The Financial Intelligence Service (FIS)
Welcome to the GuideStar UK Financial Intelligence Service (FIS)
In addition to presenting basic regulatory information on all 169,000
registered main charities on the free public website, GuideStar UK provides
extensive financial and narrative data for more than 65,000 registered
charities.
This detailed level of information is presented in GuideStar UK's finance web
application (FIS) which can help deepen charity finance professionals'
understanding of the third sector including;
Peer benchmarking
Charity finance directors and other finance professionals can now derive
considerable value from peer benchmarking, using comparative information to
assemble a peer knowledge base that allows them to:
-
Identify and analyse their position within or their sector.
-
Compare financial performance in terms of key financial ratios.
-
Review how others are responding to the increasing demands of public
accountability disclosures.
-
Find out how others are reporting risk management, reserves and other
organisation policies, and performance information.
-
Assess the range of key performance indicators used in the market.
Financial ratios
Financial ratios underpin the company credit score checks offered by Experian
and Equifax which now feature in public service delivery procurement processes
and may present a barrier to some third sector organisations. Some ratios -
such as solvency, current assets and return on investment - are applicable to
all types of organisations, but others such as those based on profitability
(PBIT - profits before interest and tax) and use of loan finance (gearing) are
of little relevance.
GuideStar UK is helping the charity finance sector develop its own set of
relevant financial ratios and use them to deepen an understanding of what
drives financial performance in not-for-profit organisations. Reserves
retention and fundraising cost ratios are obvious candidates but there are
others, such as trading cost and governance cost ratios, that may be very
informative. For example, the average solvency ratio for the largest hospice
charities is 0.89 and the average trading cost ratio is 1 - i.e. only breaking
even.
An immediate challenge is the establishment of norms including average ratio
scores for like organisations, and finding the threshold scores that place
organisations into the top or bottom quartiles. The most important challenge,
however, is to understand what the implications are of such ratio scores and
converting this into knowledge. To view a description of the finance ratios
please click
here - Opens new browser window.
Organisational performance narrative
The Charities SORP places great emphasis on the narrative component of the
trustees' annual report and over recent years the content of such narratives -
especially relating to the review of activities - has for many organisations
evolved into meaningful performance reporting. Organisational policy statements
have also emerged as an integral part of performance reporting with risk
management, reserves and investment policies revealing the strategies adopted
by organisations. Finance directors and auditors will now be able to identify
and assess the implications of pension deficits, rising utility costs, the
calculation of reserve thresholds and ethical investment policies.
Research and analysis
Almost 2% of all charities have qualifying statements from their auditors and
the 'going concern' test is a particular issue for many charities. Also there
are currently 1,300 charities holding property investments valued at more than
£6bn - or to assess the merits of the fact that 2,000 charities hold almost
£2bn as cash investments. Monitoring the growth in the number of charities and
the value of property investments held may help deepen the understanding of the
third sector's balance sheet.
Charity checklists
The following checklist will help your charity identify which sections of
Update
my charity
can be used to add further information about organisational performance and
policies. If you have any questions or require assistance adding information
please contact info@guidestar.org.uk - opens new browser window. To view the
charity checklist please click
here - Opens new browser window.
GuideStar would welcome the opportunity to develop the financial
intelligence service in dialogue with charity finance professionals. For more
information or to arrange a demonstration, go to
www.guidestarintelligence.org.uk or contact Sally Bagwell by telephone on 020
7831 0660, or email
sally.bagwell@guidestar.org.uk.
If you would like to register your interest for this service please
click here