For many UK charities, spreadsheets remain the default tool for financial management because they are familiar, flexible and free.

Yet as regulatory demands grow and governance expectations tighten, that flexibility increasingly looks like fragility.

With SORP 2026 approaching and threshold changes due later that year, the question facing trustees is no longer whether to upgrade, but how quickly they can do so without disruption.

How Spreadsheets Undermine Governance

Spreadsheets were designed for calculation, not for charity accounting. That distinction shows up quickly when a funder asks how restricted income was spent, or when trustees need to sign off accounts with confidence. The limitations of manual systems become painfully apparent.

The Missing Audit Trail

Spreadsheets offer no inherent record of who changed what, when, or why. A cell can be edited, a formula overwritten, a figure adjusted and the original data simply disappears.

This conflicts directly with the Charity Commission’s CC8 guidance on internal financial controls, which expects charities to maintain clear, traceable records that support accountability.

Fund Accounting Complexity

Charities must separate restricted from unrestricted income, track designated reserves, and report accurately against each funding stream.

In a spreadsheet, this typically means colour-coded tabs, manual cross-referencing and considerable scope for human error.

As income grows and projects multiply, the risk compounds. One misplaced link between worksheets can cascade through an entire set of figures.

Version Control and Key Person Risk

Finance staff email spreadsheets back and forth, each iteration subtly different. Which version is current? Did the corrections from last week’s board meeting actually make it into the master file? These questions consume time that could be spent on analysis and planning.

Perhaps most concerning is the single-person dependency that spreadsheet systems often create. When one volunteer or staff member holds all the knowledge of how the workbook functions, the charity’s financial resilience rests on that individual’s availability and memory.

Reviews of charity accounts by OSCR and the Charity Commission regularly highlight poor records and incomplete accounts, issues that frequently trace back to manual processes and inadequate systems.

Regulatory Pressure: SORP 2026 and Threshold Changes

The Charities SORP 2026, published in October 2025, takes effect for accounting periods beginning on or after 1 January 2026. Charities with a December year-end will feel the impact first; those with March year ends will follow shortly after.

The New Three-Tier Framework

The new framework introduces a three-tier reporting structure based on gross income: Tier 1 for charities up to £500,000, Tier 2 for those between £500,000 and £15 million, and Tier 3 for the largest organisations.

Each tier carries different disclosure and presentation requirements. The Trustees’ Annual Report requirements have been refreshed, with expanded expectations around reserves policies, future plans, and impact reporting.

Technical Changes Requiring System Support

Lease accounting changes, aligned with amendments to FRS 102, will require most operating leases to appear on the balance sheet.

Income recognition rules have also been updated, requiring charities to distinguish more carefully between exchange and non-exchange transactions.

For organisations relying on spreadsheets, implementing these technical changes manually will prove demanding.

Separately, threshold changes announced by the Department for Culture, Media and Sport will take effect from September 2026. The income threshold for producing accruals accounts doubles from £250,000 to £500,000, while audit and independent examination thresholds will also rise.

While this reduces external scrutiny for some charities, it places greater emphasis on robust internal systems. Trustees cannot rely on an auditor or examiner to catch errors that their own processes should have prevented.

Why Boards Delay the Decision

Understanding why charities hesitate to move away from spreadsheets is the first step toward addressing those concerns. The barriers are real, even if surmountable.

Digital Skills Gaps at Board Level

The Charity Digital Skills Report 2025 found that 62% of charity boards have low digital skills or need to develop them further. Over 40% of charities surveyed reported having no digital trustee, a figure that has remained stagnant since 2024.

When board members themselves feel uncertain about technology, approving a system change feels risky rather than strategic.

Budget and Capacity Constraints

Finding funds to invest in infrastructure, systems, and tools was cited as the most significant barrier to digital progress by 60% of charities in recent surveys.

Smaller charities, operating without dedicated finance staff, often lack the capacity to research options, manage implementation or absorb short-term productivity dips during transition.

Fear of Disruption

What if data gets lost during migration? What if the new system doesn’t work as promised? What if year-end accounts are delayed because staff are still learning the software?

These concerns are legitimate. Poorly planned implementations do cause problems. Yet delaying indefinitely carries its own risks, including regulatory non-compliance, governance weaknesses and financial errors that compound over time.

