There are very different levels of understanding of what good management information (MI), both financial and non-financial, looks like within the charity sector and much MI is so inconsistently reported that many charities struggle to understand the value of what good management information can bring to them.
But there are many benefits for charities who make MI work for them. Good quality data can transform the way a charity works, providing the board and management with the ability to interpret information in order to make better decisions, manage day to day activities, have confidence in meeting their strategic objectives and be able to provide insight to donors and regulators as to how each £1 donated is being used.
So what’s holding charities back? In many instances it can be the amount of MI itself. Funders, the public, the Board, management, employees and donors all want different data in different ways and not enough information can reduce an organisation’s ability to identify key risks. The right blend of financial and non-financial information is also key – even if the non-financial data is difficult to obtain it can be key to informing the charity as to the actual impact its activities are making to its beneficiaries.
IT is also a challenge for many charities, as integrated systems are often difficult to realise and costly to implement.
MI tools and systems for charities in particular need to be able to measure the value of the activities that are typical of charities – such as determining both the input and social impact of voluntary workers’ time. Some of this data may be easy to collate (eg timesheets for volunteers), however other information may be more difficult to obtain and require a long period of data capture (eg to measure social impact). Even fund accounting for some charities can be difficult where there are multiple funds without the use of bespoke accounting systems. Some charities still use separate ‘pots’ or bank accounts for recording separate funds. Often separate spreadsheets are used outside the main accounting system.
Another concern can be a charity’s trustees, who sometimes may not have the right skills to know what information they are reviewing.
Charities need to get the balance right in terms of the quantity and quality of management information that they provide. Trustees should have the experience and training to focus on strategic and operational matters and the MI should support both, which in turn will mean trustees have the right information to ask the right questions.
Trustees should be consulted on the content and quantity of MI being produced – different skill sets within the Board will mean different interests and ability to interpret information.
Good MI can also be used to inspire those working within a charity to steer their work in the right direction for the organisation, so really good MI, where people can easily see the impact that they are making, can ensure people use their energies to maximum effect. Clarity of the MI can also help an individual understand how their particular project or area fits into the organisation as a whole.
All too often MI is used as a reactive response to an adverse situation and as such, the value and assistance it can provide is often undermined. Charities need to agree upfront with their Boards what information they will provide in order to achieve their desired outcomes. If effective processes are in place and MI is planned in a proactive, strategic and visible way, it can help provide a charity and it’s Board with security, focus and assurance for the long-term.