Last updated: 6 March, 2002 Introduction I. Board of Directors/Governance II. Human Resources Management III. Financial Management IV. Strategic Planning V. Collaboratives/Partnerships VI. Outcomes and Quality Improvement VII. Information Technology Management VIII. Fundraising IX. Marketing Bibliography III. Financial Management The organization generates sufficient revenue to support organization's administration and program services Best Practices Suggestions for Achieving Best Practices 1. Direct and indirect costs are monitored, including allocation of staff time to program, administration, evaluation, and fundraising activities 1.1 Executive Director and management staff analyze current and potential costs for program, administration, evaluation, and fund raising. 1.2 Executive Director and management staff analyze current and potential sources of revenue and prepares or oversees preparation of a fund development plan. 2. A system exists for tracking revenue and expense streams to comply with government reporting requirements, funder's expectations and to effectively manage organization's finances. 2.1 Responsible financial management staff understands requirements and potential for any fee for service or sales activities. 2.2 Responsible financial management staff implements any billing methods appropriate for the organization. 3. The organization engages in cost effective fund development activities. 3.1 Responsible fundraising staff conducts cost/ benefits analysis of any fund raising events or campaigns. Annual budget is tied to outcomes, is in alignment with available resources, includes staff input, and supports programs, administration, evaluation, and fundraising. Best Practices Suggestions for Achieving Best Practices 1. The Board approves, monitors and revises as necessary an annual budget that is tied to program outcomes and supports operations and evaluation. 1.1 Executive Director and responsible financial management staff ensure financial management systems which includes: selecting and monitoring financial tracking systems, tracking key costs of operation, reviewing and revising the chart of accounts, and effectively managing payroll. 1.2 Executive Director and responsible financial management staff monitor internal reporting information which includes: structuring appropriate financial reports, controlling the frequency of financial reporting, and selecting the appropriate accounting method. 1.3 Executive Director and responsible financial management staff understand the optimal budgeting process including incorporating effective budget management techniques into day-to-day operations, analyzing determinants of costs and allocations, getting staff input into the budgeting process, and tie outcomes to specific budget categories. 2. Board approves budgets that contain realistic projections of revenue and expenses. 2.1 Executive Director and responsible financial management staff involve staff in the budget development process as well as in the monitoring process so that they have a clear understanding of the connections between the budget and their program areas. 3. A method is established for budget planning and monitoring at the program level.   The organization files all the appropriate legal and financial documents as required by law. Best Practices Suggestions for Achieving Best Practices 1. A system exists that ensures the filing of all legal and financial documents, and updating as required 1.1 Executive Director and Board leadership understand and comply with government regulations related to type of documents to be filed and timelines for filing. 1.2 Executive Director and Board leadership understand underlying conditions for a review or an audit and the necessity for timely audits and positive findings to ensure availability of future funding streams. All financial data are kept up to date and use generally accepted accounting principles. Best Practices Suggestions for Achieving Best Practices 1. Organization obtains periodic independent reviews of financial record-keeping methods. 1.1 Executive Director and Board leadership ensure that appropriate outside review or audit is conducted and approve such document when completed. 1.2 Executive Director and Board leadership understands organization's application of generally-accepted accounting principles. 1.3 Financial management staff implements any recommended improvements to financial record-keeping based on independent review or audit. 1.4 Board leadership keeps written documentation in Board meeting minutes of approval of financial statements on a regular basis (monthly or quarterly as appropriate) and of annual audit or review. 2. Board regularly approves financial statements   The organization has an adequate system of internal controls which is reviewed annually. Best Practices by Organizational Leadership Suggestions for Achieving Best Practices 1. Written financial policies exist that govern: investment of assets, internal control procedures, purchasing practices, reserve funds, compensation, expense account reporting, and earned income. 1.1 Executive Director, Board treasurer and financial management staff review and upgrade financial policies on a regular basis. 2. Internal financial management processes are monitored, including handling of checks, petty cash, cash disbursements, payroll management, etc. to prevent errors and/or misuse of funds. 2.1 Executive Director and financial management staff understand various financial monitoring processes and apply appropriate process to day-to-day financial management. 2.2 Executive Director and financial management staff understand and establish appropriate financial checks and balances into the daily financial management systems. 3. The use of restricted funds are monitored. 3.1 Executive Director and financial management staff avoid co-mingling of funds and keep appropriate financial records documenting use of restricted funds. All managers are provided periodic reports on planned and actual expenditures to-date for each significant category of costs in their area of responsibility. Best Practices by Organizational Leadership Suggestions for Achieving Best Practices 1. Budget to actual reports are made available to appropriate staff in a timely manner. 1.1 Executive Director and financial management staff understand the rationale for providing such reports to program managers. 1.2 Executive Director, financial management staff and program Directors understand the value of making monthly or quarterly adjustment to budget and overall financial plan. The organization adheres to the Board-approved budget. Best Practices Suggestions for Achieving Best Practices 1. Budget variance reports are reviewed by staff and Board on a regular basis. 1.1 Executive Director and financial management staff prepare financial reports with budget variance information for review by the Board on a regular basis. 2. Program managers are provided with financial information and guidance to make management decisions and use financial information to make decisions at the program level. 2.1. Organizational leadership uses financial statements to make critical management decisions pertaining to organizational efficiency, adequacy of financial resources, need to implement budget revisions and organization financial trends. There is a diversified funding base. Best Practices by Organizational Leadership Suggestions for Achieving Best Practices 1. There is a fund development plan that ensures a diversified funding base. 1.1 Executive Director and fundraising staff analyze current and potential sources of revenue. 1.2 Executive Director and fundraising staff apply the elements of a Board-approved fund development plan that brings revenue from diverse sources. (see also Fundraising and Strategic Planning) Back Back to top Next