In the UK the Charity Commission gives helpful information on the requirements for Charities under the SORP legislation and their own regulations. They advise:
“The framework for accounting by charities sets out different requirements for different sizes and types of charity. To understand how it applies to your charity, you need to check:
whether or not your charity is also a company; its income for the current financial year; the value of its assets; and whether or not it is required to be registered as a charity. You should then establish: what type of accounts must be prepared; what information is needed in the Trustees’ Annual Report; whether the accounts need an independent examination, or audit; and what information must be sent to the Charity Commission.
If you do have to send your charity’s Trustees’ Annual Report and accounts to us, you must do so within 10 months of the end of your charity’s financial year, although we would encourage you to do so much sooner than this in order to give an up-to-date and current picture of your charity.”
Submission of Accounts
All charities must prepare a Trustees Annual Report (TAR) and accounts, and must be ready to make copies available to the public upon request. There is guidance on preparing these available on the Charity Commission website. However, not all charities need to submit these.
Charities with an income below £10,000
Small charities, with a gross annual income below £10,000 only have to complete a simple Annual Update form online. This asks for information such as income and expenditure, details of trustees and the purposes of the charity.
Charities with an income between £10,001 and £25,000
Until 1 April 2009, charities with incomes in this category were required to submit their Trustees Annual Report and accounts. However, for financial periods ending after this time, they need only submit the Annual Return.
Charities with incomes between £25,001 to £500,000
Charities in this category must produce and submit their TAR and accounts. They also have a responsibility to confirm that there are no serious incidents or other matters that they should report and which they have not already brought to their attention.
Charities with incomes between £500,001 and £1 million
Larger charities with incomes over half a million, but less than £1 million need to submit all the above, together with completing a detailed financial section of the Annual Return. This information will be used to display the charities’ income and expenditure graphically on the Charity Commission website.
Charities with incomes over £1 million
For the largest charities, more information is required. In addition to all of the above, they must also complete a Summary information return (SIR), which provides an easily accessible summary of the organisation’s aims, activities and achievements. This will be available for the public via your charity’s record on the Charity Commission website.
Public Relations and Communications
Public relations refers to communications with a variety of publics or audiences with whom an organisation needs to be in contact. Many practitioners use the term communications rather than public relations. A working definition of public relations and thus communications from Scott M Cutlip and his co authors in 1985 defines it as “the management function that identifies, establishes, and maintains mutually beneficially relationships between an organisation and the various publics on whom its success or failure depends.”
What is Communications?
Writing in 1992 Grunig and Grunig identified two main aspects: one-way communication where an organisation effectively delivers a monologue to its audience (via press relations or the provision of information) and two-way communication where a more strategic role for communications supports meaningful two-way dialogue and engagement with selected audiences so that their views are heard and reflected in the organisation’s business and its communications initiatives. Audiences may be internal (staff, volunteers) and external (government, trade bodies, beneficiaries, suppliers, funders).
Activities that make up the communications remit include publicity, public affairs, lobbying, issues management and development (events for important audiences such as volunteers and donors).
Links with Marketing
Philip J Kitchen has written on how public relations/communications is often incorrectly placed alongside marketing activity such as advertising. Marketing, as Cutlip and his co authors noted, deals with how an organisation relates to the exchange it has with its customers whereas communications deals with a wider spectrum of relationships. Marketing is defined as the management function that identifies human needs and wants, offers products and services to satisfy those demands, and causes transactions that deliver products and services in exchange for something of value to the provider. Marketing and Communications are complementary and Communications works to portray a positive image of an organisation that is in turn supportive of subsequent marketing efforts as the public concerned has been alerted to the organisation in advance.
Strategic Role of Communications
Communications contributes to an organisation’s overall effectiveness by building relationships with audiences that are vital to helping that organisation reach its goals. In managing communications strategically there are four main areas required to develop a strategy according to Grunig and Repper writing in 1992:
stakeholder stage (where important stakeholders are identified, analysed and managed)
public stage (stakeholder groups who are affected by what the organisation does or in turn can affect what the organisation does and have organised themselves to act)
issues stage (forecasting and preparing in advance for issues that may arise as a result of an organisation’s relationship with any of its stakeholders)
communications programmes and plans (planning to maintain relationships with stakeholders and publics and to manage issues and conflicts with them)
Types of Accounts
There are two types of accounts which the Charity Commission accepts: Receipts and Payment accounts are the simplest and the suitable for most small charities and are acceptable for charities who are not companies and who have a gross income below £250,000. Accruals accounts are rather more complicated, and are a requirement for charities with a gross income above £250,000
A proper budget gives you a clear idea of how much to spend on each of the projects that will be undertaken during the year or years ahead, and how much income is expected from each of those projects. Usually these will be on separate lines of the budget, and each month an account will be produced to show how the income and expenditure has gone on each of these lines (the management accounts) so that adjustments can be made to activities if they are over- or under-performing. Most years will see changes taking place with regard to expected income. Expenditure is much easier to predict, and, of course, no-one should overspend their budget without reference to higher authority. A dynamic organisation will immediately respond to this by investing heavily in those aspects of fundraising that are going well and reducing or ceasing expenditure on those area that are not.
