FinOps Partners

Financial Accountability: The Key to Trust and Transparency in Charities

In today’s charity sector, financial accountability has never been more crucial. With donors and regulators demanding transparency, charities must establish rigorous financial oversight. In our recent conversation with Carl Wakeford, chartered accountant and founder of FinOps Partners, we explored why financial accountability is a game-changer for modern charities and how they can safeguard against fraud while building donor trust.

The Importance of Financial Transparency

Transparency is at the heart of trust in the charity sector. Increased scrutiny means charities need to provide clear, accurate, and accessible reports on fund allocation. However, transparency also brings challenges, as Carl points out: “Increased scrutiny from donors and regulators means charities need to provide detailed and accurate reporting on how funds are used.” Key strategies for fostering transparency include:

• Clear Reporting: Accurate and detailed financial reporting demonstrates a charity’s commitment to responsible fund use.
• Donor Communication: Regular updates that show the tangible impact of donations reinforce trust.
• Open Access to Financial Statements: Making financial reports publicly available shows a charity has nothing to hide.

Why This Matters for Charities: Transparent financial practices not only increase donor trust but also attract more funding. Charities that prioritise openness stand out in a crowded field.

Safeguarding Against Fraud with Internal Controls

Sadly, fraud is a growing issue in the charity sector, often due to limited resources or oversight gaps. Strong internal controls can help prevent fraud by ensuring no single person has control over all aspects of financial transactions. Carl recommends the following controls:

• Segregation of Duties: Ensuring that multiple people oversee different stages of transactions adds a layer of security.
• Financial Reconciliation: Regularly reconciling financial accounts identifies discrepancies before they escalate.
• Audit Committees: A dedicated audit team or committee can conduct spot checks to reinforce accountability.

Why This Matters for Charities: Strong financial controls aren’t about lack of trust; they’re about creating a safe, accountable environment. By preventing fraud, charities preserve donor funds for the work that matters most.