A to Z of funding (A)



If you are accountable you have to give an account or answer for your actions to someone. This may be formal, like when a Management Committee reports to the AGM or Councillors stand for re-election. But there are many other things that help organisations be 'held to account' by all the different stakeholders involved. These include: when and where meetings are held, how accessible reports are, whether there is regular contact between senior staff or trustees and users of services.

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Accounts are a way of 'giving an account' of what has happened financially. They can cover any period. Most organisations have to produce annual accounts. These are usually drawn up after the end of the financial year and should give a full and clear picture of both the organisation's transactions during the preceding year and its financial position at the end of it. These accounts are often presented to an organisation's Annual General Meeting. Registered charities may have to send their annual report and accounts to the Charity Commission every year and registered companies have to make a similar annual return to Companies House.

There are two basic ways of doing accounts: accruals accounting which shows income and expenditure (or in the case of registered charities provides a Statement of Financial Activities (SOFA) over a period, or receipts and payments accounting. Accrual accounts should include a balance sheet and notes to the accounts, whereas receipts and payments accounts should include a statement of assets and liabilities. Accounts are often professionally audited (accounts) or independently examined. Bigger organisations often produce monthly or quarterly management accounts for use within the organisation. These are not independently examined.

Don't think of your annual accounts just as figures. You really are providing 'an account' of what's gone on and you may need to explain what the figures show. The Charities SORP (Statement of Recommended Practice) requires a 'narrative' to the accounts which does just that.

For further guidance and an accounting pack including templates, please visit the Charity Commission website.

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Accruals, accruals accounting

Accrual accounting is based on the concept that any money earned by an organisation must be matched with the costs that were incurred to generate that income, and that both are included in the same period of accounting. For example the costs of holding a jumble sale are balanced against the income it generated and both costs and income appear in the same set of accounts. This allows accounts prepared on an accruals basis to show a "true and fair" view of an organisation's financial activities.

Accounts prepared on a receipts and payments basis are less sophisticated and easier to prepare. They are also often easier to understand.

For further guidance and an accounting pack including templates, please visit the Charity Commission website.

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Acevo (Association of Chief Executives of Voluntary Organisations) is the professional body for the third sector's chief executives, with over 2000 members. Acevo aim to connect, develop and represent the sector's leaders, with a view to increasing the sector's impact and efficiency and are a Company Limited by Guarantee with charitable status.

Acevo is based in London and Leeds:

1 New Oxford Street
T: +44 (0) 20 7280 4960
E: info@acevo.org.uk
W: www.acevo.org.uk

3 Albion Place
T: +44 (0) 113 243 2333
E: info@acevo.org.uk
W: www.acevo.org.uk

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Action with Communities in Rural England (ACRE)

Action with Communities in Rural England (ACRE) is the national umbrella body of the Rural Community Action Network (RCAN), which operates at national, regional and local level in support of rural communities across the country.

ACRE is supported by an agreement with the Department for Environment, Food & Rural Affairs (Defra) which helps to fund work with rural communities. Defra made a £2.8m investment in the Network in 2012/13. 

Defra have made a commitment to further investment in the Rural Community Action Network, between 2011-15, with the aim of gathering information to support national policy-making, particularly in the arenas of:

  • Rural Housing & Planning
  • Transport, Facilities & Services
  • Fuel Poverty & Energy Generation
  • Rural Broadband

ACRE is based at:

Somerford Court
Somerford Road
Gloucestershire GL7 1TW
T: 01285 653477
E: acre@acre.org.uk
W: www.acre.org.uk

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Added value

The value added by your activity. A chef 'adds value' to food by cooking it, which is why we are prepared to pay more for the cooked meal than the raw ingredients. In the business world, activities are examined to see how much value they add to the product that gets sold. The phrase has become fashionable in the voluntary sector, though it's often used rather loosely.

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Particularly important where funding from the National Lottery is concerned. Lottery money is supposed to be 'additional' to ordinary spending by the government, not a substitute for it. So if a voluntary organisation wants lottery money to provide a service which government has a statutory obligation to provide (like basic education or health care, for example), the application is likely to be turned down. However, this line is becoming increasingly blurred.

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One of the words used to describe what an organisation intends to do. Often used with 'objectives' in the phrase 'aims and objectives'.

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Annual report, annual review

The phrase 'annual report' can be confusing. It has a technical meaning in 'annual accounts and report' (when it is sometimes called the statutory report) but it is also used casually, sometimes as shorthand for 'annual review'.

Charities are required to prepare accounts according to the Charities SORP (Statement Of Recommended Practice). The SORP requires there to be a narrative report as well as the figures themselves. The report must include certain things, such as: the organisation's name and address, charity registration number (if it has one), company registration number (if it has one), its objects, the names of trustees during the year being reported on, a description of the organisation's structure, and a brief summary of the main activities and achievements during the financial year. Bigger charities have to include more and their report on activities has to be a fuller one.

