Founder Interview with Peter Wallace – Turning pennies into pounds.

How SoGood is looking to help Charities navigate financial challenges.

In this interview with Peter Wallace, CFO at SoGood Partners, we delve into the intricacies of charity finances and explore the top 10 financial ratios that are essential for keeping a charity’s finances on track. Peter emphasises the importance of cash flow management, particularly for UK charities, and offers insights into reading and understanding charity accounts. He shares valuable tips and guidance for assessing the financial management of smaller charities, highlighting the need for effective financial management strategies.

Peter discusses the development of a comprehensive financial strategy for charities, underscoring the importance of setting clear financial goals and objectives. He advises on the establishment of a budget and the necessity of regularly reviewing a charity’s financial position. Additionally, he stresses the importance of having a robust system of financial governance and controls in place.

In the rapidly evolving world of charities, change is inevitable, especially in the digital age. Drawing from his experience as a CFO in private sector tech and media start-ups, Peter Wallace has witnessed firsthand how digital transformation can revolutionise operations. He also acknowledges the potential consequences of failing to adapt to these changes.

What challenges do charities face in implementing digital transformation, and how does SoGood address these challenges?

For my whole career, I’ve managed change and digital transformation in business, whether in large advertising groups or in smaller tech start-ups. I’m struck, though, by how much harder this is for charitable organisations. I think there are two main reasons for this – firstly, most digital tools are designed to solve business problems, not those faced by most charities themselves, so retasking these tools to the needs of a charity isn’t always easy. Secondly, there is no doubt that bringing charitable volunteers along with the change is a different challenge to that posed by employees of a commercial business.

At SoGood, we’re here to help charities navigate these shifts. Our tools, services and methods are designed to meet their unique needs, which are not catered for by commercial software providers because they do not deliver against their profit requirements. Here’s my take on how digital transformation can reshape the charity sector.

How can charities effectively leverage digital transformation to maximise their resources and improve operations, and how does SoGood assist in this process?

A lot of the challenges faced by organisations adopting new technology over the past 20 years have been overcome. There is a roadmap, and, to a large extent, the building blocks are already in place.

Furthermore, the advent of cloud computing and increased automation has lowered costs and reduced risks, making the case for change that much more compelling.  

Commercial sector trailblazers paid a hefty premium to gain a competitive advantage when deciding to be early adopters of new technologies. Charities can now benefit from the successes and failures of those pioneers, benefiting from the advantage always conferred on the late adopter. 

When every penny a charity spends on operations is a penny not spent on helping those in need, it’s crucial to get transformation right and the best value for money. Having an appreciation for the financial aspects of an organisation’s business processes is, therefore, key to successful digital transformation. There is no point in taking on technology for technology’s sake. It’s about making the most of every resource and directing it to the benefit of those we are here to help.

At SoGood, we work with charities that recognise the need to identify the business processes where efficiency can be delivered, helping them unlock more value from scarce funding or donations. 

We reduce administrative overheads and promote transparency and accountability. Data is at the core of everything we do. We help charities create quantitative data that improves decision-making and resource utilisation. 

What are the current challenges in charity fundraising, and how is SoGood addressing these issues to improve funding flow and impact measurement?

Fundraising is increasingly challenging. Less ‘traditional’ money is available from government grants, loans and funding sources. Trusts and foundations are holding back deploying the funds they have. ‘New money’ in the form of donor-advised funds is equally held up and not flowing to the point of need. The main reason for this blockage is the lack of quantifiable impact measurement.

There is no question that funding exists. Organisations that can identify and organise their data as information that can be communicated regularly to funders in an engaging way will give themselves the best chance of getting the funds they need to thrive.     

At SoGood, we’re building platforms to do just that. But data alone is not the solution, which is why we take a partnership approach. To survive and become sustainable, charities have to weave data stories that support their missions and resonate with their donors and supporters.  Together, we want every pound raised to deliver the greatest social impact.

We’re not just talking about change; we’re making it. SoGood is transforming how fundraising works in the charity world.

How does SoGood support charities in managing change and digital transformation, particularly in empowering volunteers and staff to embrace new tools and processes?

Change is hard, and the right mindset is key. Without the goodwill of volunteers, for example, many charities wouldn’t survive. We need to encourage and equip people with tools that can help them do what they do as effectively as possible.

At SoGood, we empower charity staff and volunteers by demonstrating how digital tools can enhance their work. We involve them in the process, provide training, and foster a culture of continuous learning and improvement. This approach ensures smoother transitions and stronger organisations. Our success stems from our collaborative method and our focus on partnering with charities committed to change.

