Financial management for NGOs

Financial managementfor NGOs

Key concepts and jargon

Advance thinking for Mango training

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So what is financial management?

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Take a moment to write down 3 or 4 thoughts on what financial management involves before moving to the nextslide ...

Click when ready

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Financial management entails:

our financial resources

planning organising

controlling and monitoring

to achieve

objectives

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One way to think about financial management to an organisation is like maintenance is to a car ...

.. we need to put in good quality fuel and give it a regular service so that it will run efficiently.

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But if we neglect it, the car will break down

and will not reach its intended destination.

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Financial control is at

the heart of financial

management ...

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Financial

control means

that ...

Money is used properly

Assets are kept safe

Staff are protected Managers can

sleep soundly!

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Plan

DoReview

This a simple project management cycle ...

See if you can write down the equivalent of each stage in financial terms.

Click when ready

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Plan

DoReview Receive & spend project

funds

Set the budgets

Monitorthe budget

Build in learning and take action

The financial

planning cycle

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Why is financial management important in our work?

What do you think? The next slides share ten good reasons How many can you get?

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To be accountable to the people who

give us money

To be accountable to

the communities we work with

To minimise fraud, theft and abuse of

resources

To provide financial reports

for regulatory bodies To plan for the

future and become more

financially secure

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To enable staff to make better decisions on the use of funds

To achieve the objectives of the

organisation

To get best value for

our money

To enhance the credibility of the

organisationTo strengthen

fundraising efforts

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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

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Financial risks pose a threat to our financial resources.

Write down one internal and one external risk facing your organisation...

Click when ready

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Typical risks for NGOs:

Internal – theft, fraud, fire, accidental damage ...

External – exchange rate loss, donors withdrawing funds, inflation ...

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The key to good practice in financial management?

Robust systems!

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Accounting records

Books of account – ie the summary records

Supporting documents – ie the paperwork

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There are

four building blocks in a strong financial management

system ...

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Financial planning

Budgets for operations

Financing strategies for long term planning

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Financial monitoring

Financial statements for external accountability

Budget monitoring reports for internal review

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Internal control

Policies & procedures

Checks & balances

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When all the building blocks are set up and working effectively, we achieve financial control.

Financial control

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Find out more about Mango and free resources for NGOs

http://www.mango.org.uk/Guide