“Some believe that the term ‘non-profit’ implies that it is inappropriate to actually make a profit which is a false assumption”. (https://www.whitlockco.com/ non-profit-required-balanced-budget/)
There’s something odd about the way people tend to think about money and charities as disconnected things. As we know that our communities and the world at large can benefit from positive investment, we need financial resources to fund ideas that can make a difference.
Unfortunately, it is never easy to talk about finances.
Here are my top three areas to consider:
Checklists:
Making sure you accomplish tasks on a task-by-task basis allows you to stay focused checklists allow you to achieve this. Providing a visual roadmap that ensures you track the financial activity of your non-profit in real-time. It plays a vital role in sustaining a charity's cash flow.
The internal financial control checklist is a document provided by gov.uk which ensures these key areas are covered:
· Secure and recorded
· Only spent on your charitable purposes
· At less risk of theft, fraud, or cyber crime
The checklist is designed to help charity trustees and their advisers understand the internal financial controls set out for charities. Essentially, these documents assist charities in monitoring their finances and ensuring they comply with the law. (Click the link below for further information)
Using this list, your charity can identify financial risks and implement effective systems to minimise potential hurdles.
Get more done!
There is something about ticking off a checklist that is said to release endorphins in your body. Organizing and saving time sounds great, doesn't it?
Budgeting:
“In order to continually fulfil its mission, it can be desirable to maintain a reserve fund to sustain the organisation in years in which its funding goals are not met. Each organisation is different, but a starting point to determine how much of a reserve is appropriate is the organisation’s fixed costs”. (https://www.whitlockco.com/ non-profit-required-balanced-budget/)
The fixed costs your charity incurs will always have a bearing on how it operates. As a result, spending activities can become challenging if managed incorrectly. Keeping track of your spending over the fiscal year is important, but you should also understand why money is being spent. Therefore, continuous planning is essential.
Knowing how much your charity receives and spends compared to your budget will enable you to make better decisions. The goal is to detect issues in a timely fashion so that countermeasures can be taken to correct them.
How do you keep track of the donations coming in and the monies spent to help your charity accomplish its goals? Record keeping may be governed by your charity's governing document. If it is, you must follow those rules.
Managing risk:
Both creating a checklist and budgeting are part of managing risk. Your charity's management of risk depends on both of these elements. As soon as risks are identified, what are your next steps?
Here, we have discussed all the different topics, so you have a good understanding of what to do next.
“Make sure that your charity uses its annual report to say what it has done to prevent these financial risks. This helps to show your supporters and the Charity Commission what you are doing to protect your charity’s money”. https://www.gov.uk/guidance/managing-charity-finances
Whether it's adjusting your spending, re-evaluating fixed costs, or creating financial record systems, we can help you in any way we can.