Tips tools for ngo financial management

Tips & Tools for
Tips & Tools for
NGO Financial
NGO Financial
Management
Management
Denise Phelps
Denise Phelps
Treasurer
Treasurer
MD School for the Deaf & Civitan
MD School for the Deaf & Civitan
Club
Club
NGO Financial
NGO Financial
Management
Management

Do More with Less
Do More with Less

Sources of Income Inconsistent
Sources of Income Inconsistent

Mission-driven, not Financially-Driven
Mission-driven, not Financially-Driven
Staff
Staff

Small Purchaser of Goods & Services

Small Purchaser of Goods & Services

Comply with Donor Requirements
Comply with Donor Requirements
NGO Financial Tools
NGO Financial Tools

Policies & Procedures Manual
Policies & Procedures Manual

Record Financial Transactions
Record Financial Transactions

Monitor & Control Expenses
Monitor & Control Expenses

Satisfy Reporting Requirements
Satisfy Reporting Requirements

Ensure Timely & Accurate Reporting to
Ensure Timely & Accurate Reporting to
Donors and Grant-makers
Donors and Grant-makers
NGO Financial Tools
NGO Financial Tools

Record
Record

Revenues – all types

Revenues – all types

Expenses – all types
Expenses – all types

Assets – All things owned by NGO
Assets – All things owned by NGO

Liabilities – Money owed to others
Liabilities – Money owed to others

Donors can see their money is being
Donors can see their money is being
spent and decide whether to give more
spent and decide whether to give more
Processes
Processes

Programme Funding
Programme Funding

Goods & Services Requisition
Goods & Services Requisition

Cash Disbursements
Cash Disbursements

Updating the Cash Book
Updating the Cash Book
Director/Finance

Director/Finance
Officer
Officer

Responsibilities
Responsibilities

Make all general ledger entries
Make all general ledger entries

Verify information
Verify information

Produce and distribute financial reports
Produce and distribute financial reports
Monthly
Monthly

Record expenses by project
Record expenses by project

Record non-project expenses
Record non-project expenses

Record grants/income received
Record grants/income received

Run trial balance
Run trial balance


Record accrued expenses
Record accrued expenses
Cash Management
Cash Management

Cash is accounted for in General Ledger
Cash is accounted for in General Ledger

Cash is deposited correctly
Cash is deposited correctly

Separate cash handling from recording
Separate cash handling from recording

Payments are verified and approved prior
Payments are verified and approved prior
to disbursement
to disbursement

Vouchers and invoices are marked paid
Vouchers and invoices are marked paid

Bank reconciliations are done timely
Bank reconciliations are done timely
Bank Reconciliation
Bank Reconciliation
1.
1.
Record bank charges into cash book
Record bank charges into cash book

2.
2.
Record any other debits or credits that are
Record any other debits or credits that are
not in the cash book
not in the cash book
*Ensure they are all legitimate
*Ensure they are all legitimate
3.
3.
Prepare Reconciliation
Prepare Reconciliation
Balance on bank statement
Balance on bank statement
-
-
Unpresented cheques/charges
Unpresented cheques/charges
+ Outstanding deposits/credits
+ Outstanding deposits/credits
= Cash Book Balance
= Cash Book Balance
Donor requirements
Donor requirements

Expenses have to be:
Expenses have to be:

Reasonable
Reasonable


Allocable
Allocable

Allowable
Allowable
Budgeting – Why?
Budgeting – Why?

Most important part of Financial
Most important part of Financial
Management
Management

Where do you want to go and how do you
Where do you want to go and how do you
want to get there?
want to get there?

Gives a tool for checkpoints along the way
Gives a tool for checkpoints along the way

Allows you to spot trouble areas and devise
Allows you to spot trouble areas and devise
plans to address them
plans to address them

Provides a benchmark for donors to grade
Provides a benchmark for donors to grade
your performance against projections

your performance against projections
Budgeting – How?
Budgeting – How?

Gain input from everyone when creating
Gain input from everyone when creating
budgets – expenses and income sources
budgets – expenses and income sources

Look at last year and decide what will
Look at last year and decide what will
stay the same and what will change
stay the same and what will change

Break out monthly to prevent cash flows
Break out monthly to prevent cash flows
issues
issues

Income with date to be received
Income with date to be received

Expenses with date to be paid
Expenses with date to be paid
Budgeting Tips
Budgeting Tips

Once budget is created:
Once budget is created:


Increase expenses and decrease income by 10% to
Increase expenses and decrease income by 10% to
see if there would be any trouble areas created
see if there would be any trouble areas created

Look for opportunities to
Look for opportunities to

Buy in bulk for lower cost
Buy in bulk for lower cost

Prepay for cost savings
Prepay for cost savings

Set-up payment plans to spread out cash payments
Set-up payment plans to spread out cash payments

Share with staff/board/donors to see if they spot
Share with staff/board/donors to see if they spot
trouble areas
trouble areas

Gain necessary approval and record
Gain necessary approval and record
Budget change
Budget change
approvals
approvals

