Financial Management

Nonprofit is a tax status, not a business plan.  One of a nonprofit board’s major functions is to develop a financial and management plan to ensure that adequate resources are available to carry out the organization's mission.  Board members (especially the treasurer and finance committee members) and management must understand the organization’s financial position if they are to perform effectively. Financial reports (budgets, balance sheets, income statements, cash flows, and audits) are the major tools that boards and management use to exercise proper fiscal oversight and achieve that understanding. 

Components, Processes, and Timing

In one-to-one meetings, or small-group tutorials, ESC consultants can advise board members and executive directors of nonprofits about various aspects of financial management, including the development of a business plan, or any of the following: 

Treasurer and Finance Committee    Importance;  Job descriptions and responsibilities;  Coordination with development and fundraising;  Reporting at meetings;  Long range planning;  Capital campaigns;  Working with the executive director and office staff 

Budget Process    Timing;  Initial preparation by staff;  Comparison to operations and review line-by-line;  Review by treasurer and finance committee;  Timely presentation to board;  Approval and commitment by board;  Monthly breakdown for comparison to operations;  Amendments for changed circumstances;  Baseline budgeting;  3-year projections  

Financial Statements    Balance sheet;  Income statements (statement of operations);  Statement of cash flows;  Considerations, such as proper filing with IRS, consistency with strategic and financial plan, transmittal to board prior to board meetings, comparing to budget and prior year, cash vs. accrual, and possible users other than the board 

Managing Cash Flow    Preparation of monthly cash flow at time budget is prepared;  Timing of revenues and expenses;  Capital expenditures;  Possible need for line of credit;  Monitor actual to projections 

Audits    Necessity;  Options (review of compilation);  Cost;  Preparation and working with auditor;  Independence of auditor;  Uses;  Footnotes;  Management letter 

Systems, Controls, and Bookkeeping    Bookkeeping programs;  Bookkeeper job description and responsibilities;  Accounting system;  Internal controls;  Management information systems; Technology assistance;  Audit management letter 

Deliverables

Depending on the scope of the engagement, we can provide our client with: 

• Report with recommendations 
• Suggestions for a baseline budget 
• Assistance with a three-year financial projection
• Assistance in the development of a business plan
• Assistance in evaluating internal controls