Financial Management

Boards of directors have a fiduciary duty to ensure that the assets of a charitable nonprofit are used in support of the charitable mission, and in accordance with donors’ intent. One way to ensure prudent financial management is for the board of directors to adopt financial policies

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 and productive."

– Propel Nonprofits

Examples of financial policies commonly used by nonprofits include a policy that describes how cash is handled; whether and how a board member or an employee’s travel expenses will be reimbursed; and the board's role in reviewing the executive director's compensation. Perhaps the most important financial policy for any charitable nonprofit is a conflict of interest policy. Another example of a financial policy is one that addresses how the nonprofit’s assets are invested.

Do you have questions about your nonprofit's financial practices? Perhaps it's time for a financial management check-up! The following self-assessment tools can help you focus specifically on financial management practices. How is your nonprofit doing?

Basic financial policies for nonprofits

Just starting out? These financial policy guidelines (Nonprofit Financial Commons) offer a framework for drafting and adopting financial policies for your nonprofit. For additional guidance on financial policies, consult these pages:

Financial Literacy Resources

Practice Pointers

More About Financial Management

Additional Tools and Resources

Disclaimer: Information on this website is provided for informational purposes only and is neither intended to be nor should be construed as legal, accounting, tax, investment, or financial advice. Please consult a professional (attorney, accountant, tax advisor) for the latest and most accurate information. The National Council of Nonprofits makes no representations or warranties as to the accuracy or timeliness of the information contained herein.

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