This is a very difficult area in which to take decisions, and mature experince (as well as entrepreneurial flair) is needed to understand exactly why an area of work is not performing as expected, and whether thisis a temporary fluctuation or likely to be a permanent state of affairs. Naturally you need much more information that is provided in the management accounts to operate effectively, and this is can be looked at in the discussions on Planning and Fundraising reports.
Budgeting for a single event
Most of your budgeting will be done for activities for which you have a track record. Towards the end of your financial year you may look back and see that you have held a flag day, organised a concert, run a direct mail programme and made four appeals to your organisation’s supporters for extra funds, Next year, if things are going well, you will probably want to repeat those activities and organise some new ones. Budgeting for the events you repeat will be done with reference to previous years, and then adding your estimate of any likely increases in expenditure and income – bearing in mind any rate of inflation agreed with your finance officer and /or treasurer. For a new event this calculation will be much more difficult and it is advisable to be conservative.
Example: budgeting for a concert If you are going to organise a concert, then you will need to look at all aspects of possible expenditure and find a way of estimating the income. The best starting point is to borrow someone else’s knowledge and particularly their experience. You will find that most experienced fundraisers will give you quite a lot of information if they have a few minutes free.
Talk to other fundraisers about their events. Ask about their successes and failures. (This applies, of course, not just to income and expenditure, but also to management of the event.)
For an event where you are expecting to make money from those taking part, the key is to estimate how much thet will give on average. Concert-goers will be attending because the wish to see abd hear the star(s) perform. They will not go and sit through a performance they cannont stand because they with to support your organisation; neither will they pat extra because it is a charity event. So, the previous pulling power of the entertainer will be you guide to the size of venue you can book and the amount to charge.
As well as the income from tickets, look at as many different ways of making money from the event as you can think of. Sponsorship can help to keep down or eliminate your costs. It also impresses your supporters and others who may naively believe that everything is free to you, including the hall, orchestra, publicity, sound system, after-show party (very iiimportant for your key donors and for thanking the celebrities), etc. Discuss the event with companies who have supported you and look at ways they may benefit, e.g. free seats they can give to important customers, or better still the opportunity to meet and socialise with celebrities. This is a key aspect of many events that is often neglected. Much long-term income will result from using your access to celebrities to bring major donors and other key friends into contact with stars. Sponsors usually like to be thanked visibly, usually in the programme but if the event is filmed they may require a presence in the footage and that will need careful negotiation if the film is going to be broadcast.
You should also make money from selling advertisements in the programme. Ask all the tradespeople who supply you with the goods your organisaion uses during the year to buy space in the brochure, and do not forget to invite them to the after-show party.
Valuable extra funds can come from such things as a bucket collection at the end and T-shirt sales.
If you are fortunate enough you will actually make more money from sales of ‘product’ i.e. video, film, cassettes, etc., than from the event. But unless contracts are signed do not budget for income from that source, as it is notoriously unreliable. Try for the event to be filmed by a keen company in exchange for part of the sales rights and let them undertake the marketing unless you have or wish to gain that professional experience. Remember that performers may not agree to perform if they are to be filmed and may then only do numbers with which they are comfortable. They will need to know upfront and you will need to get written permission which is a nightmare in itself.
As a rule of thumb, having calculated the income, deduct between 10% and 20% for publicity (posters, adverts, etc.). Be ready to write and phone the media relentlessly to obtain as much editorial coverage as possible and as many lsitings as you can. Do not rely on your supporters alone.
Find out how much you need to pay for the hall, how much to fly in your stars and meet their other transport and hotel expenses. Their management will have a standard list of outrageous demands to be met. Do ensure you negotiate to minimise expenses perhaps setting a limit to the amount you are willing to pay.
Think carefully about the cost of the sound system, stage decoration, rehearsals (hall rental and professional musician costs), the production manager, etc. Be exhaustive in thinking through all the stages of running the show, because extra costs traditionally eat up much more than the expected profits on concerts. Orchestras need rehearsal time and can be very expensive.
If, at the end of all this, you can still estimate a profit, check the break-even point, that is , how many tickets you need to sell to get your money back. If you can do this on half the sales and still make a healthy profit if only two-thirds of the tickets sell, then you have an event worth running. In practice the margins may be tighter than this and you will need to make a professional judgement (taking as much experienced expert advice as possible) on whether or not to proceed.