Suppliers section below for charity specialist resellers: Intelligent Solutions, Avant-Garde.

Access Accounts – Foundations See Band 3 – Horizons – for fuller details. This is largely a cut-down version of that, with limitations on analysis levels and length of code lists, but still can build up via extra modules, including Project Management, at only £100. Basic cost – £595, 25% charity discount. Note, autumn 03, that a ‘charity accounts production solution’ has been produced, ensuring charity SORP compliance, with full funds analysis and extensive annual report info. Typical user: cash-strapped organisation bent on growth.
– Contact Access Accounting for resellers (make sure you get one with relevant knowledge). The Old School, Stratford St Mary, Colchester, Essex, CO7 6LZ. Phone 01206 322575, email: info@access-accounts.com. See charity web pages. Also Edinburgh office, phone 0131 317 7700, email: info@access-scotland.co.uk, and Dublin, phone 01668 4991, email: accessac@indigo.ie

Liberty Accounts Cloud accounting and payroll software since 2003, with specialised support for non-profit organisation including:

  • Fund accounting (restricted, unrestricted etc);
  • Additional cost centre analysis (Activity);
  • Account terminology as used in the sector;
  • Integrated donor ledger;
  • Gift Aid claim preparation and online filing;
  • Budgeting by organisation or Fund and/or Activity;
  • Reporting of the SoFA (I&E or R&P);
  • and, for the Anglican Church, Reporting the Return of Parish Finance.

    Smaller organisations under £250,000 annual income have a concessionary rate of £12.95/month plus £1/month per payroll employee (where payroll is used). Once the income threshold is exceeded then standard pricing is £19.95/month (plus any payroll charge). Prices are net.

Pegasus Capital Gold Good analysis features, built-in report writer, strong commercial pedigree, various add-ons. Typical user: small to medium organisation with some commercial activity. £800. Web site Sold via resellers.

Band 3

Costing more than £1000. Analysis much better than Bands 1 or 2. Allow for some consultancy/installation costs. Ongoing support (preferably including upgrades) is a good idea, otherwise changes in requirements or regulations could be problematic. All are ‘modular’: Purchase and Sales Ledgers, and usually Cash Book, are separate. Prices are for single user unless otherwise stated.

AccountView Team 2 user Nominal/Sales/Purchase Ledger system for £1395, Project Costing £995. Unlimited number of companies, cost centre accounting. Loads of other modules, such as Activity Based Costing, Transaction Import (to link with membership, for instance). This European package seems to have dropped the UK version at summer 2015 – the website redirects to VISMA in the Netherlands.

Access Accounts – Horizons A fully featured package with good reporting, analysis and import/export facilities, but quite a reasonable starting price and winner of awards. As many chart of accounts (= companies) as you like, effective use of Windows and good drill-down. Latest versions run on 32 bit systems Windows or PowerPCs (Macs). Typical user: small to medium organisation with ambitions (as can build up facilities or move on to Dimensions – see High-End). £1495 for single user bundle, including Sales and Purchase ledgers, Nov 99, also 25% charity discount. Extra modules and users at £450 each, including Project Management, KPI. Also Transaction Broker module, allowing interfaces to be set up with just about anything. Crystal Reports Pro is extra.
– Contact Access Accounting for resellers details – Charity/NFP web pages. The Old School, Stratford St Mary, Colchester, Essex, CO7 6LZ, phone 01206 322575, email: info@access-accounts.com. Also Edinburgh office, phone 0131 317 7700, email: info@access-scotland.co.uk, and Dublin, phone 01668 4991, email: accessac@indigo.ie

Arrow Financials Comparable with Access Accounts, but claimed to be cheaper, starting at £400 per single user module with support charged at 12.5%. Fully scalable and upgradeable, ODBC and SQL compliant, can define own input and print screens. Used by a number of high profile non-profits in its native Australia. Not sure of current UK distributor with sector experience (at 2014).

