The End Of Year Handover

For many institutions, this is the time of year when you have a change in committee members. Some retire and new members are elected. It often involves the changeover of office bearers, too. For the outgoing treasurer, you will need to have the books audited and prepared for the new treasurer to take over.

The books

• Clearly record all outstanding invoices to be paid
• Clearly record any monies still owed to the organisation
• Finalise as many accounts as possible
• Reconcile the books
• Book an auditor to audit your records

At The AGM

• Present your report
• Present the auditor’s findings

After the AGM

• Meet with the new treasurer
• Make sure that your bookwork and papers are complete prior to handover
• Include the auditor’s report
• Arrange for change of signatories at the bank
• Familiarise the new treasurer with your filing and recording systems
• Together with the new treasurer, complete your final BAS report

This is a simple list of the things most committees will need to do. If yours is a large organisation, the process will be more detailed but the principles still hold true.

We have a more detailed guide (cheat sheet) that takes you step by step through the handover process. It was prepared in conjunction with Canberra Preschool Society Inc. If this is your first handover, print out a copy and it will help keep you on track.

The Letter of Comfort

We’ve talked before about the importance of managing your finances but sometimes, particularly when your Board of Management is inexperienced, you can run into difficulties. In fact, sometimes even major organisations need their support. Recently, Forestry Tasmania was issued with a Letter of Comfort from the Tasmanian Treasurer guaranteeing its ability to repay a loan. We’ve also seen a couple of smaller organisations require one recently.

The Letter of Comfort had almost disappeared but lately seems to have been making a comeback. Given the economic climate, that probably should not be a surprise. In this post we discuss letters of comfort, what they are and what impact they might have on your organisation. It might be something you come across shortly.

In financial terms a letter of comfort is a letter from a parent organisation to or on behalf of a subsidiary, offering support to the subsidiary’s assurance that they can and will honour their debts and loans.

Creditors and or Lenders may request a letter of comfort from a subsidiary before they will put a hold on legal proceedings that may be started against them to recover outstanding monies and it is usually issued as a form of back up from the parent organisation to assist them to cover their debts or loans.

Many companies and money lenders will accept a letter of comfort as a reassurance that they will get their money, even if no clear terms of action or promise of financial assistance are outlined.

If your organisation is struggling financially, a letter of comfort from your parent organisation will give you room to breathe.

If you have organisations under you, you may one day be advised to write a letter of comfort as an alternative to a legally binding contract that outlines your intentions to undersign financial responsibility for a subsidiary, but you should be aware that under certain circumstances a letter of comfort can be deemed to be as legally binding as any contract.

If your letter is found to promise financial support in a court of law, you may become liable for all or some of the subsidiary’s debts and loans.

Be very careful in how you word your letter, leave nothing open to interpretation and consider using dot points to clarify what you are or are not willing to assume financial responsibility for.

A carefully worded letter of comfort may ease the minds of creditors without placing you under any legal obligation to provide financial assistance. However, in the case that any form of financial assistance is offered by the parent organisation, you would be well advised to seek professional advice about creating a legally binding contract, so that your intentions cannot be misinterpreted and your good will taken advantage of in the event that the child or subsidiary cannot actually honour their debt.

Australian Government Support For Volunteers

Ralph Waldo Emerson said “It is one of the most beautiful compensations of life that no man can sincerely try to help another without helping himself.”

The Office for the Not for Profit sector advises the value of volunteering in the Not-for-Profit sector is “estimated at $14.6 billion in unpaid work to our economy,” and with many community, government and not for profit organisations relying on the 713 million hours of unpaid work each year undertaken by volunteers to operate.

Australian census data also tells us that since 1995 the adult population who reported to have 'volunteered' in the previous 12 months increased from 24% to 35% in 2006. This is exceptional news for people and communities across the country, who are connected and empowered by volunteering, and add to a sense of community, identity and personal confidence.

