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  www.propelnonprofits.org

Examples of financial policies commonly used by nonprofits include a policy that describes when a board member or an employee’s travel expenses will be reimbursed; how cash is handled, and how the nonprofit’s assets are invested. Are you concerned about your nonprofit's financial practices?

  • This self-assessment, Indicators of a Financial Crisis (The Foraker Group) may be a great way to focus the board of directors' attention or help you prioritize next steps.
  • This short Financial Management Self-Assessment Tool, (Nonprofit Association of Oregon) is useful to explore the types of financial practices that may be beneficial for your nonprofit to follow and/or document in a written policy.

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

Find Your State Association of Nonprofits

Find Your State Association of Nonprofits

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