Tag Archives: Board of Directors

Financial Management

Posted on September 30, 2009 | Leave a comment

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.

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Posted in Governance, IRS, Nonprofit Accounting, Policies and Procedures, Q&A, Risk Management, Tax Forms

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Changes to GAAP and Other News

Posted on August 27, 2009 | Leave a comment

readingThis week I’ll bring to your attention two new books that you might find interesting, guidance on what to think about if you are contemplating a merger, a FASB and GAAP update and this weeks Question and Answer.

Nonprofit Legal Issues and Volunteer Management

The above two topics a what these two books form the Nonprofit Risk management Center deal with.  EXPOSED: A Legal field guide for nonprofit executives, will be a handy reference for those who have ever needed, or may yet need, to contact a lawyer. It is written specifically for the non-lawyer who still needs to know what about the possible legal issues their nonprofit might face. Click the above link and you can read a free preview.

No Surprises: Harmonizing Risk and Reward in Volunteer Management — 5th Edition, helps nonprofit organizations balance the risks and rewards of volunteer management. This book will help make sure you are protecting your organization and those who serve it.

Nonprofit Mergers

Are You a Good Candidate for a Merger? This is what the latest Tools You Can Use from the Fieldstone Alliance asks. The article poses eleven question nonprofit organizations should ask themselves as they contemplate a merger and gives more resources to go to. The Nonprofits Assistance Fund also updated their good idea about how to find a merger partner here.

FASB and GAAP Update for Nonprofits

For some time the Financial Accounting Standards Board (FASB) has been working to codify Generally Accepted Accounting Principals (GAAP). The end result will be a new coding system for the existing rules, not new accounting rules, with the idea to make it easier to track down relevant information to answer questions. It is set to go into effect September 15, 2009. If you would like to check it out for your self and take a look at the section for not-for-profit entities you can go here to sign up for free access.

A Questionable Relationship

Question: The Board Treasurer and the Bookkeeper of the nonprofit I work with are husband and wife. The Bookkeeper opens the mail and makes the bank deposit as well as maintaining the records on who gave what. The Treasurer manages the accounting and pays the bills. Is this a breach of ethics?

Answer: Not exactly a breach of ethics unless your organization has a code of ethical standards that prevents a relationship like this existing. But the possibility for fraud to occur is there. Perhaps more importantly, the appearance of the possibility of fraud to occur is there. I would advise that perhaps duties should be shifted to separate these folks from having responsibility over one another and to reduce the chances that they could collude together to defraud your nonprofit.

There is always the risk of alienating folks dedicated to the mission of the organization by injecting more “business like” activities such as risk management and internal controls. But that needs to be balanced with making sure the organization’s funds are well cared for. I think if it is explained correctly, most people would be willing to make changes to protect the nonprofit so it can keep doing the work it does.

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Posted in Nonprofit Accounting, Q&A, Risk Management

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Creating a Risk Management Culture

Posted on July 27, 2009 | 3 comments

Board MeetingHow do you create a culture of risk management in your nonprofit?  And what is a culture of risk management?

The Nonprofit Risk Management Center had a really nice piece last week about the culture of risk management in nonprofits, and how to establish it. From their article:

When nonprofit leaders reach out to the Center for advice on weaving risk management into the fabric of their organizations they often assume that what’s missing is a long list of policies. While adding new or updating existing policies may be in order, a bigger-picture issue almost always requires more immediate focus. That issue is the culture of the nonprofit, which may be either receptive or hostile to risk management. And, while culture change is a long term effort, starting as soon as possible will lend credence to everything else that follows.

As the article states, risk management isn’t just a list of policies or your insurance policies (that is risk financing, a part of risk management). But it is the tone that is set by board and management. The nonprofit’s ethics also come into play here. If the CEO walks out of the office with a ream of paper under their arm, what does this tell the staff? If the Executive Director says to the staff, “We can’t let the Board know anything is wrong!” what message are they communicating?

To me, and as the above article illustrates, a culture of risk management is one of always asking questions about our organizations.  Typical risk management questions like, “What’s the worst that could happen?” to perhaps less typical questions such as:

  • What would would happen to our event twice the amount of people showed up as we expected?
  • How do we reward staff?  Are we doing enough?
  • Is there a better way to present out financials that will make them easier to understand?
  • Are we being honest in our communications with our stakeholders?

A nonprofit organization faces risk every day just by opening its doors.  If a nonprofit serves a vulnerable population such as children or the elderly they can face even greater risks. But clearly we are not letting that stand in the way of doing needed work.  Managing the risks nonprofits face is critical to the success of meeting our goals and missions. The more we can make risk management a part of our daily processes, of creating that culture of risk management, the better our organizations will be.

Do you have any other ideas of questions we should be asking ourselves? Post them in the comments below. If you would like to immerse yourself in nonprofit risk management issues in a lively, intelligent and entertaining way please check out the Risk Management Center’s 2009 Risk Management and Finance Summit for Nonprofits.

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Posted in Policies and Procedures, Risk Management

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