Getting to grips with reserves and governance costs

The Charity Commission has published a report that suggests that charities often overstate their governance costs.

Based on identifying 76 charities (with an annual income of over £500,000) that appeared to have high governance cost, the vast majority had incorrectly allocated to governance costs items that should have been included in other categories, including charitable expenditure.

“The most common mistake was to equate governance costs with general management and administration costs.”

See the Commission’s news release or read the report ‘Accounts monitoring: High governance costs‘.

Reserves policy needed to achieve full potential

Probably of more practical relevance to most of VoluntaryNews’ readership is a Guardian article ‘Kids Company has shown that trustees must conquer their fear of finances‘.

This has a good explanation of why all charity trustees should make the effort to get to grips with understanding reserves policy, as an essential part of managing risk, and hence the charity being able to reach its full potential.

Good to see one of your editor’s favourite approaches to charity governance – there is no such thing as a silly question – supported in the comments as well as the main piece.