Pegasus Opera II, 32 bit software, with 2 analysis ‘segments’. With a new new Advanced Nominal Ledger option (Mar 03) with nominal account, cost centre, project and department analysis, plus user definable views, this may now be a suitable product. Typical 10 user system £2500 for system manager, plus £600 per module (Mar 01). Phone 01536 495000, email: mailbox@pegasus.co.uk

Sage Line 100 Unfortunately this is not a big brother version of Line 50, but a completely different accounting package. It does have an import facility for Line 50 and increasingly the Windows versions look similar. Has greater analysis capabilities (3 character Department and Cost Centre codes, as well as alpha-numeric nominal). Check for relevant add-ons such as Enterprise MRM – see Membership software page. Note that a complete re-write of the program using Microsoft .NET architecture was announced March 03, which will have impact on the modules – it also adds the electronic eBIS-XML financial document exchange system. Typical user: medium-size organisation wanting safety but some flexibility. Financials ‘bundle’ starting from £2500 including Crystal Reports, 10% charity discount.
– See Software Suppliers list below for specialist charity resellers, including Intelligent Solutions (have developed an Excel-based SOFA reporting facility), Avant-Garde.

High End

With a 2 user special ‘bundle’ for Great Plains Dynamics now starting at £4500, the cut-off from Band 3 is becoming less clear. At this level, it is important to know what modules include and which you are likely to need in the near future. They all require careful setting up to realise their potential and can be extensively customised for different users and areas of activity. Some larger audit firms have specialist consultants, although whether they liaise with their charity experts would need to be checked.

Access Accounts – Dimensions (the next step on from Horizons, under Band 3). From £3900. Client/server version with great flexibility in configuring screens, field names, etc.

Exchequer (now part of Advanced) A full suite of business modules including Commitment Accounting and e-Commerce. Customers include The Samaritans, Wildlife Trusts, Compassion in World Farming.

OpenAccounts The package used by professional accountancy body ICAEW, PDSA, St Vincent de Paul Society, Hospitaller Order of St. John of God (Ireland) and others. Now part of Advanced– see their charity pages.

Microsoft Dynamics (previously Great Plains) Was somewhat taking over from Sun on the more sophisticated/medium to large charity requirements before it became part of Microsoft. Designed totally for the Windows environment and SQL based. Seven analysis segments, plus FRX drill-down reporting tool. Touchstone is a reseller – see Suppliers list below.

Navision Financials Used by Woodland Trust, Archbishops Council, Diocese of London, amongst others. Now part of Microsoft Dynamics.

PS Financials Charity users include Save the Children Fund, Women’s Royal Voluntary Service. Stated strengths are: SORP and SoFA reporting, Automation of partial VAT recovery, Restricted and unrestricted fund accounting, Web reporting for trustees and remote users, Valuing volunteer input, Easy integration to membership, fundraising & other operational systems. Buy direct from the software authors. 7 The Forum, Minerva Business Park, Peterborough, PE2 6FT, phone 01733 367330.

SAP Business One (Baby SAP). Broadgate Infonet reckon they can supply a 2 user solution installed for under £8,000 to the Charity/Not for Profit sector (at Feb ’09). SAP Business One can report on Restricted, Non Restricted Funds, SOFA and SORP, and has up to 5 different levels of analysis against one GL Code – project, cost centre, department, profit centre etc.

SunAccounts Very solid and well-respected package. Loads of analysis features, very powerful recording and reporting once you’ve got it set up, but does require that initial effort. Not for the novice. See Resellers listed under Software Suppliers below. SunSystems now part of Infor.

Well at the top end

Agresso, now part of Unit4. Clients include British Museum, Salvation Army, Wellcome Trust, Age Concern, Jewish Care. Pricing – dependant on modules required, though typically starting at £50,000 +, for an integrated solution. Phone 01275 377340, email: sales.support@agresso.co.uk

Exact

Accounting Software Suppliers

This listing of accountancy software re-sellers for specific packages was a separate page on the old VolResource site.

