Financial Management - Common Good Vermont

Thank you to National Council of Nonprofits for sharing:

Boards of directors have a fiduciary duty to ensure that the assets of a charitable nonprofit are used in accordance with donors’ intent, and in support of the charitable mission. One way to ensure prudent financial management is for the board of directors to adopt financial policies. Perhaps the most important financial policy for any charitable nonprofit is a conflict of interest policy.

Financial policies clarify the roles, authority, and responsibilities for essential financial management activities and decisions. In the absence of an adopted policy, staff and Board members are likely to operate under a set of assumptions that may or may not be accurate and productive.

– Propel Nonprofits (formerly Nonprofits Assistance Fund)

Examples of financial policies commonly used by nonprofits include a policy that describes when a board member or an employee’s travel expenses will be reimbursed; how cash is handled, and how the nonprofit’s assets are invested.

This short Financial Management Self-Assessment Tool, developed by the Nonprofit Association of Oregon, is useful to explore the types of financial practices that may be beneficial for your nonprofit to follow and/or document in a written policy.

Just starting out? These financial policy guidelines from Propel Nonprofits offer a framework for drafting and adopting the most useful policies for your nonprofit.

Basic Financial Policies

Conflict of interest (National Council of Nonprofits)
Gift acceptance policy (National Council of Nonprofits)
Learn why expense reimbursement policies are important (Minnesota Council of Nonprofits)
Annual review of the executive’s compensation (National Council of Nonprofits)
Whistleblower protection (National Council of Nonprofits)
Nonprofit Fiscal Policies & Procedures: A Template and Guide (Compasspoint)
Resources for nonprofit financial management (Wallace Foundation)
An Executive Director’s Guide to Financial Leadership (Nonprofit Quarterly, authors Kate Barr and Jeanne Bell)
The Scenario Planning Worksheet developed by Propel Nonprofits is a step-by-step guide to contingency planning that can help boards and staff make informed budget and management decisions based on different scenarios.
Does your nonprofit need to conduct an independent audit? (National Council of Nonprofits)
Template accounting procedures manual (Blue Avocado)

For Boards: Finance is Fun!

An Appreciation of Depreciation (Video) Propel Nonprofits
Understanding Cash Flow (Video) Propel Nonprofits
Understanding Cost Allocation (Video) Propel Nonprofits
Understanding Reserves (Video) Propel Nonprofits

Financial Literacy Resources

Make sure board members understand their oversight role for internal controls
Take the fear out of financial statements (BoardSource)
Glossary of financial terms (Nonprofit Finance Fund)
Ideas for board orientations: Balance Sheet Cheat Sheet; characteristics of financially healthy nonprofits; how to manage restricted funds (Propel Nonprofits)
Share the past year’s IRS Form 990 and help board members understand how to read the Form 990 (Nonprofit Coordinating Committee of New York)
How to Talk About Finances So Non-Financial Folks Will Listen (Bridgespan)
Audits and audit committees (National Council of Nonprofits)
Operating reserves (National Council of Nonprofits)
Endowments (National Council of Nonprofits)

Practice Pointers

Have you considered clarifying the board and staff’s role in financial accountability? Sample board/staff financial accountability agreement (Blue Avocado)
Sit down with the finance committee and discuss what makes a great board treasurer (Propel Nonprofits)
Eight key responsibilities of treasurers of all-volunteer organizations (Blue Avocado)
Make sure your board (and staff) are comfortable managing restricted funds (Propel Nonprofits)

Watch Common Good Vermont’s Finance Friday Series

Watch our Finance Fridays series, a live webcast event for nonprofit staff and board members who want to improve their organization’s financial performance.

What Kind of Audit is Best for You? Todd Wimette Finance Friday
Christine Moriarty – What does your board need to know? Finance Friday
Reduce Your Risk Through Better Management of Your Accounting & Bookkeeping Staff
Managing Multiple Revenue Streams with QuickBooks
Financial Basics for Nonprofits with Wendelyn Duquette of QuickStart

Watch Now