One Charity. Twenty Rules.

A single purchase inside a charity can be governed by more rules at once than almost any equivalent purchase in a commercial business. Is the money restricted to a specific purpose by the donor who gave it? Does it fall within a grant’s conditions, which may have been set by a funder with its own separate reporting requirements? Does it need trustee sign-off at this value? Does it sit within the department’s own budget for the year? A charity does not have one set of spending rules. It often has as many as it has funding sources, and every purchase has to satisfy all of them at once.

Every Pound Answers to Someone Different

Restricted funds can only be spent on the specific purpose a donor or funder set out when they gave the money, and spending them otherwise is a breach of that restriction, not merely a policy slip. Unrestricted funds, by contrast, can be spent on any of the charity’s purposes, which sounds simpler until a charity is running several restricted funds and one unrestricted one side by side, each with a different balance, a different purpose, and a different tolerance for how it can legitimately be used. Trustees can, in narrow circumstances, apply to the Charity Commission to vary a restriction, but this is uncommon and not something a finance team can rely on as a routine fix (Charity Commission for England and Wales, 2026).

What the New Accounting Rules Actually Change

The rules governing how all of this gets recorded have just moved as well. The Charity Statement of Recommended Practice took effect from 1 January 2026, updated to align with changes to UK accounting standards and, notably, to improve transparency and consistency in how charities report their finances (GOV.UK, 2026). For a charity managing multiple restricted funds alongside grant conditions and departmental budgets, that push toward consistency is not a paperwork exercise. It is a direct challenge to any charity still tracking fund restrictions manually, because the new reporting expectations assume a level of consistent, traceable record-keeping that a spreadsheet updated at month-end struggles to provide.

Why Good Intentions Aren’t a Control

Most charity finance teams know their fund restrictions well. The problem is rarely knowledge, it is enforcement at the point of purchase. A well-intentioned member of staff can authorise a purchase against the wrong fund not out of carelessness, but because nothing in the process actually stopped them, or told them, at the moment they made the decision, which pot of money they were about to draw from and what conditions applied to it. Trustees are expected to be able to demonstrate how decisions are made and how conflicts and restrictions are managed, and ‘we trust our staff’ is not, on its own, a demonstrable control (Charity Commission for England and Wales, 2026).

Making the Rules Visible Before the Money Moves

The charities managing this well are the ones that build the twenty rules into the purchasing process itself, so that a purchase requester sees which fund, which grant conditions and which approval threshold apply before the money moves, not after an auditor asks about it months later. That turns governance from something trustees have to reconstruct at year end into something the organisation can demonstrate, clearly and consistently, at any point in the year.

References
Charity Commission for England and Wales (2026) CC29: Conflicts of interest: a guide for charity trustees. Available at: https://www.gov.uk/government/publications/charity-commission-news/charity-commission-news-may-2026 (Accessed: 24 September 2026).
GOV.UK (2026) All charities urged to check new rules for accounting for 2026. Available at: https://www.gov.uk/government/news/all-charities-urged-to-check-new-rules-for-accounting-for-2026 (Accessed: 24 September 2026).