It is therefore in the best interests of the Australian Government to support and encourage volunteering in the community, and they do so in a variety of ways.

A great starting point is Volunteering Australia, a one stop shop regardless of what side of the volunteering fence you are on. This site lists all relevant state, territory and local volunteer organisations, as well as free resources, news, events, policy information and training resources.

Current information on Volunteer Grants is available as well as programs to encourage International Volunteer programs, with ‘Voluntourism’ becoming more and more popular for Australians of all ages.

Corporate volunteering is of particular benefit to the Not for Profit sector and creates new opportunities for organisations to access volunteers with professional expertise that they might otherwise be unable to access due to financial and recruitment constraints. Click here to learn more about the benefits of corporate volunteering to not-for-profits organisations.

Without volunteers, meals would not be cooked and delivered to the elderly and infirm, storm and natural disaster recovery would be near impossible, community and sporting events would be without first aid services and children in classrooms all over the country would have less literacy, numeracy and general education support.

Corporate Governance

Every not-for-profit organisation is established for the benefit of its members and other groups that it deals with. In order for this to occur effectively and efficiently, a clear set of goals and objectives is needed so that your organisation can reach the heights that it intends to. Put simply, this is what corporate governance is all about. Think of it as a “plan and road-map to success” which allows your organisation to combine your intended community service objectives with the financial objectives that need to be achieved.

After having established the “road-map”, which includes listing the core vision and values of the organisation as well as clear performance targets to move towards the organisation’s objectives, it is important to assess whether or not the organisation is achieving its intended aims. Such evaluation is an integral part of the process so that the organisation is accountable to the members, who are then assured that the organisation is acting in their best interests.

An effectively managed not-for-profit organisation, with proven performance and leadership by a capable board/committee of management, will not only ensure that the organisation survives during the tough times, but thrives at all times. This benefits members in countless ways and enables the organisation to achieve further growth with more people willing to join the organisation in its ventures (increased membership, higher reputation in the field and the possibility of establishing further links with other stakeholders in the form of sponsorship).

How much more will your organisation benefit from an enhanced corporate governance structure?

How To Teach Finance To Your Board

As Treasurer, the management and control of the financial reports falls to you. Aren’t you lucky?

If you have read some of our interviews with treasurers, you will have noticed that they comment on how big that responsibility is especially when the members of the board or committee don’t really understand what you are talking about.  Many reports are approved on sheer trust and that isn’t a good basis for decision making.  It leaves treasurers feeling very vulnerable.

Sometimes it will fall to you to teach the board about how to read the reports and what they really mean. You might even have to show them that they are responsible for the contents of the report, whether or not they understand it.  For some members you might have to start at the beginning and show them what basic accounting and finance is all about.

Our Community has developed a simple, online course that will help you teach finance to the members of your committee.

The course starts at the very beginning and explains what financial reports are and what they should cover.  It gives readers a basic view of accounting, bookkeeping and financial controls.  It isn’t an in-depth course but it will give the members of a committee a better understanding of the role of the treasurer and what the reports actually mean.

The course is free to do and will help the members of your committee to support you better in your work as treasurer.

Heart and Soul Grants for Your Organisation

This clever competition will make you think.  It's exclusively open to NFP's and voluntary organisations in Australia and New Zealand.  It's a little different because it asks you to be creative with your entry.  In fact, it asks you to be poetic about your mission.  If you are clever enough, you will win a Heart and Soul grant.

So, its fun and rewarding.  I wish you luck.


CTK Foundation Heart and Soul Australia New Zealand Announcement from Community TechKnowledge on Vimeo.

Looking for exposure?

Cavill and Co have published an offer that might be of interest to not-for-profit organisations.

They are working with a leading FMCG (fast moving consumer goods) client that is seeking to establish a partnership and make a significant investment into an Australian charity and provide mass market exposure via promotion on its product.

