ICAS ICAS logo

Quicklinks

  1. About Us

    Find out about who we are and what we do here at ICAS.

  2. Find a CA

    Search our directory of individual CAs and Member organisations by name, location and professional criteria.

  3. CA Magazine

    View the latest issues of the dedicated magazine for ICAS Chartered Accountants.

  4. Contact Us

    Get in touch with ICAS by phone, email or post, with dedicated contacts for Members, Students and firms.

Login
  • Annual renewal
  • About us
  • Contact us
  • Find a CA
  1. About us
    1. Governance
  2. Members
    1. Become a member
    2. Newly qualified
    3. Manage my membership
    4. Benefits of membership
    5. Careers support
    6. Mentoring
    7. CA Wellbeing
    8. More for Members
    9. Area networks
    10. International communities
    11. Get involved
    12. Top Young CAs
    13. Career breaks
    14. ICAS podcast
    15. Newly admitted members 2022
    16. Newly admitted members 2023
  3. CA Students
    1. Student information
    2. Student resources
    3. Learning requirements
    4. Learning updates
    5. Learning blog
    6. Totum Pro | Student discount card
    7. CA Student wellbeing
  4. Become a CA
    1. How to become a CA
    2. Routes to becoming a CA
    3. CA Stories
    4. Find a training agreement
    5. Why become a CA
    6. Qualification information
    7. University exemptions
  5. Employers
    1. Become an Authorised Training Office
    2. Resources for Authorised Training Offices
    3. Professional entry
    4. Apprenticeships
  6. Find a CA
  7. ICAS events
    1. CA Summit
  8. CA magazine
  9. Insight
    1. Finance + Trust
    2. Finance + Technology
    3. Finance + EDI
    4. Finance + Mental Fitness
    5. Finance + Leadership
    6. Finance + Sustainability
  10. Professional resources
    1. Anti-money laundering
    2. Audit and assurance
    3. Brexit
    4. Business and governance
    5. Charities
    6. Coronavirus
    7. Corporate and financial reporting
    8. Cyber security
    9. Ethics
    10. Insolvency
    11. ICAS Research
    12. Pensions
    13. Practice
    14. Public sector
    15. Sustainability
    16. Tax
  11. CPD - professional development
    1. CPD courses and qualifications
    2. CPD news and updates
    3. CPD support and advice
  12. Regulation
    1. Complaints and sanctions
    2. Regulatory authorisations
    3. Guidance and help sheets
    4. Regulatory monitoring
  13. CA jobs
    1. CA jobs partner: Rutherford Cross
    2. Resources for your job search
    3. Advertise with CA jobs
    4. Hays | A Trusted ICAS CA Jobs Partner
    5. Azets | What's your ambition?
  14. Work at ICAS
    1. Business centres
    2. Meet our team
    3. Benefits
    4. Vacancies
    5. Imagine your career at ICAS
  15. Contact us
    1. Technical and regulation queries
    2. ICAS logo request

Local authority funding pressures: love in a cold climate

  • LinkedIn (opens new window)
  • Twitter (opens new window)
By Jim Gibson CA, Sole practitioner, charity trustee and member of the ICAS Charities Panel

26 March 2018

Key Points

  • Local authority funding pressures have increased over the last four years and this is likely to continue.

  • Increasingly, contract performance is measured in relation to outcomes and invoices must be supported by considerable detail.

  • Charities providing public services must keep on top of the basics to keep things running smoothly.

Jim Gibson CA gives his perspectives on the complex relationship between local authority funders and charities and shares some thoughts on good practice based on his own charity sector experience.

Patronage, or problems?

“Is not a Patron my Lord, one who looks with unconcern upon a man struggling for life in the water, and, when he has reached ground, encumbers him with help?” The sceptic might be forgiven for  thinking that Samuel Johnston’s aphorism applies to charities trying to obtain support from local authorities; others, more cynically, might see a sinister agenda, that of the Wooden Horse, by which the Greeks gained control of Troy;  “Timeo Danaos, et dona ferentes”, as Vergil puts it, (“I fear the Greeks, even when they are bearing gifts”). But the reality today is that a sense of balance and a constructive partnership is required.

The pressure is on

There is no doubt that the funding pressures which local authorities are under have increased in the last four years and are likely to continue to do so. There is less money available from central government, budgets are constrained, there is also a duty to look after public money and there is constant pressure to achieve value for money. Funding models can change, as can the political composition and philosophies of local authorities. And there is always the inherent difficulty of dealing with a large organisation, when it is sometimes difficult to get through to the right person or forge meaningful relationships with officials.

At the same time the public wants to see things done about crying social needs such as isolation, disadvantage and loneliness. Gone are the days when charities could expect handouts without any real accountability and recent events concerning improper behaviour within some charities are intensifying the spotlight on charities. It can require a lot of hard work to turn the fine words spoken by councillors in public about the value of the charity sector to the reality of service delivery on the ground.

Demands from on high

What sort of demands are local authorities imposing? More and more funding is outcome based. There is increased monitoring, obtained either through reporting on outcomes or by a deeper analysis of financial information provided by the charity. The discretionary relief offered on water and sewerage charges can be reduced or abolished, and the charitable exemption offered by Scottish Water may not always compensate. Whereas in the past authorities might have been slow or reluctant to take action if they perceived that a charity was struggling, my experience suggests that they are now taking a much deeper interest in the quality of a charity’s staff, trustees and governance arrangements, and are more ready to intervene, by initiating discussions about reorganisation or refocussing activities.