Change in scope of project

Change in scope of project

Change in key personnel to carry out project
Change in key personnel to carry out project

Need for additional funds, due to
Need for additional funds, due to
unforeseeable events
unforeseeable events

Transfer of funds from one line item to another
Transfer of funds from one line item to another

Costs prohibited by the grant agreement are
Costs prohibited by the grant agreement are
incurred
incurred
Fixed Assets
Fixed Assets

Ensure they are recorded on balance sheet
Ensure they are recorded on balance sheet

Reflect any changes in them as soon as they
Reflect any changes in them as soon as they
happen
happen

Asset examples
Asset examples


Vehicles
Vehicles

Office Equipment
Office Equipment

Office Furniture
Office Furniture

Computer Equipment
Computer Equipment

Property/Real Estate
Property/Real Estate
Fixed Assets
Fixed Assets

Tag & Inventory all fixed assets
Tag & Inventory all fixed assets
(Donor/Type/#)
(Donor/Type/#)

Record in Asset Register/General Ledger
Record in Asset Register/General Ledger
Opening Balance (cost-purchase/market-
Opening Balance (cost-purchase/market-
donate)
donate)
+ Additions to asset category

+ Additions to asset category
(purchase/donated)
(purchase/donated)
-
Subtractions (depreciation/dispose/sell)
Subtractions (depreciation/dispose/sell)
= Closing balance
= Closing balance
Fixed Assets Tips
Fixed Assets Tips

Verify and inventory all fixed assets at the end
Verify and inventory all fixed assets at the end
of the period
of the period

Make sure you are personally seeing the
Make sure you are personally seeing the
inventory at least once per year (vehicles,
inventory at least once per year (vehicles,
laptops, etc.)
laptops, etc.)

Keep receipts of all fixed assets with any
Keep receipts of all fixed assets with any
applicable warranty information
applicable warranty information

Decide whether to sell any assets that you are
Decide whether to sell any assets that you are

not using or will need to use in the future
not using or will need to use in the future
Travel
Travel

Travel is planned for in advance for budget and
Travel is planned for in advance for budget and
discount purposes
discount purposes

Travel expenses are approved before incurred
Travel expenses are approved before incurred

Travel expenses are accounted for with
Travel expenses are accounted for with
receipts before paid
receipts before paid

Travel adheres to donor requirements
Travel adheres to donor requirements

Travel should be at lowest cost - economy
Travel should be at lowest cost - economy
class, travel on non-holiday weekdays, etc.
class, travel on non-holiday weekdays, etc.
Goods & Services
Goods & Services

Procurement principles
Procurement principles


Competitive Bidding
Competitive Bidding

Transparency
Transparency

Supremacy of the tender committee/procurement
Supremacy of the tender committee/procurement
officer
officer

Excluded parties
Excluded parties

Employee, officer or agent of NGO
Employee, officer or agent of NGO

Specification development contractor
Specification development contractor

Excluded by donor agreement
Excluded by donor agreement
Goods & Services
Goods & Services

Request for Bid
Request for Bid

Responsibilities/specifications/type of

Responsibilities/specifications/type of
service
service

Minimum qualifications
Minimum qualifications

Terms of Service
Terms of Service

Deadline for submission
Deadline for submission

Deadline for completion
Deadline for completion

Compare at least 3 Suppliers
Compare at least 3 Suppliers
Goods & Services Tips
Goods & Services Tips

Annual goods and services needs
Annual goods and services needs

Collective buying opportunities
Collective buying opportunities

Bulk or early payment terms discounts
Bulk or early payment terms discounts


Monthly commitment discount
Monthly commitment discount

Consolidate suppliers
Consolidate suppliers

Referral discounts
Referral discounts

Lock-in prices/contracts
Lock-in prices/contracts
Reporting
Reporting
Requirements
Requirements

Determine each donor’s requirements
Determine each donor’s requirements

Keep each donor/grant accounting
Keep each donor/grant accounting
separate – through bank accounts
separate – through bank accounts

Quarterly
Quarterly

Disbursements
Disbursements


Cash Flow/Disbursement
Cash Flow/Disbursement

Director/Accounting Officer Statement
Director/Accounting Officer Statement
Annual Reports
Annual Reports

Government requirements
Government requirements

Donor requirements
Donor requirements

Independent auditor
Independent auditor

Submitted 30 days after audit to Donors
Submitted 30 days after audit to Donors

Financial reports 90 days after end of
Financial reports 90 days after end of
fiscal year
fiscal year

Include impact reports, explanations, etc.
Include impact reports, explanations, etc.
with financial statements
with financial statements
Additional Information

Additional Information

Payroll
Payroll

Corporate Governance
Corporate Governance

Computer Information Systems
Computer Information Systems

Appendix
Appendix

Bank reconciliation
Bank reconciliation

Budget Book
Budget Book

Fixed Asset Register
Fixed Asset Register

Comparative Quotation Chart
Comparative Quotation Chart
QUESTIONS???
QUESTIONS???
Thank you for participating today!
Thank you for participating today!
Contact information –

Contact information –
Denise Phelps
Denise Phelps