Category Archives: Policies and Procedures

Manage What Risk

Why should we care about risk management in our nonprofits? Or maybe we should ask what is risk management in the first place? It is more than just an insurance policy and that list on your shelf about what to do in case of a fire. Anyone involved with money in a nonprofit is probably familiar with risk and managing risk; who signs the checks, reads the reports, makes sure those reports get filed to the right place at the right time? Anyone involved with the program side of a nonprofit is probably familiar with risk and managing risk too; who makes sure our volunteers are taken care of? Are we keeping our participants safe? Anyone on the board of a nonprofit organization is probably familiar with risk and managing risk as well; are we meeting our mission? Are we paying our top level staff correctly? Do we understand our financial reports?

I always try to stress that risk management is everyone’s job and there is no better organization to help us under stand risk and help us manage it that the Nonprofit Risk Management Center. Their annual Summit is coming up on September 18 – 20 in Seattle and I encourage you all to take a look at the programs they are offering this year. Members of The Nonprofit Center will get a discount on registration, and if you register before August 6 you will save even more. I look forward to seeing you there.

Financial Management

MFMP-logoI have written before about creating policies for your nonprofit. Now nonprofits have a new tool they can easily use to create their own financial management policies and plans. The Nonprofit Risk Management Center has a new tool called My Financial Management Plan where users can go through up to 21 different modules on nonprofit financial and accounting topics to create a variety of policies and procedures to help manage, organize and streamline their financial operations. From the Risk Management Center:

Nonprofit leaders have spent countless hours developing the necessary components of a financial management plan. But for many organizations the components, from an annual budget, return on investment strategy, cash flow planning tool and more, remain disparate. The nonprofit lacks a cohesive plan that reflects the organization’s commitment to the effective stewardship of its assets. My Financial Management Plan was created to guide leaders in updating the components of their financial management systems and integrating these components into a cohesive plan. This powerful system features covers topics such as Board Fiduciary Obligations, Managing Fraud Risk, Managing Cash Flow, Return on Investment Analysis, Cost Allocation, Classifying Net Assets, Managing Cash Flow, Budgeting, the form 990 and Grants and Contributions.

My Financial Management Plan is a powerful tool to turn financial management strategies, policies and protocols into a plan that will help your nonprofit demonstrate both competence and accountability. Use the “Plan Modules” feature to go through the 22 system modules. Each module offers the opportunity to upload existing material from your financial management system, create new content (based on our templates or created “on the fly”), or skip sections you don’t wish to use. Use the “Manage My Plan” feature to edit your draft plan, upload supporting PDF files and view/download your plan. The system also features a classroom with easy-to-understand articles and resources on a wide range of financial management topics.

I was fortunate enough to work on this project and create a lot of the module content. I know that this will be a great tool for nonprofits to learn about what they need know about with regards to their nonprofit’s finances and creating the appropriate policies and procedures to ensure good financial stewardship. For those not ready to buy access to the program you can register with the site to receive periodic email updates on nonprofit financial issues.

If you have any questions or comments about the program please let me know via email or in the comments below.

Nonprofit News Update

roundupThis weeks update features a great piece on using Social Capital, more human resource topics that didn’t make it in to the last post and the latest from the Internal Revenue Service that might affect your organization.

The Power of Social Capital

The Fieldstone Alliance has a great e-newsletter and this topic caught me eye: Mapping Your Networks to Mine Valuable Resources. From the article:

After Exploring all possible options for reducing expenses and increasing revenues, many nonprofits are stymied—how can they survive this downturn? Every nonprofit has another valuable resource that they can tap—social capital. Positive, productive relationships represent social capital, which is just as important (well, almost as important) as money in the bank.

Social capital has been described as the resources available to people based on the networks their relationships give them access to. Just as a skilled plumber knows how the water is piped throughout the house, a skilled nonprofit or community leader knows how social capital flows through their networks or community.

Check out the article for more.

More on Nonprofits Human Resource Issues

Are you, or have you ever had to draft a severance agreement? This article talks about a new publication from the Equal Employment Opportunity Commission that may be of help, even though some are renaming the document, “How to Sue Your Employer.”

Exempt employees can present a challenge to employers, nonprofit or for-profit, especially when it comes to the issue of docking an employee’s pay.  Make a mistake and you can violate their exempt status and open your self up to a world of financial and legal hurt. This article and this article offer some guidance that may be of help. You should also make sure there are not any separate, or even more stringent state rules that may apply to your organization as well.

IRS Updates and News

For those who have been waiting, is ready to help you through filling out your 2008 form 990. They can also help you with several state filings as well, please do pay them a visit.

The final regulations for the 990-N, the electronic post card filing for small nonprofits have been released. No changes from the draft version, but it should be noted that organizations that are required to file the form and fail to do so for three consecutive years will automatically lose their tax-exempt status. Revocations will begin in May 2010.

The latest Form 990 filing tip is all about related organizations and schedule R. What is a related organization you ask? From the IRS:

Related organizations are organizations that stand in a parent/subsidiary relationship, brother/sister relationship, or supporting/supported organization relationship. Supporting and supported organizations are defined in section 509(a)(3) and 509(f)(3). Determination of the first two relationships depends on a definition of control set forth in the Form 990 instructions glossary and Schedule R instructions. The definition of control depends on whether the organization has owners or persons with beneficial interests.

Finally, the IRS wants us to make sure we handle donated property and non-cash contribution transactions the right way. Here is a page with several more links that might be of interest to any organization that receives non-cash contributions.