Managing Care Home Charity Finances during the rising cost of living. By Julie Hopkins
With care homes structured as a charity the current impact of the rising cost of living may be affecting cash flows of the entity. Potential solutions are considered below.
Key areas to consider for optimising cash flow
- Obtain a realistic picture of the current financial situation
- Carry out sensitive scenario analysis to investigate what actions could improve things
- Consider how secure is your cash flow
- How reliable is your cash flow forecast?
- What projects are currently running and how are rising costs impacting the fundraising capability?
- Keep the Trustees updated about the financial position, potentially increase the number of Board meetings to keep everyone current and obtain regular feedback
- Prepare a cash flow forecast based upon a receipts and payments basis which reconciles back to the cash in the bank, distinguishing between restricted and unrestricted reserves
- Confirm that your capital requirements can be met from unrestricted cash resources
- Seek professional advice sooner rather than later
- Taking early positive action can impact your charity’s sustainability
The Charity’s business model
Consider the intrinsic parts of your charity with a clear understanding of operational surpluses or deficits taken together with any funding restrictions.
Update the funding pipeline highlighting key sources of funding and their timeline.
If you have an activity requiring substantial investment revisit the current need to fully consider options including alternative funding or potentially delay the project. If delayed, consider the impact that this will have on the strategic vision of the charity.
Ensure optimal governance is in place to mitigate any risks.
Meet regularly with budget and project holders, identifying any funding risks and gaps.
In conclusion always ensure that all stakeholders are communicating regularly and committed to a sustainable care service.