Financial managementfor NGOs Key concepts and jargonAdvance thinking for Mango training www.mango.org.uk
Take a moment to write down 3 or 4 thoughts on what financial management involves before moving to the nextslide ... Click when ready
Financial management entails: • to achieve objectives our financial resources
One way to think about financial management to an organisation is likemaintenance is to a car ... .. we need to put in good quality fuel and give it a regular service so that it will run efficiently.
But if we neglect it, the car will break down and will not reach its intended destination.
Financial control means that ... • Money is used properly • Assets are kept safe • Staff are protected • Managers can sleep soundly!
This a simple project management cycle ... See if you can write down the equivalent of each stage in financial terms. Click when ready
The financial planning cycle Set the budgets Build in learning and take action Receive & spend project funds Monitor the budget
Why is financial management important in our work? • What do you think? The next slides share ten good reasons • How many can you get? Click when ready
To be accountable to the people who give us money To be accountable to the communities we work with To provide financial reports for regulatory bodies To minimise fraud, theft and abuse of resources To plan for the future and become more financially secure
To enable staff to make better decisions on the use of funds To achieve the objectives of the organisation To enhance the credibility of the organisation To get best value for our money To strengthen fundraising efforts
A key feature of financial management is managing risk • Two types of risk: • Internal– from within, which we can do something about • External – from outside so beyond our direct control
Financial risks pose a threat to our financial resources. Write down one internal and one external risk facing your organisation... Click when ready
Typical risks for NGOs: • Internal– theft, fraud, fire, accidental damage ... • External – exchange rate loss, donors withdrawing funds, inflation ...
The key to good practice in financial management? Robust systems!
Accounting records • Books of account – ie the summary records • Supporting documents – ie the paperwork
Financial planning • Budgets for operations • Financing strategies for long term planning
Financial monitoring • Financial statements for external accountability • Budget monitoring reports for internal review
Internal control • Policies & procedures • Checks & balances
Financial control • When all the building blocks are set up and working effectively, we achieve financial control.
Find out more about Mango and free resources for NGOshttp://www.mango.org.uk/Guide