Addressing financial literacy among charity trustees and leaders

Resources for taking practical steps to address lack of financial knowledge as part of managing a charity responsibly and prudently.

Addressing financial literacy among charity trustees and leaders

Resources for taking practical steps to address lack of financial knowledge as part of managing a charity responsibly and prudently.

Charity trustees play a crucial role in charities’ governance and financial management. However, many trustees lack the financial literacy to fulfil their responsibilities effectively. Three insightful articles from Pilotlight, Getting on Board, and Sage provide a deeper look at the importance of training, support, and education for charity trustees, highlighting strategies to empower them in their roles. They highlight a few points:

The importance of training and support

According to Pilotlight, well-equipped and supported trustees can significantly enhance the impact and sustainability of charitable organisations. Their article emphasises the need for training materials, toolkits, and expert advice to help trustees navigate legal complexities and contribute meaningfully to strategic decision-making. Additionally, effective support structures, including succession planning, are vital for maintaining organisational stability and effectiveness. This involves identifying and nurturing potential future trustees to create a pipeline of capable individuals committed to the charity’s mission.

Addressing financial illiteracy

Getting on Board highlights a common issue: many charity trustees are often clueless about finances. The article stresses that trustees cannot delegate their financial responsibilities and must engage with the charity’s financial matters. It suggests providing finance training for all trustees and ensuring that financial information is presented clearly and linked to the charity’s activities. This approach helps trustees overcome any anxiety about discussing finances and encourages them to ask insightful questions, even if they are not finance experts.

Steps to educate and empower trustees

Sage’s article outlines five essential steps to help trustees take an active role in the financial management of their charities. These steps include assessing the trustees’ current level of financial knowledge, explaining finance terminology, detailing significant income streams, and mapping management accounts to statutory accounts. The article also looks at the importance of strong financial governance and the personal liability trustees face if they fail to meet their obligations.