Charity and Not-for-Profit Newsletter | Winter 2016/17

Interpreting Change Charity and Not-for-Profit Newsletter | Winter 2016/17

Digital for Charities: Mastermind or Recipe for Disaster Going digital is one of the fastest growing concepts, but should be approached with caution.

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Autumn Statement 2016: Charity and Not-for-Profit Highlights

When Should Trustees get Paid?

A look at the key announcements and the impact they will have on the charity sector going forward.

The rule of thumb is that trustees are not to receive payment for work carried out. However, this is not always the case.

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Contents

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Welcome and Partners

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Special Feature Digital for Charities: Mastermind or Recipe for Disaster

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Raffingers Foundation

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Looking for Cloud Accounting Software? Look No Further!

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Employee Spotlight

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Autumn Statement 2016: Charity and Not-forProfit Highlights

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Gift Aid Small Donations Scheme Flow Chart

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Are you Compliant With the Latest Fundraising Provisions?

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Crowdfunding: Is it Right for Me?

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Beware of Fraudulent Emails “From HMRC�

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Partners Perspective When Should Trustees get Paid?

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Welcome to our WINTER Newsletter

Raffingers Partners

Welcome to the winter edition of our charity and not-for-profit newsletter. This quarter, we are pleased to bring you all of the latest news and insights from the sector.

Gary Inglis Managing Partner gary@raffingers.co.uk

Last quarter, the government announced that the 2016 Autumn Statement will be the last in an attempt to simplify the tax system. Yet with this, came several announcements that will affect organisations in the sector. As a result, this quarter, we bring to you the key highlights that pertain to charities, see page 8.

Andrew Coney Partner andrew@raffingers.co.uk

Emphasis on better governance seems to be a running theme for the year ahead and trustees and senior staff are forced to make changes that will boost the reputation of not-for-profits. This quarter we feature two articles that can help trustees better meet their internal and external obligations “Are you Compliant with the Latest Fundraising Provisions?” and “When Should Trustees get Paid?”.

Finally we feature two articles to help guide charities and not-for-profits with growth entitled “Digital for Charities: Mastermind or Recipe for Disaster” and “Crowdfunding: Is it Right for Me?” As always, if you would like to be featured in our next edition or have any suggestions for topics that you would like to see discussed, please get in touch.

The Partners at Raffingers

Lee Manning Partner lee@raffingers.co.uk

Adam Moody Partner adam@raffingers.co.uk

Suda Ratnam Partner suda@raffingers.co.uk

Barry Soraff Partner barry@raffingers.co.uk

Paul Dell Partner paul@raffingers.co.uk

Raffingers Foundation - Page 6

Digital for Charities: Mastermind or Recipe for Disaster SPECIAL FEATURE

Going digital is undoubtedly one of the fastest growing concepts for many businesses, yet, for several of my smaller not-for-profit clients, taking the digital plunge is often put on the back burner. With everything from finance to marketing taking a practical shift online, is there anything that charities should be wary of when getting their name out there?

Working closely with charitable organisations has given me insight into new processes that could be adopted by others in the sector to grow and sustain their organisation. With digital software helping to boost revenue, it seems natural for charities and notfor-profits to also want to jump on the bandwagon, which is why it is surprising to see the statistics fair differently. According to Lloyds Banking Group Benchmarking report on the digital reporting of UK small businesses and charities, 49% of all charities and not-for-profits in the UK lack basic digital skills and only 52% of charities are using digital to reduce

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costs. Implementing digital into different areas of your organisation has benefits. Digital procedures can be effective when dealing with your:

Accounts and Finances Over the last year, we have seen HMRC change the way charitable organisations carry out their financial obligations. With the introduction of new digital schemes and services such as the Charity Taxonomy, the launch of the Charity Digital Service and also HMRC’s Making Tax Digital consultation, modern methods of accounting are on the rise. Although several legislative measures are not yet punitive for charities, it seems as though the Charity Commission will be hedging the sector in this direction. With organisations continuously gaining coverage for their lack of transparency, familiarising yourself with legislation surrounding this and recording accounts digitally can help your charity or not-for-profits get ahead of the game, ensuring it is compliant and is maintaining accurate books.

Technology A simple way to ensure that your organisation’s finances are adequate is through the use of technology. For the charity and not-for-profit sector, technology seems to be an underutilised tool, which can effectively increase the impact of the way organisations are run. I personally recommend all of my clients to ditch the old-fashioned excel documents and invest in robust bookkeeping and accounting software, such as Xero. Furthermore, with Xero being a cloud based software, you can access your financial accounts from anywhere at any time. With this, you can ensure that your accounts are precise and reliable.

