Over the past few years, the size of the operations of this client had increased significantly. As a result, the income increased by over 200% in three years.
The rapid expansion, whilst welcomed by the trustees and certainly by the beneficiaries who are now benefiting from a wider range of services spread over a much larger area, did bring with it many challenges. Although the larger organisation could benefit from economies of scale, one challenge was in ensuring effective management and monitoring of all the income streams of the charity.
We advised that it was increasingly important to prepare cash flow forecasts. However, the internal resources of the charity did not have the expertise for this task. We helped them set up cash flow projections with all major components of income and expenditure. Until then the charity had been operating a main non-interest-bearing bank account. The projections proved, however, that during the course of the next 12 months and beyond, the charity could have significant positive cash flow balances. This would necessitate a proper strategy for how these extra funds could be utilised. We advised the trustees on the setting up of an investment committee whose remit, amongst other things, would include appropriate investment of surplus cash in order to generate a new income stream for the charity.
We helped the charity to set up an investment committee. Meetings were arranged with potential investment managers and various banks. As a result of this, the charity was able to generate significant interest income.
The investment committee now meets twice a year and all major decisions are reviewed and monitored by this committee, which then reports to the board of trustees.
If you would like any advice on management of finance then please contact our charity group who will be more than happy to help.