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Fund accounting for charities can sometimes feel like solving a puzzle while blindfolded. Between restricted funds, unrestricted funds, various activities, and compliance with the Charity SORP, managing finances can quickly become overwhelming. The good news? Adopting a multi-dimensional chart of accounts can make life a whole lot easier for charity CFOs, treasurers, and finance managers. Here’s how this approach can simplify your charity’s financial management and ensure SORP compliance.

Why Fund Accounting is So Tricky

The heart of charity accounting lies in fund accounting, where every pound must be tracked according to how it can be used. Income is divided into:

• Unrestricted Funds: Can be used for any charitable purpose.
• Restricted Funds: Must be spent on specific projects or purposes, often dictated by the donor.

Then, to add to the complexity, charities must track spending across different activities and departments, all while complying with the Charity SORP. This often results in an unruly chart of accounts that balloons with every additional fund and activity.

Enter Multi-Dimensional Accounting

A multi-dimensional chart of accounts tackles these challenges head-on. Instead of having one long list of codes, you tag transactions with multiple dimensions – such as Fund, Activity, and Department. Think of it like adding layers of detail without cluttering up your chart of accounts. This method simplifies financial tracking and reporting without sacrificing accuracy or transparency.

For example, a single transaction for a charity event might be tagged as:

• Fund: Restricted (Event Fund)
• Activity: Fundraising Event
• Department: Marketing

This allows you to generate reports that show exactly where money came from, how it was spent, and which part of the organisation was responsible. No more confusion or endless spreadsheets!

Why This Matters for Charity CFOs

Charity CFOs know the pain of trying to produce accurate SORP-compliant reports while managing day-to-day operations. A multi-dimensional approach can help you:

• Streamline Reporting: Quickly generate reports like the Statement of Financial Activities (SoFA) or balance sheet without manual adjustments.
• Improve Transparency: Easily show trustees and donors how funds are being used.
• Reduce Errors: Consistent tagging reduces the risk of misallocating funds.
• Save Time: Less time wrestling with spreadsheets means more time focusing on your charity’s mission.

How Aedon.Charities Can Help

Aedon.Charities is designed specifically to make charity fund accounting simpler and more efficient. Built on Salesforce, it uses a multi-dimensional chart of accounts to help you track funds, activities, and departments with ease. You can generate key SORP reports, manage restricted and unrestricted funds, and keep your financial records crystal clear.

If you’re tired of tangled accounts and compliance headaches, it’s time to make the switch. Visit Aedon.Charities to learn how our software can make your life easier and your charity’s finances smoother. Download our whitepaper: Designing a Multi-Dimensional Account for the Charity SORP, to learn more about how to streamline this often complex process. We are here to help!