Trustees should remember that legal responsibility for accurate accounts rests with them, regardless of who prepares the figures or what systems are used.

Lack of understanding does not provide protection. A well-chosen accounting system, properly implemented, reduces rather than increases trustee exposure.

What to Look for in Charity Ready Accounting Software

Selecting software is not about finding the most feature-rich platform or the cheapest option. The goal is matching capability to your charity’s needs, now and as you grow.

Fund Accounting as Standard

Any system claiming to serve charities must handle restricted, unrestricted and designated funds properly. Look for native support for tracking income and expenditure by fund, project and cost centre. The ability to generate reports showing fund movements over time is essential for both compliance and decision-making.

SORP Aligned Reporting

Standard reports should map directly to the Statement of Financial Activities (SoFA) and balance sheet formats required under SORP. Systems that produce generic profit and loss statements designed for commercial businesses will require significant manual adjustment at year’s end.

Controls and Integration

Role-based access ensures that only authorised users can process certain transactions. A full audit trail records every change, supporting the separation of duties that CC8 expects. Dual authorisation for payments should be straightforward to configure.

Accounting software that connects with your bank, CRM, donor database, and payroll system reduces manual data entry and the errors that come with it.

Automated Gift Aid claims and real-time bank feeds can save hours each month. Choose a platform that can handle growth in income, transactions and complexity, with vendor support from people who understand charity accounting.

A Trustee Friendly Roadmap for Making the Transition

Moving from spreadsheets to software need not be traumatic. A structured approach reduces risk and builds confidence across the organisation.

1. Assess Where You Are

Start by naming current pain points. Are management accounts consistently late? Do board members struggle to interpret the figures they receive? Is reconciliation taking longer each month? Has the departure of a key person ever caused panic? Documenting these issues creates the case for change and helps define requirements.

2. Define Requirements and Plan Timing

Involve the treasurer, finance lead, CEO and at least one other trustee in defining what the charity actually needs. Separate essential features like fund accounting, audit trails and SORP-compliant reports from nice-to-have features like dashboards or advanced analytics.

Avoid implementing immediately before year-end. Assign board-level oversight to ensure the project receives appropriate attention and secure budget for software licenses, implementation support and staff training.

3. Prepare Data and Run Parallel Systems

Before migration, review current spreadsheets thoroughly. Remove duplicates, correct obvious coding errors and reconcile historical discrepancies. Decide what history to migrate and what to archive. This process often reveals the true limitations of the existing setup.

Operate old and new systems alongside each other for at least one full reporting cycle. Test the month-end processes, fund reports and management accounts in both environments. Compare outputs. This builds confidence and catches configuration issues before they affect live operations.

4. Train Staff and Review Progress

Train finance staff on both the software mechanics and the underlying accounting logic. Provide simple guides to help trustees read and interpret new report formats. Nominate internal champions who can support colleagues through the learning curve.

After a few months, assess whether reports meet trustee needs, gather feedback from budget holders, and consider further automation once the core system is stable.

Transition as Risk Reduction

Moving from spreadsheets to purpose-built software is not about chasing technology for its own sake. The point is equipping your charity with systems that match today’s governance expectations and tomorrow’s regulatory requirements. The work involved is manageable. The risks of delay are not.

At Charity Accounting Partners, we help trustees navigate these decisions with practical guidance tailored to their charity’s size and circumstances. If spreadsheets are holding your organisation back, or if SORP 2026 has prompted questions you cannot easily answer, book a free discovery call and let’s talk through your options.

FAQs

How long does a typical transition from spreadsheets to accounting software take?

Most charities complete the transition within three to six months, including parallel running. The timeline depends on data complexity, staff availability for training, and whether you choose to migrate historical records or start fresh from a specific date.

Can we keep using spreadsheets for some tasks after moving to accounting software?

Yes. Many charities use spreadsheets for budgeting, forecasting or ad hoc analysis while running core accounting through dedicated software. The key is ensuring the accounting system remains the single source of truth for financial records and statutory reporting.

What happens to our existing data when we switch systems?

You can typically migrate opening balances and recent transaction history into the new system. Older records can be archived and kept accessible for reference. A good implementation plan includes data mapping and validation to ensure nothing material is lost during transfer.