Building Public Trust in Not-for-Profits

Over the last 12 months, the media has propagated the lack of confidence the public have in charity and not-for-profit organisations. With public trust at its lowest point since 2005, what can be done to increase confidence in the sector?

According to the Charity Commission, the trust in not-for-profit organisations has dropped from 6.7/10 in 2014 to 5.7/10, to date. Research conducted by the charity watchdog, shows that of the top ten responses individuals gave for losing trust in the sector, the most popular reasons were: stories and coverage broadcasted by the media (65%), being unaware of how the money is allocated (21%) and elaborated techniques used to pressure donors (18%). Additionally, 63% of the respondents were asked what factors constitute a trustworthy organisation, with their responses being:

• The organisation must make a positive difference to the cause it is working for
• The organisation must ensure that a reasonable proportion of the proceeds reach the end cause
• Be well managed
• Ensure that the fundraisers are completely ethical and honest
• Make independent decisions, to further the cause they work for

With this in mind, there are a few areas that not-for-profit organisations can easily apply to better the perception of the sector, including:

• Be More Transparent: As a charity, being transparent makes all the difference when trying to acquire trust from the public. It is important to be open about your work, your finance and what exactly your organisation does. As a standard, all relevant documents and reports should be made easily available to your stakeholders and to the general public.

• Effective Reporting: Not all charities or not-for-profit organisations will need to conduct an audit because they are under the audit threshold. However, many will need to still carry out an independent examination. Both audits and independent examinations are required by law. Ensuring that these are carried out is of benefit to both the public and the charity. Only charities that make under £25,000 will not need to carry out any kind of report; though, it is recommended that a short financial statement should be carried out if you fall under this category.

• File Annual Reports on Time: Filing your annual accounts shows the validity and the trustworthiness of your organisation. Failing to report on time, not only makes your organisation appear less reliable, but can lead to a statutory enquiry, being named and shamed by the Charity Commission and potentially hefty penalties and criminal sanctions.
• Establish Financial Controls: By establishing financial controls, you are able to better manage and control the money matters of your organisation, in this way eliminating any unnecessary costs and increasing the potential amount you are able to donate.

• Trustees and Fundraisers: Ensuring that both the trustees and fundraisers of your organisation are truthful is paramount. In the case that any members of your team are participating in unethical acts, it is important to make the commission aware as soon as possible.

• Utilising Sector Specific Resources Available: The Charity Commission and NCVO have a range of resources which are readily available to not-for-profit organisations, which can not only help you to grow, but also ensure that you are compliant with legislation.

If you would like to find out more information or to discuss your accounting requirements, please contact Suda Ratnam at suda@raffingers.co.uk.