Additionally, using accounting software, such as Xero, can also be a benefit when managing other areas of your organisation. Through add-ons, you can manage your database with apps such as Insightly, whilst apps such as Arlo are great at helping you to keep on top of your event management and fundraising opportunities.

Although technology is a great way to help you save costs and run as effectively as possible, it is important to practice good risk management. Charities and not-for-profits are particularly susceptible to fraud, especially cyber fraud which has opened doors to over 5.1million cases being reported in 2015. This fact emphasises that whilst using digital is indeed beneficial to the growth of many organisations,

having a procedure in place which protects both you and your donors is incredibly important. What is more, the Charity Commission and the Information Commissioners Office (ICO) are on a mission to crack down on negligent data loss and malicious online criminal attacks.

Marketing Marketing yourself on a range of digital platforms is a great way to gain exposure. Using social media is an inexpensive and practical way that charities and notfor-profits can get themselves noticed by the public.

Platforms such as Twitter, Instagram and Facebook are free and can give your charity exposure to millions of active donors.

Social media is not the only way to keep you relevant.

Email marketing is a great way to ensure that you are regularly keeping donors updated with what your charity or not-for-profit is doing and allows you to sell yourself to those who have already showed interest in what your organisation does.

For more information, please contact: Suda Ratnam 020 8418 2681 suda@raffingers.co.uk

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Raffingers Foundation

£3,520 Thank you to everyone that has supported us in 2016, helping us to raise a massive £3,520 for Pancreatic Cancer Research Fund and Ovarian Cancer Action.

Raised so far

Our latest fundraising attempt saw our team put on a cake sale in our local offices, raising £221.

To get involved or to donate, visit:

www.raffingers.co.uk/community

Cake Sale On 16 December 2016, the team at Raffingers opened their doors to local businesses at Bourne Court, Woodford Green, with the team donning their favourite Christmas Jumper.

We are pleased to announce that we managed to raise £221 for Raffingers Foundation. A massive thank you to all those that donated or baked cakes for the sale.

Join us at our first Charity Ball and help us raise awareness and much needed funds for Pancreatic Cancer Research Fund and Ovarian Cancer Action.

Tickets: £75 per person, or, tables of 10 are available for £700 (includes three course dinner and live band).

We are also looking for sponsors and donations: If you would like to donate an item for our auction or purchase an advert in our Charity Ball Brochure (prices start from £50), contact lauren@ raffingers.co.uk

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Looking for Cloud Accounting Software? Look No Further!

Looking for the perfect cloud accounting software to help you better run your organisation’s accounts? If so, Xero is the ideal solution, removing the administrative burden of bookkeeping so you can better focus on your charity or not-for profit’s mission.

Through the beauty of Xero, you can benefit from easier invoicing, billing and banking whilst remotely accessing your accounts online in real time, at any time. You no longer have to wait six months after your year end to view your key financials; instead you can see the profitability of your charity and frequency of donations on a daily basis. What is more, you can guarantee that your accounts are complying with

charity and not-for-profit regulations and you are being completely transparent with your finances.

If you would like to find out more, or have a quick chat to discuss this software in more detail, please contact Amy at amy@raffingers.co.uk.

two and a half years. It was here that I developed a passion for cloud accounting. I then joined Raffingers in June 2016 as a Cloud Accounting Assistant.

I am currently studying towards AAT Level 4 and plan to move on to ACCA once I have finished.

Employee Spotlight

In this slot we introduce you to a valued member of our team, allowing you to put a face to a name.

This quarter we speak to our Cloud Accounting Assistant, Daniel Stopp.

Name: Daniel Stopp Email: daniel@raffingers.co.uk Career: After completing my A-Levels I worked for a telecommunications company for a year. I then moved to my first accountancy practice where I worked for

Interests: I play league cricket as an opening batsman for Harlow Cricket Club and also play Sunday League Football for Risden Wood FC. I am also an Arsenal fan and try to go to as many home games as possible.

When I am not working or playing sport, I like to spend time with my girlfriend in Sweden. I am also learning the Swedish language.

Partners Report: Dan joined us back in June last year and I do not know what we would do without him. Dan has taken on his own portfolio of clients with ease and has been an instrumental part of the cloud team and the enablement process. Dan has great knowledge of cloud accounting and with his eagerness to learn and his great attitude to work, we know he is a great asset to the team.

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Autumn Statement 2016 Charity and Not-for-Profit Highlights SPECIAL FEATURE

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Gift Aid 1.1 Charity Tax and Digital Gift Aid At the Budget 2016, the government announced that intermediaries will be given more power to administer Gift Aid. This will help to simplify the Gift Aid process for donors who make donations digitally. As a result, Gift Aid should welcome in an extra £60 million over the next five years.

