Key practices review

Let’s have a look at some key financial practices that non-profits should have in place. Check your score on your overall financial practices by selecting the items below that you have in place.

1. Budgeting and Planning *

Develop an annual budget that aligns with the organisation’s mission and strategic goals.

Involve board members, staff, and key stakeholders in the budgeting process.

Ensure that the budget is realistic, balanced, and includes both income and expense projections.

Continuously monitor and compare actual financial performance against the budget

Not yet in place

* required

2. Financial Policies and Procedures *

Establish clear financial policies and procedures that outline how financial transactions are handled, including authorisation levels and segregation of duties.

Document processes for financial reporting, reimbursement of expenses, and procurement of goods and services.

Regularly review and update these policies to stay in compliance with legal and regulatory requirements.

Not yet in place

* required

3. Cash Flow Management *

Develop a cash flow projection to anticipate and plan for the organisation’s short-term cash needs.

Monitor cash flow regularly, ensuring that there are sufficient funds to cover operational expenses and obligations.

Maintain a cash reserve or contingency fund to address unexpected financial challenges.

Not yet in place

* required

4. Revenue Diversification *

Diversify revenue sources to reduce reliance on a single funding stream. This may include grants, donations, earned income, membership fees, and fundraising events.

Cultivate donor relationships and engage in ongoing fundraising efforts to sustain and grow revenue.

Not yet in place

* required

5. Expense Control and Monitoring *

Closely monitor expenses to ensure they are in line with the budget and organisation’s goals.

Implement cost-control measures, such as competitive bidding for contracts and regular expense reviews.

Consider cost-sharing opportunities or collaborations with other organisations to reduce costs.

Not yet in place

* required

6. Financial Reporting *

Generate regular financial reports that provide a clear and comprehensive view of the organisation’s financial health.

Share financial reports with the board of directors, staff, and stakeholders to promote transparency and accountability.

Comply with any legal and regulatory reporting requirements.

Not yet in place

* required

7. Grant Management *

Establish a systematic approach to managing grants, including grant proposal development, compliance monitoring, and reporting.

Keep accurate records of grant-related expenses and outcomes to ensure compliance and accountability to funders.

Not yet in place

* required

8. Audit and Internal Controls *

Conduct an annual financial audit or review by an independent auditor to assess the accuracy and integrity of financial records.

Implement internal controls to safeguard assets, prevent fraud, and ensure compliance with financial policies.

Not yet in place

* required

9. Board Oversight *

Engage the board of directors in financial oversight and decision-making.

Appoint a finance or audit committee responsible for regularly reviewing financial reports, policies, and internal controls.

Not yet in place

* required

10. Long-Term Financial Planning *

Develop a strategic financial plan that addresses long-term sustainability, capital investments, and growth initiatives.

Explore opportunities for endowment funds or planned giving to secure the organisation’s future.

Not yet in place

* required

11. Transparency and Communication *

Maintain open and transparent communication with donors, funders, and the public regarding the organisation’s financial status and impact.

Provide donors with clear information on how their contributions are used to support the mission.

Not yet in place

* required

12. Training and Capacity Building *

Invest in training and capacity building for staff and board members to ensure they have the necessary financial knowledge and skills.

Not yet in place

* required

13. Compliance and Legal Matters *

Stay informed about relevant tax laws, reporting requirements, and regulations that apply to non-profit organisations.

Ensure compliance with all legal and regulatory obligations, including filing annual reports and maintaining tax-exempt status

Not yet in place

* required

Download the document to keep these 13 steps for when you need them.

Key-Financial-Practices..pdf