In our latest Q&A, we speak to Mark Morford, Regulated Products Manager at CAF Financial Solutions Limited. He is able to outline how and why charities use the CAF Charity Deposit Platform – powered by Flagstone.
Tell us about CAF – what role do you play for UK charities?
CAF Financial Solutions Limited, a subsidiary of Charities Aid Foundation, offers financial products and services exclusively for charitable organisations in the UK.
We do this via our website, social media, charity events, and our team of Relationship Client Directors based around the UK.
We also offer the CAF Charity Deposit Platform – powered by Flagstone – which helps charities to better manage, protect, and grow their cash reserves.
What are the biggest challenges charities face when managing their cash reserves?
There are two stand-out challenges. Firstly, opening new savings accounts is often time-consuming because of charities’ inherently complex structures. Secondly, charities see frequent turnover of trustees and account signatories.
Between these two factors, charities are less likely to switch deposits between different banks and savings accounts to get the best possible rates. This is one of the main reasons why Flagstone is so popular with our charity partners.
There’s also the challenge of keeping cash safe. Ensuring FSCS protection on all deposits is a priority, while it’s also important that charities’ deposits are kept with well-rated, trustworthy institutions. This can be difficult to guarantee if you don’t have lots of time to do the research.
Which aspects of Flagstone’s platform do your charities find most useful?
Access to a wide range of providers and competitive rates is important – but the key feature for most is the ability to access them all through a single application. By putting all these accounts in one place, charities can cut down the admin involved with opening new accounts.
Similarly, charity trustees can rest easy in the knowledge that every savings account they see in Flagstone will accept charity money. This often a great comfort to them.
Charities are also able to ensure the security of their cash with the platform. They can more easily take advantage of FSCS protection, while also filtering banks for strong Fitch credit ratings.
Finally, the platform offers the flexibility for trustees to structure their cash deposits over a range of timeframes. This way, they can cater for short-, medium-, and long-term liquidity needs.
Can you share an example of a specific charity that’s significantly benefited by using Flagstone?
One stand-out example is LGBTQ+ youth homelessness charity akt – formerly the Albert Kennedy Trust.
akt had built up significant cash reserves over time. But it was struggling to ensure that it kept all that cash safe within FSCS limits, while also maximising their interest. We introduced them to the CAF Charity Deposit Platform, where they could open multiple savings accounts without all the effort they’d come to expect.
This made it easier to ensure all their cash reserves were eligible for FSCS protection, while also increasing their interest income by over 500% since beginning to use the platform.
akt's Director of Finance, Joanne McKenna, added that ‘the platform is really easy to use. We’ve definitely made full use of it. I’ve moved money around to access some of the higher interest rates – it means we earn more interest, and spreads the risk of where we leave our cash.’
You can read akt’s full case study with CAF here.
Which trends do you see impacting charities' financial management?
The sector is struggling with the cost of living crisis. While donations increased to an estimated £13.9bn in 2023 (Source: CAF UK Giving 2024 report), the number of donors has declined as incomes are squeezed. Meanwhile, austerity has reduced funding from central sources.
This, as well as reduced inflation, is driving charities to lock in higher rates today. But they need to be ever more careful that their cashflow meets their current beneficiary needs.
Charities are also increasingly wary of cybercrime and the risks it poses. The proliferation of financial management technology inevitably makes charities day-to-day lives easier – but it also creates opportunities for cyber criminals to take advantage. That’s why they’re increasingly looking for platforms that prioritise security and risk controls, rather than just convenience.
What role will technology play in the future of charitable giving?
Technology will undoubtedly continue to play an ever-increasing role in charitable giving, as it now touches every aspect of people’s lives. We’re seeing donors’ expectations and habits change as technology becomes more embedded – they want quick, easy ways to donate, and more donations than ever now take the form of spontaneous gifts.
This means charities will be forced to innovate, to ensure they can capture those donations whenever donors want to make them. But it also creates uncertainty, as it means charities’ income is more likely to fluctuate. Platforms that allow charities to quickly react to these fluctuations, like the CAF Cash Deposit Platform, are likely to be increasingly vital.
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