There is also a tighter insistence on accuracy in reporting; this will manifest itself in the use of standard templates or spreadsheets in applying for funding, which can be complicated to understand, are often pre-populated so that cells cannot simply be overwritten and may involve several time-consuming iterations before one can get to an agreed position. A charity providing a service to a local authority will have to submit a detailed invoice four weekly or monthly, again often using a standard template, showing how many service users have been supported. If these are not completed 100% accurately, the claim will be rejected, and the charity will have to wait another month to get its money, thus bringing pressure on cash flow.

The charity sector is not traditionally a high paying one, and many authorities are insisting that charities pay the national living wage. This is laudable, but it does raise issues of pay differentials, and consistency of contracts of employment; charities need to have robust processes in place within their HR functions.

What do charities providing public services need?

1. Competent staff

Are your staff able to do the basics competently and efficiently, keep up with, or be prepared to seek help in keeping up with, the latest developments in legislation (such as the Charities SORP (FRS 102), pensions auto-enrolment and the General Data Protection Regulation), business practice and technology? Are they well supervised? Staff costs are usually the largest component of expenditure for any charity providing public services, and this must be carefully monitored.  It is easy for “staff creep” to occur; someone is recruited to fill a one-off need, to cover for sickness or a short-term absence or to deal with a special project with time-limited funding, but then before the charity knows it, they are paying for one or two more staff members than they are receiving funding for, and their reserves are being depleted. The world of flexible working has many advantages, but it has drawbacks too; contracts of employment must be carefully drawn up, especially if there has been a reconfiguration of service. The temptation is to push on with the reconfiguration and not spend enough time reviewing the terms of employment contracts, which then come back to bite.

2. Strong accounting processes

Be on top of the day to day bookkeeping (this might seem obvious, but it can easily fall behind due to illness or operational pressures), keep a close eye on budgeting and cash flow, build in full cost recovery to your contracts, know the requirements of the Charities SORP (FRS 102), have a clear reserves policy and be able to justify it.

3. Attention to detail

Pay attention to contracts; be careful what you bid for, read the small print, and if in doubt talk to a colleague. The writer has experience of a situation where the terms of a contract between a charity and a local authority were reviewed after the initial phase, apparently with no issues arising. The trouble was that the new contract contained more onerous outcomes, and nobody at the charity noticed until the income fell well short of budget. Fortunately, the reserves were able to withstand the shortfall, but it was a salutary experience.

Conclusion

“Everything is in a state of flux”; the words of Heraclitus the Greek philosopher (around 510BC) are still true, especially in the charity sector as it has experienced the shift from grant funding to commissioning.

Many ICAS members give of their expertise to the charity sector and the ICAS Charities Panel reflects the broad range of sector knowledge and professional skills of the wider membership. The Panel is keen to support its members who advise, work for and otherwise support charities.


Please share your views with the Panel by starting a discussion below or by emailing the Charities Panel

Email the panel


ICAS Charities Panel: who we are and what we do

By Adrienne Airlie CA, Chair of the ICAS Charities Panel

12 February 2018

ICAS logo

Footer links

  • Contact us
  • Terms and conditions
  • Modern slavery statement
  • Privacy notice
  • CA magazine

Connect with ICAS

  • Facebook (opens new window) Facebook Icon
  • Twitter (opens new window) Twitter Icon
  • LinkedIn (opens new window) LinkedIn Icon
  • Instagram (opens new window) Instagram Icon

ICAS is a member of the following bodies

  • Consultative Committee of Accountancy Bodies (opens new window) Consultative Committee of Accountancy Bodies logo
  • Chartered Accountants Worldwide (opens new window) Chartered Accountants Worldwide logo
  • Global Accounting Alliance (opens new window) Global Accounting Alliance
  • International Federation of Accountants (opens new window) IFAC
  • Access Accountancy (opens new window) Access Acountancy

Charities

  • ICAS Foundation (opens new window) ICAS Foundation
  • SCABA (opens new window) scaba

Accreditations

  • ISO 9001 - RGB (opens new window)
© ICAS 2022

The mark and designation “CA” is a registered trade mark of The Institute of Chartered Accountants of Scotland (ICAS), and is available for use in the UK and EU only to members of ICAS. If you are not a member of ICAS, you should not use the “CA” mark and designation in the UK or EU in relation to accountancy, tax or insolvency services. The mark and designation “Chartered Accountant” is a registered trade mark of ICAS, the Institute of Chartered Accountants of England and Wales and Chartered Accountants Ireland. If you are not a member of one of these organisations, you should not use the “Chartered Accountant” mark and designation in the UK or EU in relation to these services. Further restrictions on the use of these marks also apply where you are a member.

ICAS logo

Our cookie policy

ICAS.com uses cookies which are essential for our website to work. We would also like to use analytical cookies to help us improve our website and your user experience. Any data collected is anonymised. Please have a look at the further information in our cookie policy and confirm if you are happy for us to use analytical cookies: