Management accounting – How it can help to improve the financial health of charities
Hazra Patel, 25 November 2025
Hazra Patel, 25 November 2025
It goes without saying that in the charity and not-for-profit sector every penny counts. Rising costs, uncertain funding streams and increasing demand for services means that charities are under more pressure than ever to demonstrate financial stability and effective resource management.
This is where the lessons from the world of business can be critical, no more so than in the use of regular management accounting to give a window into financial health.
While statutory accounts provide a historic snapshot of financial activity, management accounting gives trustees and leadership teams something more by providing valuable, real-time insight. It helps charities understand not just where they have been, but where they are going.
Many charities focus their financial reporting on meeting regulatory requirements. It is easy to understand why, as anything else may seem to detract from the limited resources that some organisations operate with.
However, management accounting shifts the emphasis from compliance to strategic decision-making for organisations and their trustees.
By producing regular management accounts, often monthly or quarterly, charities can more easily:
Having this level of visibility allows trustees to act quickly, adjusting budgets or plans before small financial issues become major risks.
Donors, funders and regulators increasingly expect clear evidence of how charitable funds are being used.
Management accounting enhances transparency by providing detailed, timely reports that can be shared with stakeholders.
It also supports better internal governance. Trustees can assess the financial implications of strategic decisions, ensuring that spending aligns with charitable objectives while maintaining sufficient reserves for the future.
One of the biggest challenges charities face is balancing immediate needs with long-term financial health.
Management accounting helps achieve this balance by forecasting future income and expenditure under different scenarios.
For example, scenario planning can help charities understand the impact of losing a grant, changing service demand, or investing in new technology.
These insights make it easier to plan proactively, rather than reactively and to build financial resilience.
Good management accounting doesn’t just provide numbers, it provides clarity throughout the year, opening up constructive conversations between finance teams, trustees and operational staff.
Our experienced charity and not for profit team are happy to help organisations and trustees with a wide range of issues. For further support, please contact Partners Hazra Patel (hazrapatel@lubbockfine.co.uk) and Lee Facey (leefacey@lubbockfine.co.uk).
