April marks the start of a new financial year for many – and for charity trustees, that makes it the perfect moment to take stock. Before the busyness of the year ahead takes hold, now is the time to ask: do we have the right financial foundations in place?
Day in, day out, charities across England and Wales provide vital support to people who need it most – and demand for those services has never been higher. Recent research found that 9% of people received food, medical or financial support from a charity in the past year, up from just 3% five years ago. That’s a tripling of need in half a decade.
At the same time, the financial pressures facing charities are real and growing. Costs are rising, donations are under pressure as households feel the squeeze, and many charities are drawing on their reserves to bridge the gap.
These are challenging circumstances. But they also make one thing clearer than ever: good financial awareness isn’t a nice-to-have for charity trustees. It’s fundamental to your charity’s ability to survive and serve its beneficiaries.
Good financial practice in charities
So what does good financial practice actually look like?
For trustees, it means making sure your charity has enough money to carry out its activities and to pay its bills when they are due. Setting a realistic budget for the year ahead, and committing to reviewing it regularly against actual income and spending. It means having a reserves policy that your board understands and follows. It means keeping financial records that are accurate, up to date and properly approved. And it means acting quickly when the numbers start telling a different story to the one you expected.
It also means making sure that financial information is genuinely understood around the boardroom table – not just by the treasurer, but by all trustees. Collective responsibility is a cornerstone of good governance, and that includes financial oversight.
We know that not every trustee comes with a finance background, and that’s absolutely fine. What matters is the willingness to engage with the numbers, ask questions, and seek advice when you need it.
Prevention is better than cure
In our casework, we see time and again how financial difficulties that might have been manageable at an early stage can escalate into serious problems when they go unnoticed – or unacknowledged – for too long. A deficit that could have been addressed through careful planning becomes a crisis. Reserves that might have funded a period of transition get depleted without a clear strategy for replenishing them.
The good news is that most financial problems don’t appear overnight. They tend to develop gradually, and with the right financial awareness in place, trustees can spot the warning signs early and take action before problems become irreversible.
This is why we place such emphasis on regular, accurate financial reporting within the charity. It’s not about bureaucracy – it’s about ensuring you have the information you need to make good decisions. A clear picture of your income, expenditure, reserves and financial risks is the foundation of confident, effective governance.
A resource designed to help
We know finance can feel overwhelming, so we’ve designed a Trustee Finance Toolkit. The Toolkit brings together the key financial guidance in one place and is designed specifically to support trustees.
There is also a financial health checker tool which matches you with the guidance that your charity needs. With a new financial year just beginning, there’s no better time to work through it with your board.
The bigger picture
Financial resilience isn’t just about surviving difficult times – it’s about being in a position to continue serving the people who depend on you, whatever the economic weather. Charities that invest in strong financial governance are better placed to adapt, to plan for uncertainty, and to maintain the trust of their donors and beneficiaries.
We are here to support you
As a regulator, our role is to support trustees to get this right. We want charities to thrive, and we know that the vast majority of trustees are working hard and in good faith to make that happen. Good financial awareness and honest, timely reporting are the habits that make that possible.
If you’re a trustee and you have ideas about how financial management could be improved at your charity, speak out. Talk to your fellow trustees about how now is the time to improve your practice. And use the guidance and tools available to help you. Remember: a new financial year is a fresh start – but only if you use it wisely.
