Financial Management

The National Council of Nonprofits created this Nonprofit Audit Guide to provide charitable nonprofits with the tools they need to make informed decisions about independent audits.

Table of Contents

Developing and adopting a written financial policy is a valuable practice for any nonprofit organization, no matter how small or large. Financial policies clarify the roles, authority, and responsibilities for essential financial management activities and decisions. In the absence of an adopted policy, staff and board members are likely to operate under a set of assumptions that may or may not be accurate or productive. If the idea of creating a financial policy seems daunting, these guidelines for policy development and this downloadable basic example may be helpful.

Establishing good fiscal policies and procedures is more of an investment of time and attention than money. There is no “one size fits all” template that will work for all organizations. This guide offers a recommended structure for policies and procedures as well as some questions to guide you in considering what is best for your organization. (CompassPoint, 2012) 

How can nonprofits' leaders and boards better mitigate their fraud risks? First and foremost, they should focus on governance. (Nonprofit Quarterly)

Operating Reserves for Nonprofits - For seven consecutive years Nonprofit Finance Fund’s State of the Sector report revealed that less than 25% percent of those nonprofits responding had more than 6 months of cash in reserve. In fact the majority of the nonprofits responding reported that they had less than three months of operating reserves on hand.

The Overhead Cost Definition gives an overview of different overhead definitions from both the IRS and FASB (Financial Accounting Standards Board), and what classifications of expenses may or may not be included. (Propel Nonprofits)

Certain nonprofit entities are allowed semiannual refunds of sales and use taxes they pay on direct purchases and leases of tangible personal property and services. Learn more about form E-585, "Nonprofit and Governmental Entity Claim For Refund State and County Sales and Use Taxes," and how your organization can request refunds. (N.C. Department of Revenue)

Questions Regarding Form E-585

Financial ratios are an established tool for businesses and nonprofits to understand an organization’s financial situation and help leaders identify strengths and weaknesses in financial condition. This tool provides calculation of 14 ratios, including a mix of balance sheet and income statement ratios. (Propel Nonprofits)

Reserve funds are becoming real necessities for most nonprofits. This article addresses the need for reserve funds and best practices.