1.2 Gift Aid Small Donations In the 2016 Autumn Statement the government announced plans to make the Gift Aid Small Donations Scheme more accessible, flexible and fairer. This will be done by scraping the ‘two year rule’ and allowing contactless payments to be made.

The measure will come into force on 6 April 2016.

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Tax Relief 2.1 Museums and Galleries Tax Relief The government announced that they will broaden the scope of the tax relief, which was introduced at The Budget 2016, to include permanent exhibitions so that it is accessible by more institutions in the UK. The rates will be capped at £500,000 per qualifying exhibition and set at: • 25% for touring exhibitions • 20% for non-touring exhibitions This will raise an expected £30 million a year in tax relief.

The relief will take effect from April 2017 and expire April 2022, if no discussions have been made to renew in 2020.

2.2 Social Investment Tax Relief The Social Investment Tax Relief allows charities to claim 30% relief on income tax if they can meet certain commitments. Charities will be able to now take £1.5million of investment, an increase of half a million, if they have fewer than 250 employees. This has dropped from the initial 500.

The government estimate a saving of £20million in the next five years.

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Funding 3.1 Tampon Tax Fund for Women’s Charities Announced at the 2016 Autumn Statement, the Tampon Tax will contribute up to £15million towards women’s charities, which is equivalent to the amount raised from VAT on sanitary products. £3million will be awarded to Comic Relief to be distributed amongst a range of women’s charities. The government has also announced that from December 2016 applications will be welcomed for the next round of funding that will support women’s charities. These will also be opened to those who run schemes that tackle violence against women and girls.

3.2 Rough Sleeping Fund An extra £10million pounds will be allocated to the Rough Sleeping Fund. This will help to double the size of the fund, which will help to create and innovate new approaches to preventing and reducing the number of people who are sleeping rough, especially in London.

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Increased Expenditure For Charities 4.1 National Living Wage and National Minimum Wage Rates From April 2017, the National Living Wage (NLW) will increase by 4.2%, from £7.20 to £7.50.

As previously announced the following rates will apply from April 2017: • £7.05 - the main rate for workers aged 21 to 24 years old (old rate: £6.95) • £5.60 - the rate for workers aged 18 to 20 years old (old rate: £5.55) • £4.05 - the rate for workers aged 16 to 17 years old (old rate: £4.00) • £3.50 - the rate for apprentices (old rate £3.40)

4.2 Class 1 With affect from April 2017 both employer and employee Class 1 National Insurance Contributions (NICs) will become chargeable on earnings above £157 per week.

4.3 Salary Sacrifice This was a great way to incentivise and reward employees because of the tax and Class 1 NICs savings.

However, following consultation, with effect from April 2017, the salary sacrifice scheme will only be available on pensions, childcare, cycle to work and ultra-low emission cars. Any schemes in place before April 2017 can continue to run until April 2018.

4.4 Personal Allowance The personal allowance currently is £11,000, rising to £11,500 from April 2017. The government today announced that this will increase to £12,500 by the end of parliament. Thereafter, the personal allowances will increase in line with consumer price index.

4.5 Insurance Premium Tax The tax on insurers will increase by 2% to 12% from June 2017.

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Gift Aid Small Donations Scheme Flow Chart These are the basic rules for determining your charity’s status when applying for further public spending initiatives.

Is your organisation a charity or CASC?

No

Yes

You cannot claim.

You must be registered online via HMRC’s Online Service as a charity for two years

No Yes

Have you been registered with HMRC as a charity for at least two years Have Gift Aid claims been made in two of the last four tax years?

No Yes

You cannot claim.

The following types of donations cannot be claimed: • £50 notes • Overseas notes worth more than £20 • Individual donations exceeding £20 • Donations from companies or nonindividuals

No

Submit Gift Aid Claims every other year to meet the criteria

Do you receive individual cash donations of £20 or less?

Yes

Has this been banked?

No Yes

You cannot claim Donations must be banked in a financial institute

Where was the donation recieved?

£A

Community building, e.g. church, that qualifies for community building allowance

(enter the sum here)

Somewhere else that does not qualify for community building allowance

£[B]

(enter the sum here)

Include cash donations, no more than £8,000 a year for each building if you satisfy HMRCs conditions

Include cash donations, no more than £8,000 a year for each charity

£[A + B]

£[C]

Value of gifts which Gift Aid has been claimed on

Is the value of A + B more than 10 times the value of C?

