Financial Policy And Procedure Manual For Nonprofit

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Financialpolicies 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."

Do you have questions about your nonprofit's financial practices? Perhaps it's time for a financial management check-up! The following self-assessment tools can help you focus specifically on financial management practices. How is your nonprofit doing?

Just starting out? These financial policy guidelines (Nonprofit Financial Commons) offer a framework for drafting and adopting financial policies for your nonprofit. For additional guidance on financial policies, consult these pages:

Disclaimer: Information on this website is provided for informational purposes only and is neither intended to be nor should be construed as legal, accounting, tax, investment, or financial advice. Please consult a professional (attorney, accountant, tax advisor) for the latest and most accurate information. The National Council of Nonprofits makes no representations or warranties as to the accuracy or timeliness of the information contained herein.

If your nonprofit is lacking in the area of financial policies and procedures, it will help your board members to understand the definitions of financial policies and procedures and review sample financial policies and procedures to ensure your organization is financially healthy and sustainable for the long term.

What is a financial policy? A financial policy is a formal description of how your board handles issues like paying down debts, allotting cash reserves, who can handle money, and how you deposit and withdraw funds. The goal of financial policies is to protect donor funds, promote financial stability, and hold the board and executives accountable for financial expenditures and oversight.

Until you have your financial policies and procedures established, you have a bit of work in front of you. It will be well worth the time and effort you spend on this process. Once you document your financial policies and procedures and have them approved by the board, you can make adjustments as you need to.

With access to unlimited cloud storage, your financial policies and procedures and all your other documents will always be within easy reach of your board members. Moreover, your board management system gives your nonprofit board all the tools it needs to facilitate all of your board activities and help you reach your goals and objectives in light of helping your community.

Financial policies clarify the roles, authority, and responsibilities for essential financial management activities and decisions. If the idea of creating a financial policy seems daunting, this basic guideline for policy development may be helpful.

Developing and adopting a written financial policy is a valuable practice for any nonprofit organization, no matter how small or large. 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 or productive. If the idea of creating a financial policy seems daunting, these guidelines for policy development and this basic example may be helpful. Even though there may be occasional deficits, or periods of tight cash flow, the following characteristics are good signs that your organization will be financially healthy over the long-term.

The purpose of the financial policy is to describe and document how the board wants financial management activities to be carried out. In order to accomplish this, every financial policy needs to address five areas:

We offer an example of a very simple financial policy to get you started, but keep in mind that no example will be an exact fit for your organization. Never adopt a policy without a thorough review and consideration of the risks, operations, and structure of your organization.

No advances of funds to employees, officers, or directors are authorized. Direct and necessary expenses including travel for meetings and other activities related to carrying out responsibilities shall be reimbursed.

In order to ensure that planned activities minimize the risk of financial jeopardy and are consistent with board-approved priorities, long-range organization goals, and specific five-year objectives, the Executive Director shall:

FAN will accept stock or other negotiable instruments as a vehicle for donors to transfer assets to the organization. Transfer and recording the value of the asset shall be done in a consistent manner and in compliance with accounting standards. The Executive Director shall sell any stock given to the organization immediately upon receipt by the organization.

FAN shall accept contributions of goods or services other than cash that are related to the programs and operations of FAN. Any other contributions of non-cash items must be reviewed and approved by the Board of Directors before acceptance.

Propel Nonprofits is an intermediary organization and federally certified community development financial institution (CDFI). We provide capacity-building services and access to capital to support nonprofits in achieving their missions including the ability to link strategy, governance, and finance and to support nonprofits throughout their organizational lifecycle.

Accountability is important for nonprofit organizations. After all, they are tax-exempt and rely heavily on donations and other charitable contributions from donors and their communities. Naturally, there is an expectation that nonprofit organizations operate ethically and steward these resources wisely.

In addition to sharing a nonprofit policies and procedures manual template, this article will walk you through why such a manual is so important and what key policies and procedures you should include. Keep reading!

Policies and procedures are operational guidelines for a nonprofit organization. They protect the organization by outlining protocols, policies, and procedures that employees and board members must follow as they work to fulfill the mission of the nonprofit organization.

A comprehensive policy and procedure manual is a great accountability tool for any nonprofit. By documenting policies and procedures in writing, the nonprofit is protecting both itself and its staff by clearly outlining guiding principles as well as potential ramifications for violations.

Having a documented policies and procedures manual also ensures that nonprofits respond to situations in an equitable and consistent manner. When policies and procedures are written down, and include consequences for violations, nonprofit managers must adhere to what is documented each and every time a situation arises.

Having all policies and procedures documented in an easily-accessible manual allows staff, volunteers, and board members to react to situations in real time by having all of the needed information at their fingertips.

There are some key policies and procedures that all nonprofits should have in place, regardless of mission or size. These include procedures related to compensation, fundraising and gift acceptance, conflict of interest, non-discrimination, and finances.

For example, a gift policy may state that the organization does not accept gifts of real estate or that the organization does not accept gifts other than cash. Having this policy in place can help to avoid offending potential donors who offer a gift that the organization is unable to accept.

Nonprofits need to make it clear that it is the responsibility of their directors, staff, and officers to report breaches in legal or ethical conduct and that these reports will not yield adverse consequences to the reporter.

However, it is important to clarify roles in policy creation as well as voting procedures for the board. If your organization has a human resources director, it may be most appropriate for them to oversee the initial creation of new policies and procedures. However, the Board of Directors will always have the final say over implementing the policy, and should have a formal vote to adopt.

Before voting on a policy, it is important to solicit feedback from key stakeholders (perhaps a board committee, a human resources director, etc.) to try to anticipate any challenges or pushback that may result from the policy.

It is a good idea to keep track of these situations and of any other trends you are noticing within your nonprofit that may eventually require a written policy. This will allow you to draft policies proactively, rather than waiting until there is a crisis to determine your stance and expectations. Difficult situations can be avoided if there is a policy in place to provide guidance.

In summary, a comprehensive policy and procedure manual is an absolute necessity for any nonprofit. Having your organization's policies and procedures clearly documented will help increase efficiency, ensure equity and consistency, and help protect your organization from adverse legal ramifications.

To have effective management practices, your organization must lay the groundwork by enacting specific policies and procedures. Nonprofit financial management is no different. You need to lay out a foundation with financial policies that define certain rules for finances.

Imagine your organization receives an in-kind donation from a generous supporter, but that gift is of no use for your mission. Unfortunately, that means the gift will likely go to waste, either being donated elsewhere or thrown away.

This financial management documentation should define the situations which are considered a conflict of interest and provide the next actions if a conflict arises. It should include the following elements:

Even the best budgets sometimes go astray. And your organization will need to review your finances regularly throughout the year to ensure you stay on track. We recommend your finance and executive teams meet every:

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