Financial Management

Introduction

Maintaining trust that public funds are being used for the public good.

Overview

This section explains accountants, bookkeepers and accountants can help your organization establish and maintain professional financial management systems.

Page Index

  • Key Issues
  • Common Problems and Solutions
  • Successful Strategies
  • Annotated Web Resources
  • Topic Library
  • Sub-Topics and Vendors


    • Key Issues Related to this Topic

  • Spending money for the common good. Good financial management systems help neighborhood volunteers and staff ensures that the contributions they received are spent to achieve their group’s mission and the common good.

  • Good financial management attracts volunteers and donors. Having and using well-designed financial management systems is important to respect the time and effort of volunteers ands staff, and to provide complete reports on the use of public and private funds. A major, preventable cause of volunteer, staff and funder burnout for neighborhoods is poor financial management practices.

  • Your group can be incorporated without becoming a charity. Remember that non-profit corporations first must become incorporated with the State of MN, and can begin conducting business whether or not they ever apply for approval as a charitable organization with the IRS. Apply for federal 501(c) 3 status for your group, when you decide that your group needs to receive public or private contributions as a charitable organization to do your work.

  • Neighborhood board members are responsible for overseeing the finances of their organization and can be held legally liable for unpaid taxes, debts, etc.

  • High quality, cost-effective help is available. It is strongly recommended that neighborhood staff and volunteers get professional help to set up and maintain their financial management systems. A number of accountants and book keepers have experience helping Minneapolis and St. Paul neighborhood meet their financial reporting requirements for their board, funders and the Minneapolis NRP program and St. Paul PED.

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    Common Problems and Solutions

  • Setting up standard record keeping procedures. Establishing standard financial record keeping systems for your group will greatly reduce the time required for doing book keeping and for providing reports to funders and the necessary documentation for audits.

  • Tracking spending by project and funder. Once a neighborhood group has a larger annual budget with several sources of funding it is often necessary to set up a combination fund-based and project-based financial management system in order to produce reports for volunteers and staff. Popular software programs including quick books and quicken can be used in this way.

  • Ensuring continuity of financial records. With common, frequent turnover in neighborhood volunteers and staff, clear and easy-to-use record keeping and filing systems and financial management software can help your new team pick up where the previous team left off.

  • Audits- An annual audit of your organization may be required by the State of Minnesota. An accountant or auditor can help you determine whether an audit is necessary and help your group move through the audit process.

  • Beware of becoming a fiscal agent. Often neighborhood associations are asked by small, emerging grass roots groups to be a fiscal agent for a grant they want to receive. Some neighborhood associations have successfully done this helping to give rise to new & valuable partners. Please be aware that your organization is held responsible for the implementation and accounting of funds of any grants received by your group. See the list groups listed under the legal section for advice and counsel on fiscal agency issues.

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    Successful Strategies

  • Start a Finance Committee. Monthly or bi-monthly meetings of your Treasurer, staff, bookkeeper and interested volunteers can provide needed fine-grain review and oversight of your group’s finances. Having a finance committee can allow your group’s full board to take less time out of their meetings to review financial reports.

  • Teach board members how to read standard reports. Many low-cost classes and trainers are available to train your board what to look for when reviewing your group’s monthly financial statements.

  • Maintain standard record keeping procedures. Establishing standard financial record keeping systems for your group will greatly reduce the time required for doing bookkeeping and for providing reports to funders and the necessary documentation for audits.

  • Hire sub-contractors to administer programs. Many neighborhoods are contracting out their home rehab and business rehab loan programs to larger non-profits to administer. This can save your group a lot of work and ensure that the program is well managed (see the "housing" sections of the Resource Guide for more info and referrals).

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    Annotated WebLinks

  • Free Management Library
    MAP for Nonprofits   06/15/04
    Helpful background information on financial management, services and classes

  • Web links and accountant referrals for CPAs
    Minnesota Society of CPAs   06/15/04
    Accountant referrals

  • Information on nonprofit legal and financial requirements
    MN Council of Nonprofits   06/15/04
    Resources on the financial responsibilities of nonprofits

  • Publications on financial management
    Wilder Foundation   06/15/04
    Publishes excellent manuals for nonprofit financial management including "All the Way to the Bank: Smart Money Management for Tomorrow’s Nonprofit"

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    Library

    Financial Training

    Checklist of Required Filings for Non-Profit Corporations   09/17/01
    Checklist of Required Filings for Non-Profit Corporations

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    Vendors by Sub-Topic

    Accountants and Referrals-  
        MAP for Nonprofits
        Minneapolis Neighborhood Revitalization Program
        Minnesota Council of Nonprofits


    Book Keeping  
        Minnesota Council of Nonprofits


    Financial Training  
        MAP for Nonprofits
        Minneapolis Neighborhood Revitalization Program
        Minneapolis Training Program for Neighborhood Organizers
        Minnesota Council of Nonprofits


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