No

Use the value of A plus B

Yes

Yes

Use the 10 times value of C

Is the claim within the claiming limits? (£8,000 for tax year 2016/17 and £5,000 for earlier years)

You can claim

No

You cannot make a claim

For further information or advice on the Gift Aid Small Donations Scheme, please contact Suda Ratnam at suda@raffingers.co.uk.

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“The new Charities Act provisions will help charities to demonstrate that their donors and the public are treated with respect and protected from intrusive practices”

Are you Compliant With the Latest Fundraising Provisions?

As of 1 November 2016, trustees of large charities need to be aware of and compliant with the latest fundraising provisions in the Charities Act 2016.

Several months ago, the government announced that the Charities (Protection and Social Investment) Act 2016 will include a new provision set to affect large charities that carry out significant fundraising activities. The clause aims to help protect donors and the general public from poor fundraising practices, as well as facilitate a more effective standard of working between charities and their fundraising employees. Sarah Atkinson, Director of Policy and Communications at the Charity Commission stated that “The new Charities Act provisions will help charities to demonstrate that their donors and the public are treated with respect and protected from intrusive practices, and that recognised fundraising standards are always part of the picture where charities are working with a professional or commercial partner.”

As a result, two provisions are now enforceable by charities. These include: When using a professional fundraising or commercial partner: The law states that where a professional fundraiser or commercial partner is used to raise funds for the organisation, the mandatory agreement must include additional information which covers: • Any recognised schemes or standards that apply to the individual when fundraising • How the professional fundraiser or commercial partner will ensure that they are protecting the

needs of the general public and are not acting in an intrusive or delinquent manner • How the charity or organisation will guarantee and monitor that the partner is fulfilling the above obligations Charities that must have their accounts audited will need to include additional information when submitting their annual accounts on the Charity Commission portal: The provision states that trustees will need to ensure that additional information on the charity’s fundraising practices is included in their trustees’ annual return. This should contain: • The organisation’s approach to fundraising • Any work that they undergo that involves any commercial partners or professional fundraisers • Any standards or schemes that the charity must remain compliant with whilst carrying out fundraising activities • Any complaints or criticisms that they have received whilst carrying out fundraising activities • How the charity intends to protect the public from intrusion and pressure from their partners The Charity Commission has updated its charity reporting and accounting: the essentials November 2016 guide, to help charities get up to date.

For more information, please contact: Andrew Coney 020 8418 2710 andrew@raffingers.co.uk

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Crowdfunding: Is it Right for Me? Charity crowdfunding is a popular and growing concept for many charities and often works well when fundraising for new campaigns. However, just how successful is it and is it really right for my organisation?

Traditionally, fundraising takes place face-to-face between a charity and their potential donor, relying solely on personality to build a rapport and land a donation. However, the advancement of the internet has made it easier for charities to exploit and promote their organisation in a fresh, innovative way. Online fundraising has grown significantly and in the last five years, the UK has seen the evolution of new types of fundraising, such as crowdfunding.

Crowdfunding is the process of raising money to support a particular cause, fund or project. Typically these are smaller amounts and are usually made

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online by many individuals. Ultimately, it is a great way to bring awareness to a specific cause.

For not-for-profits, crowdfunding provides two benefits, including: • Reaching a wide or a niche audience: Being that campaigns are run online, you can gain exposure to tens of thousands of individuals.

Furthermore, it is easier to seek donors that have a keen interest in your cause.

• Promoting a particular cause or project: If you have any large fundraising projects, which you need to raise the profile of, crowdfunding

Online fundraising has grown significantly and in the last five years, the UK has seen the evolution of new types of fundraising, such as crowdfunding.

may be a great place to start. It will give you the chance to diversify your ideas, attract donors and promote your brand.

Although crowdfunding is a great addition to charity and not-for-profit fundraising, it is not suitable for all organisations nor should it completely erase all other forms of fundraising. Many charities who fundraise online fail to see that it does not guarantee instant success nor is it a quick fix. Consequently, crowdfunding should be used to help facilitate a campaign and not for general or long term fundraising campaigns. As a guide, a successful crowdfunding campaign will: • Include a Plan of Action: Having a secure plan of action will allow you to get the most of the crowdfunding experience. A solid plan will ensure you are accounting for as many opportunities as realistically possible; covering any probable threats and ensuring that you are meeting all aims and objectives in a timely manner.

• Create a Social Buzz: Creating a social buzz around your campaign will help to make it as fruitful as possible. Not only will it get people engaged, it should make it easier to get donors • Reward Donors Effectively: With crowdfunding, donors are giving you something.

In return you should thank them. This does not have to be a physical object or anything expensive, it could simply be a personal shout out on your social media platform.

