Planning for the future: Finance

Covid-19 has thrown a lot of musical activity up in the air, and people will be looking to chairs and treasurers for guidance and reassurance about group finances. That doesn’t mean that you have to have all the answers. But before you communicate any information: be confident about what you do know and clear about what you cannot know at this time, and this will help to inspire confidence in your members.

  1. Establish what you do know:
    • Make sure the accounts for your group are up to date; reconcile your cashbook to your bank statements so you know your current cash position
    • Identify unavoidable payments and commitments over the next month, three months, six months and one year ahead
    • Add any income you are confident in receiving over the same timescales e.g. where members have committed to paying subscriptions
    • Identify decision dates for new cost commitments e.g. deposit dates for Christmas venues. Plan committee meetings in advance of these
  2. Discuss as a committee the actions needed to minimise costs and protect income:
    • Consider putting on hold non-essential outgoings (take account of cancellation costs)
    • But if funds are available, consider investing in tools to improve efficiency and future resilience (for instance, is this the moment to investigate the MM Platform?)
    • Find ways to reduce and share costs and risk e.g. joint Christmas concert with another local group
    • Reconsider the use of your reserves
  3. Test your resilience. Ask some key 'what if' questions. Estimate the impact:
    • Are you at risk of running out of cash? When could this happen?
    • Talk to the people who fund you at an early stage: this could be your members, or your audiences, individual donors, sponsors or funders.
    • Who else can help? Talk to your bank, investigate support schemes, consider an appeal.
  4. Repeat steps 1-3 on a regular basis, when new information emerges and in advance of key decision dates.

In general

  • Communicate with and involve your members, musical directors, rehearsal venues etc. Be sensitive to their respective financial positions.
  • Make sure the information you present is clear and straightforward for everyone to understand.
  • Consider appointing a vice treasurer to provide a backup and sounding board for you. Share the cashbook and other financial information securely. Consider the need for further bank signatories.
  • Don't cut corners or bypass financial controls; be vigilant for fraud.
  • Refer to your governing document as a guide to what you can and can't do.
  • Accept that your group will be different after this, including positive improvements to use of IT etc.
  • Take stock, anticipate, be agile and adapt.
  • It is fine to change course as new information becomes available. Don’t get stuck on one decision that was taken in April, when the situation looks very different come June.
  • But always take decisions collectively, as a committee. Make sure that the committee are contactable and are able to meet (online or via telephone conference call) as often as is necessary – this may be more frequent than usually.

Other tips

  • Look at our Keeping Running resource on contracts, ticket refunds, membership subscriptions, freelance contracts etc.. to help you evaluate where you stand as a group and what you may be able to do to contain costs and/or maintain income
  • Always bear in mind that your duty as a committee is to the charity and/or the constitution, if you are not a charity. You are there to ensure the survival of the organisation – what actions will support that most strongly?

Note on reserves

You may have two or three types of reserve, i.e. money set aside which you do not use on a day-to-day basis for your operations:

Restricted funds; e.g. given by a funder for a specific project. You are not allowed as a committee to take decisions on these funds that deviate from their original purpose. You need to consult the funder about any changes you wish to make with regard to how you spend that money. E.g. you may have money for a project to be completed by September 2020, but now you won’t be able to complete it until March 2021. Contact the funder and discuss your new plans with them. In general, we have found that funders at the moment are bending over backwards to be really flexible and helpful. But they need to know you have a plan!

Designated funds; these may be funds that the committee has decided to set aside from reserves in order to make a certain project happen, or renew the website, e.g.. This is money that you as a committee have designated for a particular purpose; but it is your decision to now ‘un-designate’ such funds, should there be a more urgent priority (e.g. to keep the group alive and afloat until it can resume its usual activity).

You will have taken the decision to designate the funds in the committee, now table a discussion with the committee about whether you need to use these funds for more urgent purposes, and then minute the decision.

Unrestricted reserves; this will be money accumulated from surpluses in past years; you may have a policy (as generally recommended) that these should cover 3 or 6 months’ of operations. It is money you have saved up for a rainy day. THE RAINY DAY MAY BE NOW – so if you do need to use part or all of these reserves, to keep your charity going, make sure you have a full discussion in your committee and minute the decision you take. This kind of unforeseeable eventuality is what reserves are for.

Useful links

We hope you find this Making Music resource useful. If you have any comments or suggestions about the guidance please contact us. Whilst every effort is made to ensure that the content of this guidance is accurate and up to date, Making Music do not warrant, nor accept any liability or responsibility for the completeness or accuracy of the content, or for any loss which may arise from reliance on the information contained in it.