Financial Management Basics for NGOs

1. Introduction Financial management is crucial for the success of any organization, be it private, government or non-government. Successful enterprises watch their finances very closely and therefore take the right decisions at the right time, ultimately leading to success. Most businesses have a well structured finance department responsible for looking after the accounts and finances of the company. On the other hand, NGOs most often do not consider financial management to be a priority and … [Read more...]

2. What is Financial Management?

Financial Management is a vital activity in any organization. It is the process of planning, organizing, controlling and monitoring financial resources with a view to achieve organizational goals and objectives. It is an ideal practice for controlling the financial activities of an organization such as procurement of funds, utilization of funds, accounting, payments, risk assessment and every other thing related to money. In other terms, Financial Management is the application of general … [Read more...]

3. Importance of Financial Management for NGOs

As a NGO you might be thinking your primary task is to work towards social service and not financial management. But unless your finances and funds are sorted, you cannot achieve your objectives. The primary significance of financial planning and management in NGOs lies in achieving its overall goals and objectives. Here are some points indicating the importance of financial management for an NGO. Being accountable to the donors: Most NGOs rely completely on funding and therefore having … [Read more...]

4. Process for developing Financial Policy of an NGO

Developing a financial policy is a matter of time, effort and resources. Depending on the size of your NGO, the time required for developing a policy may vary and may take anything between ten days to few months. Once the first draft of the policy document is ready, it is it is reviewed and re-assessed to make it relevant to NGOs overall mission and vision statement. The policy is generally developed though a series of brainstorming sessions where board members, senior team members discuss and … [Read more...]

5. Important questions to ask, before developing a Financial Policy for NGO

Since preparing, drafting and making a financial policy consumes lot of time, policy-deciders must consider the most significant and relevant factors, before getting into actual discussion about the policy. Of all these factors, budget processes and systems within an NGO have maximum effect on financial policies. Therefore, financial policy strategists ask potential questions to have clear understanding about the overall organization and more importantly, its financial aspects. After jotting the … [Read more...]

6. Structure of Financial Management Policy

All financial decisions, activities and plans are done in accordance to a set of procedures that form the basis of the financial policy. Once the financial objectives are confirmed, the next move is to frame policies to guide its further proceedings. Financial management policy of an NGO is a manual that covers all the accounting policies, procedures and systems of the organization. Primarily, there are two purposes for framing a financial policy To look into proper governing of the … [Read more...]

7. Components of Financial Management

The most important section of a financial management policy of an NGO is the procedures for accounting. The accounting procedures describe the methods that the organization has adopted for maintaining daily accounts and carrying out day to day activities. The accounting policy describes both the external and internal controls that are in use by the organization. Accounting system of an organization should deal with the following; Funding Agreement: One of the most important documents for your … [Read more...]

8. Financial Management Staff & Responsibilities

Financial Management in NGO is undertaken by its governing body, board members and finance staff. Governing Body: The body comprises of members from different committees of the organization such as finance, public relations and project. Being the ultimate authority in any Non-Governmental Organization, the governing body plays a lead role in financial department. According to the nature and state of the concern, it is also known as Council or Board of Trustees or Board of Directors or … [Read more...]