Money without a profit motive.
WHY IT REQUIRES MORE DISCIPLINE, NOT LESS
You are accountable for other people's money.
WHAT TO ESTABLISH
Proper bookkeeping from the start Separation of restricted and unrestricted funds Clear authorisation for spending Bank arrangements requiring more than one person
WHY MORE THAN ONE SIGNATORY
It is the basic protection against misuse and against suspicion.
WHAT TO PRODUCE
Regular financial reports for the board Annual accounts Reports for funders
WHAT THE BOARD SHOULD RECEIVE
Income and expenditure against budget Cash position Restricted fund balances Forecast
WHY FORECAST
Nonprofits fail from cash, like any organisation.
WHAT RESERVES ARE FOR
Continuing when funding is delayed or ends.
HOW MUCH
Enough months of core costs to manage a gap.
WHY IT IS DIFFICULT
Funders resist funding reserves and some criticise holding them.
WHAT TO DO
Establish a reserves policy, stating the level and the reason.
WHY A WRITTEN POLICY
It answers the criticism.
WHAT TO AVOID
Committing to programmes beyond secured funding Spending restricted funds on core costs Paying people late
WHAT TO ARRANGE
Independent examination or audit, per requirements.
WHAT TO PUBLISH
Accounts, where required or where transparency serves you.
WHAT TO TRACK
Cost per beneficiary, and how much reaches the purpose.
