Forums need money to organise meetings, pay expenses and for any special events or projects they support. The way money is managed can be the main cause of dispute within a Forum. A few simple finance rules will help ensure that you make the most of the money you have and that the forum is not only ‘above board’, but can also show that it is.
Starting with basics, your constitution should specify:
- the forum’s financial year (eg from 1 April one year to 31 March the next);
- the responsibility of the Treasurer to keep accounts of income and spending;
- that any money the forum has will be used only in furtherance of the aims and objectives.
Finance Rules
As well as the basic items above which will be in your constitution, you will probably need a set of Finance Rules covering things like:
Publication and Examination of Accounts – you should set out arrangements for the publication of forum accounts (eg on your website) and that the annual accounts will be independently examined by a third party who is not a member of the committee.
Note: It is better to specify that your accounts will be ‘independently examined’ rather than ‘audited’. Audit can be a costly process which may be disproportionate to the level of scrutiny neighbourhood forum finances need. ‘Independent examination’ is an alternative to a full financial audit for smaller charities. It is a legally acceptable form of external scrutiny of your end of year accounts.
Bank Account – a number of banks offer accounts designed for small societies – search online to find the best deal for your Forum. To open a bank account you usually need a copy of your constitution and the minutes of a meeting at which the resolution to open a bank account was agreed.
Cheques and Expenses – make sure that cheques need two (of three or more) signatories. Have a form for claiming expenses which is, preferably, signed by someone who is not a cheque signatory. All expenses claims should be receipted.
Book-keeping – the Treasurer needs to have a book or online spreadsheet to record payments and receipts. There is a template spreadsheet on the website. If you use a spreadsheet, make sure it is backed up. Regularly check your bank statement against the books.
Insurance – the committee should take a careful look at what the forum does and what it might become liable for. In particular, you should look into the need for Public Liability Insurance which – for a community group – can cost about £100 a year. Birmingham City Council has a scheme which Neighbourhood Forums can use to take out insurance collectively.
You could include your Finance Rules as part of your Constitution, but usually they are included in a separate document, agreed by members, which is referred to in the Constitution but is not part of it. There are two reasons for this:
- it makes it easier to find the Finance Rules and to refer to them in practice (you do not have to look through the Constitution to find them)
- amending and adding to the Constitution usually needs a two-thirds majority of members; but amending Finance Rules might only need a simple majority vote. It makes it easier to add to the rules, for example, if you find you need to during the year.
Model Finance Rules
Independent Examination
The BCC Insurance Scheme