Charities are victims of red tape every bit as much as businesses.

With Christmas around the corner this is a time of goodwill to all men, when our charitable instincts are perhaps heightened.

So spare a thought for your colleagues and friends who work in the not-for-profit sector, where red tape and constantly changing regulatory landscapes are soaking up valuable resources that are intended for good causes.

A recent Monahans report compiled on a national basis through MHA has identified the top 10 issues facing charities, and perhaps surprisingly there are a number that are not fundamentally different to those faced in business.  Yes, there are the highly specialist issues surrounding trustees and their responsibilities, conflicts of interest, the complexities of gift aid and the issues of trading subsidiaries, but there are also a number that are common to business and not-for-profit organisations alike.

A new SORP (Standard of Recommended Practices for Charities) applies to accounting periods starting after January  1, 2015 and will necessarily change the basis of certain charity accounting, like FRS102 will in business, increasing costs at least in year one of the change.

The perennially thorny subject of VAT is always at the top of charity agendas as the rules are complex and difficult to apply, and most businesses would agree what should be a straightforward tax is overly complicated – perhaps it has been designed that way?
Work place pensions or auto-enrolment will also increase charities’ employment costs, as it will for those in business at a time when most employees are facing falling living standards.

Governance is key in charities to ensure that the organisation’s aims are followed and its charitable objectives are not compromised.  That said, if a business changes its model without the correct plans in place it can fail very quickly, so there are parallels here too.

Lastly “the f word”, fraud that is.  Typically in charities it is committed by a paid employee working alone, as in most businesses where fraud is an issue.

It is also time for a New Year’s resolution by the Charity Commission for less red tape, more targeted regulation and a lighter touch to promote a greater proportion of resources going to good causes. We may be waiting some time.

For a copy of the report of the top 10 issues facing charities please call Simon Cooper on 01249 766966 or email simon.cooper@monahans.co.uk