In this article we focus on just one thing – the concept of Performance reporting.
We all share the common goal of ensuring that we have a thriving and sustainable charities sector where New Zealanders understand, trust, and have confidence in the charities they support.
Yes, we can. Baker Tilly Staples Rodway works to create enduring success for all our clients and works with you to build capability and capacity to effectively deliver on your charitable purposes. We all share the common goal of ensuring that we have a thriving and sustainable charities sector where New Zealanders understand, trust, and have confidence in the charities they support.
Our team of Business Advisors can assist in many ways, whether it’s taking care of your compliance and other statutory obligations, assisting with GST or other indirect tax queries, or providing pragmatic business advice.
We can leverage our experience helping a wide range of charities of different sizes to assist you based on your specific circumstances and long-term goals. We currently support our clients in the following areas:
We can assist with the charity registration process with Charities Services which includes ensuring you have ticked off the necessary items on the “ready to apply” and “before you apply” checklists.
We can assist you with your annual reporting to Charities Services. This includes assistance with completing your annual return and compiling your performance report/financial statements. We have significant experience preparing performance reports and financial statements that comply with the reporting standards and the requirement to present both financial and non-financial information.
We can assist you in developing your core policies and procedures.
For example, in our previous articles, we have discussed the need to ensure that reserves are well-managed, balancing the need for a contingency fund with a focus on delivering upon the organisation’s mission. Reserves should allow the charity to weather unexpected financial disasters, make investment decisions and, on occasion, run budget deficits in order to achieve your charitable purpose. We can assist in drafting a reserves policy that will guide your organisation’s approach to accumulation of funds, taking into account your specific needs and charitable objectives.
Under the 1908 Act, there was no requirement for incorporated societies to obtain an audit or review of their financial information. In our previous articles we highlighted the change that is coming for Incorporated Societies which will require societies to prepare financial statements in accordance with generally accepted accounting principles (GAAP).
We can help you prepare GAAP-compliant financial statements. We currently provide a compilation service to prepare performance reports and financial statements in accordance with the XRB’s simple format reporting standards (yes, we know this might seem like jargon!).
We can provide advice on suitable legal structures for your not-for-profit organisation and assess the various advantages and disadvantages of different entity types in relation to your goals and current structure. We understand that a ‘one size fits all’ solution does not exist and we tailor our advice accordingly.
Not-for-profit structures include:
Generally speaking as a registered charity your charity’s income will be tax exempt, your charity’s bank will not need to deduct resident withholding tax from its interest income, your charity may not need to pay fringe benefit tax on some benefits provided to its employees, your charity can access GST concessions, and your charity may be able to issue donation receipts so that donors can claim donation tax credits or gift deductions.
However, all of these tax benefits are subject to continual monitoring and review by the Government to make sure they are effective.
We can help provide clarity on the latest changes and provide advice in relation to tax compliance. Some of the proposed changes on our radar are:
A significant change to the Goods and Services Act 1985 has taken effect with retrospective application to 15 May 2018. This change means that if non-profit body has claimed GST input tax on the purchase or maintenance of an asset, then the future sale or other disposal of that asset will be subject to GST, even where that asset has not been used to make taxable supplies.
Inland Revenue recently won a High Court case denying tax credits for donations. The Court held that some of these donations did not qualify as charitable gifts and donation tax credits were not available. This case demonstrates Inland Revenue’s increased scrutiny as to whether contributions can be considered donations from a tax perspective. It is not always clear cut which payments can be treated as charitable gifts.
There are also questions around whether certain charitable organisations with revenue-generating arms are bona-fide charitable operations. We can assist you with ensuring you structure your group activities to ensure effectiveness. In future limited liability companies may be required to file their accounts independently of their related charitable purpose entities. Funds currently being supplied from the commercial entities in the form of donations are treated as deductible items of expenditure by the commercial entities to the extent of their taxable income.
Our Business Development offerings are practical and tangible services that help to create long term success by ensuring that organisations are well-equipped to meet their charitable objectives and their current and proposed activities to deliver their charitable purpose. We can assist in the follow areas:
An effective planning process can help you gain a greater understanding of your vision and core values, enabling you to create a clear and concise plan. Together we can sit down and review your past performance and clarify your future direction. You will be able to set solid and realistic goals and define strategies for achieving these goals, along with an action plan to address immediate and critical issues.
We can help to ensure you are recording information to be able to report your outputs and outcomes when your performance report is due and focus on the areas that are most significant and relevant to your charity. All tier 3 and 4 registered charities are required to describe their outputs over the past year (the goods or services provided or delivered).
Outcomes can be thought about as the reason why you delivered a particular activity or what your charity seeks to achieve or influence through delivering its goods or services. Your outcomes will be closely linked to the overall purpose your charity was established. Outcome statements are compulsory for Tier 3 charities (not yet Tiers 1 and 2). If your charity is reporting under Tier 4 it is also really worthwhile to clarify your outcomes so your whole organisation can be clear on what you are trying to achieve.
Setting financial targets and monitoring your actual performance against your forecast will enable you to respond to changes both within your charity and in the wider environment.
Cashflow planning is best practice in any charity and is important for survival and growth.
Helping our clients look ahead with confidence is core to our purpose to create enduring success.
Understanding the difference between profit and cash is essential for your charity to be viable in the long-term!
We can help you assess your organisation’s strengths and weaknesses and help you draft governance and team structures that best fit your activities and enable you to deliver on your charitable purpose.
Many charities do not have absolute clarity around their team’s roles and responsibilities.
A defined structure and operating procedures help to mitigate risk and assist with the achievement of your charity’s objectives.
A review of the Statement of Service Performance can also improve the depth of conversations around your governance table and help develop clarity on the priorities for the year.
Implementing the correct software and IT infrastructure is important. Choosing the correct software to support your business plan is critical to achieving success.
We believe that all New Zealand businesses should have access to proactive IT support.
A fully supported IT infrastructure not only keeps your organisation running but it also saves you time and money so you can focus on what your charity does best.
The better you understand what drives your organisation, the easier it will be to balance your short and long-term cashflow requirements.
We help our clients understand the key drivers or KPI’s in their business, how to accurately measure them and to apply strategies and tactics to improve them.
The number of KPI’s you monitor should be limited to those that will make the most significant difference to your organisation. These should be aligned with your Strategy Plan and outcomes as discussed in the above section.
It is remarkable how simple changes to your processes can improve your overall outcomes!
Operating a charity is hard work. Long and demanding hours make it easy to get trapped in a tunnel vision state. It’s important to take time from the daily operation of your organisation to gain perspective and clarity.
Business coaching doesn’t just focus on accountability, revenue and cashflow. It also focuses on organisational performance and achievement of overall goals.