Financial Management

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

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 to review the executive director's compensation. 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! Self-assessments are tools that can help focus the board of directors' attention and/or help you prioritize next steps. The following self-assessment tools can help you focus specifically on financial management practices. How is your nonprofit doing?

Just starting out? These financial policy guidelines (Propel Nonprofits) offer a framework for drafting and adopting financial policies for your nonprofit.

Basic financial policies for nonprofits

For Boards: Finance is Fun!

Financial Literacy Resources

Practice Pointers


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