Many organisations choose to publish a document - often presented to an Annual General Meeting - which is wider in scope than the statutory report. It may be seen primarily as a fundraising tool or a way of being accountable to users rather than a way of accounting to the Charity Commission or Companies House. It may include detailed accounts, but (especially with big organisations) mainly contains summary accounts. It is often then called an Annual Review.

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Annual return

A phrase used by both Companies House and the Charity Commission to describe the form they require companies or charities to fill in every year and return. Often the Annual Return is sent back with the organisation's annual accounts and report.

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Arts and Business

Arts and Business (A&B) encourages the private sector to support the arts. A&B is made up of two companies but is also a registered charity.

Arts and Business is at:
Nutmeg House
60 Gainsford Street
Butlers Wharf
London SE1 2NY
T: 020 7378 8143
E: A&BContactUs@bitc.org.uk
W: www.artsandbusiness.org.uk

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Arts Council England

Arts Council England (ACE) works to champion, develop and invest in the arts. As the national development agency for the arts, ACE supports a range of artistic activities, from theatre to music, literature to dance, photography to digital art and carnival to crafts. Now also taking responsibilities for museums, libraries following the abolition of the Museums, Libraries and Archives Council (archive responsibilities have been transferred to The National Archives). Informed by a major consultation earlier in 2011, ACE have now published their ten year vision, Achieving great art for everyone, embedded within five key goals.

ACE has a national office as well as regional offices. For further information contact the ACE at:

Arts Council England National Office
14 Great Peter Street
T: 0845 300 6200
W: www.artscouncil.org.uk

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Assets and liabilities

Assets are what your organisation has. For example an organisation might state that their volunteers are their greatest asset. When talking finance, assets mean your money, property and anything that is owed to you. Assets are contrasted with liabilities, which are what you owe other people or have a commitment to pay.

In a balance sheet that conforms to the Charity SORP (Statement of Recommended Practice), assets are divided into:

  • tangible fixed assets held for use by the charity
  • investment fixed assets
  • current assets.

Fixed assets are things like equipment or property that you would have to sell in order to get any money. Inexpensive bits of capital equipment (like staplers or waste-paper bins) aren't usually counted as fixed assets.

Current assets are money in the bank and any money owed to you.

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Asset transfer

The conveyance of something of value from one person, place, or situation to another.

The law recognises that persons are generally entitled to transfer their assets to whomever they wish and for whatever reason. The most common means of transfer are wills, trusts, and gifts. Asset transfer is a term used to describe the process of the transfer of the ownership (or leasehold) of property or land from one party to another.

Currently, the term is being used in the context of the transfer of public sector assets to third parties – including the voluntary and community sector. Government is currently encouraging local authorities to review their buildings and land for opportunities to transfer these assets to community organisations. They have the power to dispose of land and buildings at preferential rates – often under market value – if a wider community benefit can be realised through the transfer. Asset transfer can help to secure community use of buildings and provide a development opportunity for local community and voluntary organisations. But, like any major development, it also carries risks and groups considering asset transfer need to do a lot of work before pursuing it.

The Asset Transfer Unit (ATU), led by Locality, was set up to promote community asset transfer.

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Association of Charitable Foundations (ACF)

Promotes and supports grant-making charitable trusts and foundations. Members tend to be the bigger, richer trusts, particularly those that have paid staff. It can't give individual advice to grant-seekers but its publications and its website often have general advice and useful information.

ACF is based at:
Central House
14 Upper Woburn Place
London WC1H 0AE
Telephone 020 7255 4499
Fax 020 7255 4496
Email acf@acf.org.uk
Website www.acf.org.uk

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Audit, auditor

An audit is an examination of something, a writing down of what you've got. A social audit is when you examine what non-money resources you receive and use. Audited accounts are audited when they've been examined in a certain defined way.

An auditor is an independent person who examines the accounts and then states that they give a true and fair view of the organisation's finances or that the accounts are consistent with the financial records. The law distinguishes between accounts that have been professionally 'audited' (by an auditor) and those that have been 'independently examined' (by an independent examiner). Company law and charity law provide rules about how an audit must be conducted and what an auditor must do. An auditor needs to be professionally qualified (an accountant) but not all accountants are able to carry out all types of audit.

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Audited accounts

A statement of your organisation's finances, usually for your last full financial year, which has been drawn up by a qualified auditor.

If the auditor believes the figures to give a true and fair account of the organisations financial state, he or she declares them to be true. If he or she doesn't have enough information to go on or believes there's something false about the figures, he or she 'qualifies' the accounts.

Charity law requires charities with a certain level of income or expenditure (currently £10,000) to have their annual accounts professionally scrutinised. If the income or expenditure is over £250,000, the accounts must be audited by a registered auditor. (Below that, organisations can opt for an independent examination). Even if there is no legal requirement to do so, funders sometimes insist that accounts be audited. In these circumstances it may be worth checking out exactly what they mean - independently examined accounts may be acceptable.

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