Financial Management for NGOs
Solid financial management is key for all NGOs in order to make funding sustain their efforts as effectively as possible - or put more simply, to get the biggest bang for the buck.
Good financial records are essential for good governance and funders, which many organizations rely on for their survival, obviously want to be assured that they're making a sound investment. That's not to mention the fact that fiscal discpline is essential for maintaining the integrity and reputation of the sector. It is difficult to forgive a private enterprise for waste - but almost impossible to forgive a charitable effort for the same.
Yet it can be a bewildering field to say the least. Both when sitting on, as well as when advising boards, I have found that the quality not to say quantity of reporting varies considerably.
Mango, a UK-registered charity that exists to help NGOs strengthen their financial management, has a guide. The Guide has five sections - Here's quoting from their website:
- Introduction - key responsibilities for trustees, senior managers, finance staff and donors. Principles of financial management for NGOs.
- Getting the Basics Right - the building blocks: keeping accounts, financial planning, financial monitoring and maintaining control. Also: working with beneficiaries, managing audits and legal requirements.
- Advanced Issues - financial sustainability, working with donors, giving and receiving grants, accountability (including cost-effectiveness) and overseeing controls.
- What NGOs Do - a short introduction to what NGOs do and what this means for managing their work. The important implications for managing NGOs are summed up as two golden rules.
- Resources - practical resources available to download and use, including Mango's highly-rated training manual, a complete financial system and Mango's Health Check, available in seven different languages.
My favourite is their Health Check - available in seven languages - which alas, as I am writing from São Paulo, does not include Portuguese. Still, essential reading-for-action for Chairman and Treasurer.
I'll add it to my set of standard list of documents I suggest as essential first reading for new trustees. Here are the original three for reference, as outlined at the end of the 'Finding New Trustees' article from earlier this year:
- The Essential Trustee
- http://www.charity-commission.gov.uk/supportingcharities/efftrustintro.asp - The role of the Charity Commission
- http://www.charity-commission.gov.uk/tcc/ccabout.asp - Operational Guidance from the Charity Commission on charity accounts and reports
- http://www.charity-commission.gov.uk/supportingcharities/
And the essential websites for UK trustees/board members (in addition to the Charity Commission):
- The Governance Hub
- http://www.governancehub.org.uk/ - Trustee Net
- http://www.trusteenet.org.uk/
