I recently attended the London & South East charity seminar at RBC Brewin Dolphin, hosted in partnership with Charity Finance Group and Stone king.
As I listened to the various speakers, an intriguing thought came to mind: charities are like a charcuterie board and, in this post-election period, will they finally have a seat at the table? While it is too early to say for sure, one thing is clear; the charity sector has untapped potential and, as auditors, we can play a part in helping charities unlock this potential.
It occurred to me that there are three key areas that are largely untapped by charities:
- Embedding AI into it the fabric of operations
- Responding to changes from the Charity Commission
- Revisiting the Endowment Fund
Unlocking AI for charities
The 2024 Charity Digital Skills Report found that 65% of charities either agree or strongly agree that AI developments are relevant to them. More than three in five (61%) charities currently use AI in day-to-day operations. The most popular uses of AI tools are content creation (33%), admin (32%), and drafting documents and reports (28%). That shows that, while the appetite exists, charities need to use AI in more innovative and unique ways.
We know that charities have a clear purpose, a strong vision and mission but many struggle with inconsistent funding, budget deficits and a lack of data management. Perhaps it is time to take a step back and re-imagine the value chain for our charities.
This is where AI can shine. Generative AI can help with strategic planning, for example, while advanced AI algorithms can assist with data analysis, helping streamline programmes, create tailored grant applications and deliver greater impact by better understanding beneficiaries. AI tools such as those within Microsoft Teams can save time by automating routine tasks, such as taking and summarising minutes. Tools like Co-pilot can assist in generating content ideas, answering queries and linking answers to reputable sources. The list goes on.
Utilising generative AI as small stepping stones, your charity may start to see that strategy and planning becomes more intentional. This can lead to clearer insights into funding and spending, better budget controls and, ultimately, a greater impact on the communities you serve.
Charity commission changes
The Charity Commission’s strategy for 2024-2029 sets out a clear ambition to help to create an environment where charities further build public trust, setting out has five overarching priorities:
- Priority One: We will be fair and proportionate in our work and clear about our role
- Priority Two: We will support charities to get it right but take robust action where we see wrongdoing and harm
- Priority Three: We will speak with authority and credibility, free from the influence of others
- Priority Four: We will embrace technological innovation and strengthen how we use our data
- Priority Five: We will be the expert Commission, where our people are empowered and enabled to deliver excellence in regulation
Priority Four stands out, signalling the increasing importance of technology and data in the charity sector. The Commission recognises that advances in technology will offer “new avenues to support charity and promote accountability.”
There are also three guides I would like to draw attention to that are very much in line with Priority Five and will help you to implement more robust environments:
- CC14 – Investing charity money: a guide for trustees
- CC48 – how to plan, run and keep a record of charity meetings
- CC27 - Guidance about making trustee decisions, including the 7 decision-making principles
Unlocking value in the Endowment Fund
During the final session, the message ‘The value is in what you spend; that’s what makes you charitable’ resonated. This statement highlighted a common issue – that the endowment fund can be treated like the furniture of a charity, always present but never fully utilised.
To unlock an Endowment Fund’s full potential, trustees must first review the original legal documents to determine whether the endowment is permanent or expandable. In other words, must the charity preserve the capital asset for future generations and only use the investment return, or is there flexibility to convert the capital into income?
The next step
Intentionally assessing the value chain and embedding AI could create efficiencies and allow charities more time to focus on delivery and impact, rather than the everyday mundane tasks. Ensuring you are keeping on top of Charity Commission changes and utilising guides could help you develop a more robust environment and safeguard your charity for changes ahead. And reassessing the role of the Endowment Fund and considering whether it is permanent or expendable could help you to untap additional potential.
Now is the time to take a step back and position your charity to thrive in this new era. If you would like to discuss any of the issues raised in this blog, please contact your usual UHY charity adviser or get in touch using the contact form below.