AccountView Resellers

– Rowanberry Consultancy Ltd, 37 Sandy Lane, Maybury, Woking, Surrey, email: rcl@rcl-systems.co.uk Website. They point out that “AccountView is suitable for charity organizations as it is a very flexible accounting package with the capability of users constructing their own summarized financial reports”.

Sage, Sun, Great Plains

Computercraft, a democratic business, has been reselling SunAccounts since 1987. Phone 020 7284 6980, email: info@computercraft.co.uk

Lake Financial Systems SunSystems reseller for more than 10 years. Various charity case studies (in pdf) on the web site. Stable Mews, The Beechwood Estate, Leeds, LS8 2LQ, phone 0113 273 9303, email: info@lake.co.uk

Sapphire Systems is another Sun dealer with charity clients. Head Office: 31 Lombard Street, London, EC3V 9BQ, phone 020 7648 2000. Also in Manchester.

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.

Terminology

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?

ON THE PLUS SIDE
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.

ON THE DOWN SIDE
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?

REPORTING AND ANALYSIS

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.

COMPATIBILITY

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.

SALES

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

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.

COST

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.

Trends

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

A REALISTIC APPROACH TO SOFTWARE SELECTION FOR THE SMALLER ORGANISATION

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.

Finance Resources

Websites

  • CASH-Online Key site Community Accountancy Self-Help (CASH) provides ‘finance advice and training for small charities and voluntary groups’. Based in west London, the web site continues to be developed slowly as an essential resource. CashFacts online include Bank Reconciliation, Financial Controls, Volunteer Expenses, Budgets – in various formats, some including audio. Useful to the finance novice in any area.
  • Community Accountancy Network. Should have details of local community accountancy services, where they exist. There’s also some guidance material.
  • Charity Commission Various publications available to help charities comply with accounting regulations.
  • There is a dedicated website for the Charity SORP accounting standards, jointly sponsored by Charity Commission and OSCR, the Scottish regulator.
  • Charity Finance Group. For  charity finance staff and senior management.
  • Mango, now part of Humentum, provides financial management services to the aid sector in the field. See their Guide to Financial management for some basics on budgeting, reporting etc. Seek out their Downloads section, for their complete Excel based accounting system.
  • Sayer Vincent are an accountancy firm specialising in the non-profit sector. Their web site has some useful information, although the sections on software effectively just says ‘refer to our consultant for advice’.
  • AccountingWeb ‘Find an accountant’, information on software companies, news. Nothing sector specific, but plenty of useful tips, an email news update and more.
  • Association of Charity Independent Examiners.
  • Association of International Accountants Worth checking out by those operating abroad.
  • Taxation (HM Revenue and Customs) – see our charity taxation page for links.

Briefings, checklists

Charity Finance Monthly magazine – see Magazine page.

Charity Finance Accounts Compliance Checklist produced by Charity Finance magazine – see Civil Society Media shop, under Books (£45 at 2011). Designed for all UK charities with gross income over £100,000.

Scrutiny of charity accounts – article on our web site (courtesy of Croners/Gareth Morgan) about independent examination for the smaller charity.

Sample Documents

A sample Financial Procedures (or Financial Standing Orders if you prefer) lightly edited from a ‘real life’ version can be used as a starting point for your own, or to prompt thoughts, improvements etc. Please read the introductory notes.



Events

Charity Accountants Conference. Annual event run by Directory of Social Change, usually early September.

Training Courses

Community Accountancy Self Help 1 Thorpe Close, London, W10 5XL, phone 020 8969 0747. Run a programme primarily for Kensington, Chelsea, Brent, Hammersmith and Fulham groups, but open to others too. Subjects range from a half-day on Bank Reconciliation to 4 day Financial Administration, with others on Unit Costs/Pricing Services, Management Committee Finance Reports and how the PQASSO quality assurance system (from CES – see Training page) relates to finance.

Directory of Social Change run a variety of useful courses, with trainers from Sayer Vincent or Community Accountancy Project. See main Training page.