1. Women’s Resource Centre Women’s Commissioning Support Unit Finance for joint projects and consortia Kathleen Moss Chartered Management Accountant

2. What we’re going to do Different types of joint working Due diligence
Activity Based Costing
Full cost recovery
Budgeting/monitoring expenditure

3. Different types of joint working
Secondment
Sharing back office functions
Lead partner with sub-contracts
JANE – Joint Activity, Not an Entity (HMRC implications)
Partnership
Joint venture company:
Jointly owned charity
Jointly owned trading company or CIC
Partnership
Lead partner with subcontracts – subcontracts should reflect the t&cs that the lead partner contract holds with funder
Or equal partners
May be liable for all liabilities
JANE – possible vat issues if reimbursing for work done

4. Due diligence Reasonable investigation into an organisation
Why is the organisation looking for partnership?
Published accounts
Reserves
Management accounts
Forecast/future income
Stability/sustainability
Reliance on funders/funding streams
Ethos of organisation
Moral of staff
Is there an IT disaster recovery plan

5. Due diligence – finance example
Last Year
Fixed Asset £ 25, Creditors £(117,423)
Debtors £ 6, Restricted funds £ 42,014
Bank £269,402 Unrestricted fund £141,380
Current Year Forecast
Restricted Inc £223, Restricted Exp £265,032
Earned Inc £ 53, Unrest Exp £108,282
Donations £ 5, Total Exp £373,314
Interest £ 1, Deficit £ 90,492
Next year budget
Restricted Inc £120, Restricted Exp £120,000
Unrestr Inc £ 90, Unrest Exp £ 49,318

6. Due diligence – finance example possible questions
Why is there a deficit in current year? Is it planned?
Is there a strategy around it? Will the reserves cover the deficit?
Will the reserves cover running costs for future year?
Is the income from more than one source?
Implications of not receiving some or all of the income?
Is the restricted income confirmed, is the expenditure related to it definite, can it be scaled back?
What is the forecast cash position at end of year and end of future year?
How definite is the £90,000 unrestricted income, it is quite a lot more than previous year?
Would the fixed assets sell for £25k?

7. Due diligence – other questions might include
Background information: usually available from their website such as history, services they provide and who they work with.
Trustees and how the charity is governed – some information available from Charity Commission website, such as filing record.
Financial position, looking back through several years’ accounts, but also by discussion.
Questions you might ask include:
Do actual figures reflect budgets or are there large variances?
Do they recover their overheads on funded work?
Do they have financial KPI’s (key performance indicators)
Do they own property, lease it, have mortgages?
Are there any liabilities that are not on the balance sheet?
Organisation chart and people – how are they structured, who is responsible for management decisions.
Experience of similar service delivery

8. Activity based costing (ABC)
Recognises relationship between costs, activities and products
More accurate costing of service or product
Uses cost drivers (event or factor that causes an activity to be performed) to attach activity costs to outputs
Alternative approach to arbitrary allocation or apportionment of overhead costs
Helps us to think about cost allocation in clearer way 8

9. ABC Costs Customer, product or service specific costs
Activity specific costs
Non-specific costs
Some costs might relate to specific products or customers and not be related to activity
Other costs may have no reasonable direct relationship to activities eg office move 9

10. ABC - cost driver: Reports
Funder A
Income £50,000
Service delivery £42,500
Overhead 15% £ 7,500
Report requirement: 4 reports per yr
Each cycle takes 3 days to prepare
CEO time £220 per day
£220*4*3 £ 2,640
Contribution £ 4,860
Funder B
Income £45,000
Service delivery £39,375
Overhead 12.5% £ 5,625
Report requirement: 1 report per yr
Each cycle takes 2 days to prepare
CEO time £220 per day
£220*1*2 £
Contribution £ 5,185
CEO time: £43,000+NIC+pension - £49,097
Workable days – 25 Holidays – 8 BH– 4 CPD/other days
£49,097/223 = £220 per day
Could also include other costs in CEO time – desk/share of rent/building costs/share of other overhead see FCR

11. Full cost recovery If you are not recovering the full costs of a project you are creating a deficit for your organisation.
Charging the full cost of project incurred by the organisation
All direct project costs
Project’s share of organisational overheads
Explain how overheads proportion calculated
Can use ABC

12. Full cost recovery

13. Budgeting Project budget for each partner Project budget whole project
Quantified plan of action for forthcoming accounting period.
Project budget for each partner
Project budget whole project
Organisational budget
All costs and income
Joint costs
Partner costs
Write out notes on calculations
THIS SLIDE COVERS:
What stage are you doing your budget at?
When applying for funding or when funding is in place
What adjustments need to be done between these two points
For example if you did not get the full amount of funding applied for – how do you reconcile this before starting the project?
KEY POINTS TO COVER:
Exercise: on the left hand side put all the budget lines that this project might have
If you have those costs over 12 months then you can break them down over each quarter
Input these into the projected costs columns
Not all costs will be spread evenly over the 4 quarters – such as start-up costs
When you review the budget every quarter – put the amount spent in the actual column

14. Monitoring expenditure
Minimise and understand over and under spends
Review project budget for each partner
Review project budget whole project
Measure actual expenditure against budget
Review variances
Needs to be regular and timely
THIS SLIDE COVERS:
What stage are you doing your budget at?
When applying for funding or when funding is in place
What adjustments need to be done between these two points
For example if you did not get the full amount of funding applied for – how do you reconcile this before starting the project?
KEY POINTS TO COVER:
Exercise: on the left hand side put all the budget lines that this project might have
If you have those costs over 12 months then you can break them down over each quarter
Input these into the projected costs columns
Not all costs will be spread evenly over the 4 quarters – such as start-up costs
When you review the budget every quarter – put the amount spent in the actual column

15. Further information Charity Commission: NCVO: Sayer Vincent: WCVA:
Choosing to collaborate: helping you succeed
Collaborative working and mergers (RS4)
Strength in numbers (RS24)
Work with other charities
NCVO:
Collaborative working
Sayer Vincent:
WCVA:
CA Plus Community Accounting – offer free toolkits and guidance 15

16. Finance for joint projects and consortia
Thank You
and
Evaluation Forms!
KEY POINTS TO COVER:
EVALUATION FORMS