The pain-free way to prepare a financial management policy for your NPO

Making certain your non-financial gain organisation (NPO) has a glowing money administration coverage is a have to.

Stuffy even though it could seem, this document lays out a established of expectations and processes in composing, minimising chance and leaving no place for any flawed assumptions from team or board users.

But how do you go about creating an airtight economical administration coverage without the need of the worry?

In this write-up is some professional direction to assistance you create and employ a potent economical policy, no issue the size of your NPO.

Here’s what we address:

What is a fiscal administration policy?

Let us strip back the jargon.

A money administration coverage is just a listing of rules about your organisation’s funds that you’ve set out and agreed on.

This should protect all areas of the NPO, from accounting to HR and customer company.

Why is it essential?

Very well, it does the position of describing and documenting particularly how the board wants any associated things to do to be carried out.

That could include things like:

  • Everything associated to fund management
  • The upkeep of controls
  • Furnishing education and checking useful resource
  • Utilizing the doc as a place of reference both internally and externally (e.g. workforce, trustees, auditors).

What to consist of in your financial management coverage

That’s all very well and excellent, but what facts must you truly pack into this all-important doc?

A strong financial management coverage needs to cover your organisation’s accounting programs, procedures, and finest methods.

What that means is detailing the treatment close to the input, processing, output, control, and distribution of your NPO’s economical details and stories.

Here’s a brief checklist to make certain you’ve lined the necessities:

  • Make absolutely sure the NPO’s accounts observe sound accounting rules and methods.
  • Ship correct monthly reports to the treasurer, board of trustees, and administration workforce to endorse superior economical management.
  • Assure the organisation’s methods (financial or usually) are applied appropriately, transparently, and with accountability.

Try to remember, there’s no just one-dimensions-fits-all approach to this document.

Your NPO may well need a additional detailed plan, with far more granular facts about distinct tasks, but this standard outline is a fantastic location to begin.

The most vital issue below is that your coverage is customized to your organisation’s needs. To do that, the doc requires to deal with important parts and define the associated policies and treatments.

Economic policies will variety the spine of your organisation’s agreements about how it will seem following its dollars.

As very well as serving to your organisation to functionality far better, they present funders and other bodies that your group is searching just after its dollars perfectly.

To agree economical regulations, your committee will want to make your mind up organisationally suitable depth, such as (but not solely):

Monetary data

  • What form of economic records will you hold so you can satisfy your authorized/statutory obligations (this sort of as the Charities Act, HMRC)?
  • Do trustees have proper fiscal control of the NPO?
  • Does the organisation meet up with its obligations to funders? How?
  • If funds payments are designed, will you use a petty hard cash ebook?
  • Before the commence of the economical year, will trustees approve a budgeted earnings and expenditure account for the next 12 months? How will it be agreed on and set?
  • At yr end, how will you evaluation, assess, and revise the budget?
  • Will stories comparing real earnings and expenditure towards the price range be offered to trustees? When and how?
  • Will an auditor or unbiased examiner be hired to audit the accounts?


  • Which financial institution or constructing culture accounts will the organisation maintain?
  • Who will the signatories be?
  • Will the lender mandate (a listing of folks who can indication cheques or authorise payments on behalf of the NPO) want to be authorized and recorded by trustees yet again if any changes are designed?
  • Will you need the lender to offer statements every month, and will these be reconciled?
  • Will your organisation be able to do the job with any other financial institution or fiscal establishment, or use overdraft amenities or financial loans with out the enter of trustees?
  • How numerous people today will require to indicator each individual cheque?
  • How lots of persons will need to authorise BACS payments? 

Petty dollars and income handling

  • Do you hope to deal with petty dollars?
  • If so, how will you tackle it and how a lot will you continue to keep for the float?
  • What is the optimum total that can be compensated out in income?


  • How will you receive money (funds, on the internet payments, etc)?
  • How will you record payments?
  • Will any payments received be recorded straight absent, or will there be a slight hold off? Will you continue to keep information of documentation to again this up?
  • How will donations be collected?
  • What variety of donations will you take?
  • How will the NPO control donations?
  • What about Reward Assist and Reward Assist reporting?
  • What form of fundraising activities will you take on?
  • How will you regulate money, and how will you sustain transparency?


  • How will you make sure all expenditure is correctly authorised?
  • Who is accountable for the NPO’s chequebooks?
  • How will you control on line banking and credit card payments, and what checks and balances will you set in position?
  • When it comes to cheques, will the pertinent payee’s name be inserted on the cheque in advance of it’s signed, and need to the cheque stub often be finished in whole?
  • Can any lesser payments be designed without contacting a conference for acceptance? If so, what is the utmost price allowed?

Payment documentation

  • Will any payments from your NPO’s accounts be backed up with an invoice?
  • How will the initial bill be kept and submitted?
  • How should really the cheque signatory reference the payment (E.g. cheque number, date cheque drawn and volume of cheque)?
  • How will salaries be recorded? Is it obvious and transparent?
  • How will the NPO document and concur on any expenditures or allowances?


  • How will you define the money calendar year?
  • How regularly will the treasurer want to report to the board?
  • How will you crank out reports?
  • Do you want a finance sub-committee?

With this listing of things to consider in your again pocket, you’ll be well-outfitted to get ready a solid economical administration policy.

Speak to your treasurer, the finance committee, and the government board not just as you get begun, but verify in along the way.

Oh, and never forget to have out an informal danger assessment prior to finding started off on your draft.

Money management guidelines: What upcoming?

Once you’ve received a operating document drafted up, it is time to get it reviewed and discussed in advance of you current it to the board for approval.

When that’s all signed off, it is time to feel about adoption, usually in the type of instruction for all existing and incoming personnel.

This is a dwelling document, so critique your economic administration policy yearly to make certain it proceeds to function for your organisation.