Académique Documents
Professionnel Documents
Culture Documents
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Budget
The budget process should begin two to
three months before the start of the fiscal
year and should include the input of staff
(both financial and program), board
members, and the executive director. The
board finance committee should oversee
the construction and execution of the
budget.
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Review the previous years results. What was the cost per unit of
service?
Develop new goals and objectives for the coming year.
Estimate the cost of the new objectives based on the previous
years results. Dont forget to include indirect costs (incidental
costs not closely attached to programs and goalse.g.
administrative costs) along with direct costs (closely associated
with the program e.g. staff salaries) and to adjust any costs that
will be changing in the coming year.
Next, budget projected income. Estimate revenues, including
grants, donations, etc.
Compare the projected revenue with the projected expenses. The
organization may decide that it is appropriate to incur a deficit or
realize a surplus for the year instead of breaking completely even.
Finally, the board must approve the budget and continue to review
it on a monthly basis.
Office of Faith-Based and
Community Initiatives
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Budget Notes
The categories and labels for the budget should
correlate with those used on the chart of
accounts.
It may be helpful to prepare separate monthly
budgets to break down the year into smaller,
more manageable sections. Finally, remember
that the budget should be realistic, consistent
with the organizations objectives, cost-effective,
and flexible.
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Auditing
An organization may or may not decide to
obtain an audited financial statement
depending on the size and revenue of the
organization, as well as the boards
expertise regarding financial management.
These statements can range from more or
less expensive and/or comprehensive. If
an organization is applying for government
funds, it should obtain an audited financial
statement.
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Internal Controls
Financial internal controls should be in place
for the operating, accounting, and
compliance departments regarding payroll,
cash collection and disbursement,
safeguarding fixed assets, etc. Making
sure the financial management of the
organization is operating properly is the
responsibility of the entire organization,
not just the accounting department.
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Internal Controls
Segregation of Duties
Financial duties should be segregated so that no
one staff member handles any transaction
entirely on their own from start to finish. For
example, different members may sign checks,
authorize payments, record transactions, or
reconcile bank statements. This may be more
difficult for a very small organization. If this is the
case, a staff member may sign the checks for
transactions and a board member (such as the
treasurer) may review the statements and
checks on a monthly basis.
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Grant Management
Accounting Requirements
Accounting requirements differ according to each
individual funder, but here are some general
guidelines to follow:
1. Account for each award or grant separately
2. Federal and non-federal match funds should be
tracked separately
3. In-kind donations should be tracked as both
revenues and expenses
4. Identify costs by program year and budget category
5. Differentiate between direct and indirect costs
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Grant Management
Financial Responsibilities of Grantees
When preparing a grant proposal, an organization
should keep in mind the following
responsibilities:
1. Budget for the entire life of the grant, including all
allowable costs, the agreed upon indirect cost rate,
and increases in the cost of living
2. Address all matching requirements
3. Focus on sustainability
4. If applying for federal funds, an organization must
also seek a solid base of non-federal funds
5. Pay special attention to specific requirements of
each individual grant
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Government Grants
When managing a government grant, certain
additional guidelines must be followed. These
guidelines, called Circulars, are published by the
Office of Management and Budget. Different
Circulars, apply for educational institutions, nonprofit organizations, and government
organizations.
For a listing of the OMB Circulars, visit
http://www.whitehouse.gov/omb/circulars/index.html.
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Final Note
This guide is only a brief overview of the financial
management systems that should be in place for
a non-profit organization. The best way to obtain
sound financial advice is to recruit a few board
members with extensive knowledge of financial
systems, or to hire a public accounting firm for
consultation. This can be done relatively
inexpensively for many non-profits and the time
and trouble saved by such a partnership will
likely pay for itself.
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1. Regulatory
Requirements
2. Written
Policies and
Procedures
10. Internal
Controls
3. Documentation
of Expenses
EFFECTIVE
FINANCIAL
MANAGEMENT
9. Reporting
8. Matching
Requirements
and In-Kind
Contributions
5. Efficient
Accounting
System
7. Time and
Activity
Documentation
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4. Managing
Cash
6. Budget
Controls
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Additional Resources
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