What is the role of data in the charity sector, and how does SoGood leverage data to enhance visibility, awareness, and collaboration for charities?

Digital technologies are worthless without data. Therefore, our first port of call is to understand the role of data in the charity sector and either create or surface it. To date, our approach follows three themes: Visibility, Awareness, and Collaboration. 

My fellow founders will elaborate further on these themes and explain the products that we have developed to address each one. My goal here is to highlight the essential nature of quantifiable data and connect this to money. The private sector has this relationship enshrined in its DNA, and the charity sector needs to do the same. 

How can the charity sector develop financial metrics equivalent to those in the private sector, and how does SoGood help charities measure their impact in monetary terms to demonstrate value?

The language of money helps private sector businesses make decisions designed to ensure their survival and prosperity. Profit, return on investment, shareholder value, etc., are all terms with money at their core, which are measurable and directly affect an organisation’s behaviour. 

The charity sector needs equivalent terms that are equally powerful in determining how they carry out their activities – allowing them to flourish. You can read the article we wrote last year if you want to find out more about our research approach, but suffice it to say that we’re working towards ‘Return on Goodwill’.

Goodwill comes in the form of monetary donations and volunteer efforts. The charity receiving this goodwill is responsible for delivering the largest impact possible to its service users. Our work allows our charity partners to measure their impact in monetary terms and then track this over time to demonstrate value. This is only possible by closing the loop between the charity and its service users. A linear relationship does not provide the feedback needed to generate quantifiable impact.

How can charities effectively manage their finances to ensure sustainability and transparency?

Effective financial management for charities involves several key components. First, charity trustees must play an active role in financial governance by implementing robust financial controls, such as internal audits and risk management. Maintaining accurate accounting records and charity and bank accounts, is crucial for transparency. Managing income and donations requires a strategic approach, including leveraging Gift Aid and ensuring transparency in financial reporting. Additionally, charities should develop policies for spending cash wisely, such as managing payments and understanding cost recovery. Building financial reserves is also essential, as it provides a financial cushion for future challenges. This involves managing unrestricted cash reserves and having a clear financial strategy to handle financial assets and liabilities effectively.

How does SoGood assist charity leaders in balancing new technology with operational stability, and what approach do you recommend for successful digital transformation?

Balancing new technology and operational stability is a common challenge for charity leaders. I advise starting small, with quick wins that will build confidence and momentum. Digital transformation is simpler and less disruptive than it used to be, so make the most of it and get going!

At SoGood, we guide charities through a practical, step-by-step digital transformation process. We align digital tools with organisational goals and show how these tools can speed up and streamline operations. Involving staff and volunteers is crucial. It builds their skills and creates a more resilient and inclusive organisation.

How can charities effectively manage their finances to ensure transparency and sustainability, and what role do financial reporting, management tools, and overcoming challenges play in this process?

Effective financial management is crucial for charities to ensure transparency and sustainability. Understanding the importance of financial reporting and auditing is the first step, as it involves preparing a Trustees’ Annual Report and Accounts and recognising the role of independent examiners. Utilising financial management tools and resources, such as online planning templates, is essential for managing financial data and maintaining online security. Staying up to date with the latest financial management trends is also vital. Implementing a comprehensive financial management strategy involves setting effective financial controls, managing risks, and understanding the roles of budget holders and charity trustees. Finally, overcoming common financial challenges, such as lack of funds and knowledge, requires training the team, managing service delivery, and staying informed about financial risks and trends. By addressing these areas, charities can effectively manage financial change and digital transformation.

Finally, how does SoGood support charities in maximising their impact through digital transformation, and why is effective financial management crucial for UK charities?

At SoGood, we believe that in the digital age, transformation is not just an option—it’s essential to maximise the impact your charity could have. We founded SoGood to help third-sector organisations adopt digital tools to make their operations more efficient, increase funds raised, and become sustainable. With insights from our directors’ private-sector backgrounds, we continuously develop our approach to ensure every charity can thrive in this new era.

We practice what we preach, and our work has a quantifiable impact that allows us to unlock investment and funding, which we directly deploy to our charity partners—often at no cost to them. Our goal is to elevate understanding and appreciation of the great work done by the charity sector at a national level, ensuring that those in need receive the help they deserve. Additionally, effective financial management is crucial for UK charities. It’s important for charities to stay up to date with the latest financial management trends and best practices to maintain transparency, accountability, and sustainability.