• Be Innovative and Fun: There are thousands of crowdfunding campaigns running at present.

To distinguish yourself from all the other campaigners, you need to do something fun and exciting. Possibly run a competition or a league to get as many people interacting with you as possible.

• Have Realistic Goals and Expectations: Although setting the bar high is always a good thing, being realistic is a must. Be realistic especially if you have never done any crowdfunding work and have nothing to benchmark yourself against.

Crowdfunding is great for small and medium charities and not-for-profits, especially when looking to attract and reach a diverse and wider market. However, failing to plan effectively can have a negative impact on your image.

For more information, please contact: Gary Inglis 020 8418 2770 gary@raffingers.co.uk

Beware of Fraudulent Emails “From HMRC” In the last few months many of our clients have been the subject of scam emails, supposedly from HM Revenue and Customs (HMRC) declaring that they are eligible for a tax refund. These phishing emails ask for confidential information, such as a full address, postcode and specific figures. If you have an email and are unsure whether it is from HMRC, then do not open it, and if you already have then do not click on any links or attachments.

Due to the frequency of these emails and the number of people that are falling victim, it is important that you are vigilant and know how to spot a fraudulent email.

How to tell if an email is fraudulent Spelling and grammar: Often fraudulent emails will be full of spelling and grammatical mistakes. If this is the case, then the email is not from HMRC. Asking for personal information: HMRC will never email you to: • Notify you of a tax rebate • Offer you a repayment • Ask you for personal or confidential information, such as your full address, postcode, unique taxpayer code or your bank account details If you receive an email with links asking you for any of these things, then do not open the email or click on any of the links.

Urgent action required: HMRC will never in an email ask for a reply or the links to be completed immediately or in a short time frame. For example ‘you only have three days to reply’ or ‘urgent action required’.

Common greeting: An email from HMRC will greet you with the name you provided to them when you signed up.

If the email greets you with ‘Dear customer’ then you know that it is fraudulent. HMRC will always start an email with your full name.

Attachments: Be wary of emails that contain attachments.

These attachments could contain a virus which is designed to steal your personal information.

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Partner’s Perspective

When Should Trustees get Paid?

SPECIAL FEATURE

The general rule of thumb is that trustees are not to receive monetary payment for any work that is carried out to benefit the charity. However, this is not always the case: in certain circumstances, payment is allowed if it satisfies the conditions disclosed in the governing document.

Prior to the Charities Act 2006, the Charity Commission’s permission was required in order to modify or grant any powers to pay trustees. However, since the introduction of the Charities Act 2006, if the governing document did not include a provision on payments to trustees, no appeals can be made. In the case where there is no mention of payments, the trustees themselves will need to use their discretion to determine whether payment is reasonable and is of benefit to the charity. This should always be of legitimate and reasonable means and payment should be in exceptional cases only.

What is Payment?

Payments can come in many different forms and is

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Trustees who require remuneration should always act in the best interest of the charity not try to capitalise or benefit financially from the charity. considered an exchange in return for a service or act performed by a trustee for the benefit of the charity.

There are three key categories, which the Commission groups payments for trustees into: • Paying a Trustee to be one: As mentioned, trustees should not receive any monetary payments, unless it is consented to in the governing document

• Purchase of a Service From a Trustee: In some cases, trustees can be paid to complete a service or work for the benefit of the charity; this includes domestic work such as plumbing and painting to services such as accountancy or legal advice. However, it is best practice to have this formally stated in a written agreement which should be kept as part of the charity’s financial records.

• Trustee Expenditure: If stated in the governing document, trustees can be reimbursed for expenditure such as travel goods purchased for the benefit of the charity. Although, this must be of a reasonable price and the individual must not be over compensated.

The charity commission also state that an honorarium is a form of payment.

Conflict of Interest The wellbeing of the charity should always precede that of the trustees when handling pay-outs. All trustees who require remuneration should always act in the best interest of the charity and should not try to capitalise or benefit financially from the charity. If a company does not act ethically, a conflict of interest may arise and the trustee may need to be removed from the board.

Another conflict of interest may arise when a person who is connected to a trustee may be paid to carry out work or services for the charity. In this case, it is important that all trustees connected, related or associated with the individual are disassociated with any part of the process. For connected individuals to work for the organisation, the Charity Commission must approve this first.

Factors to Consider: Although payment can be made in some cases to trustees, it is important to remember that: • Trustees who receive payment in this way should always be a minority • All arrangements should always be written out in an agreement and be reasonable • Payments should only ever be agreed and made permissible by the provisions stated in the governing document

For more information, please contact: Lee Manning 020 8418 2662 lee@raffingers.co.uk

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