Does this sound like something that would be of benefit to your organisation?

You can apply on site.  The process is broken down into simple steps, each with advice.  You have nothing to lose so why not have a go?

The closing date for submissions from potential NPO partners is Thursday 4 August at 5pm.

Interview With A Treasurer

We recently spoke to the treasurer of a community group about their role in the organisation and the challenges they face.

1. What do you love about the role of treasurer?

I know that people tend to think of small not-for-profit organisations as casual and with no real budget to worry about. That couldn’t be further from the truth. We are not-for-profit, yes, but we have a budget of hundreds of thousands of dollars to manage. We have all the demands of a regular workplace – salaries, overheads, budget limitations and the lot. You can’t just leave it to anyone to manage the budget. You have to know what you are doing. That’s why I took on the role.

2. What has been the hardest part of your job?

Well, when I first took over this role there was a big mess that I had to clean up. The previous treasurer had done some account fiddling and there was money missing. I had to go back through our financial history and look for irregularities and make sure that we were still financially viable as an organisation.

It was very fiddly and detailed work and even worse, there were a lot of people in the organisation who were quite upset at being duped. They blamed themselves for not keeping an eye on the accounts, too. And they should have.

3. So should the treasurer be accountable to someone?

Of course. For the safety of the individual as much as the safety of the organisation, the finances should never be left to one person to manage. I report to a board of management but even so, they don’t quite understand the accounts fully. Part of my job is to teach them so that they get the whole picture and not just what the treasurer tells them.

4. What would you like to change?

I’d like to change the attitude to the role. Everyone thinks that treasurers have a boring job but really it’s dynamic and involving. It’s strategic, too, not just about counting the numbers. It’s about long term planning so that the organisation can stay in business.

Without good monetary control that goes beyond keeping track of your bills, no committee or organisation will be able to function.

Free NFP Success Course

How successful is your NFP? If it’s struggling, you could probably do with some help. That’s where Westpac comes in.

7 Steps to Successful NFP is a free course offered by the Davidson Institute as part of Westpac’s commitment to financial education. The course offers an introduction to key financial management concepts in an easy to follow, practical format.

The course description says:

“This short course will provide you with valuable tips and tools that can assist you in understanding the key financial drivers of a successful organisation.”

At only 1 ½ hours in length, this course won’t eat into your day but it will make a difference to the way you operate.

The course is being presented around the country during the first week of July and places are still available.

To check the dates and locations of this course visit the Davidson Institute now.

Passing The Buck

When your term of office as a Treasurer comes to an end, there is a simple but clear process for handing over the bookkeeping responsibilities to the new Treasurer.

Firstly, it is imperative that you make sure that all of your financial records are up to date, even if there are monies outstanding or invoices unpaid for some reason. As long as you have it all clearly recorded, the new office bearer can move easily into the role and the financial administration can continue to run smoothly.

Many committees don't remember to have their books audited but it makes sense to have a complete audit before you hand the books over to someone new. You will then have a clear record of the state of the finances at the point of handover. Many accountants will offer their auditing services free of charge if you are a small NFP organisation so make enquiries with your local accounting services.

When you contact the bank to organise for any new signatories to be added to the account, don’t forget to get the necessary paperwork for removing anyone who no longer holds a role as signatory within your organisation. Otherwise you can end up with a long list of people who can move money in and out of the NF’s bank account/s and it can become very difficult to maintain accurate banking records. That can obviously expose you to some risk.

Always hand over every historical financial record to the new Treasurer. Although legally you are only required to keep records for the past seven years, it can be a handy reference tool when it comes to expenses and investments, so it often pays for an NFP to keep them for much longer.

Finally, spend some time with the new treasurer and show them how the system works. Every system is a little different and it is important that they can follow an audit trail if they need to look up an older transaction.

A good handover means a smooth progression for the role so take the time you need together.

Is Social Influence Important?

Once upon a time fundraising was all about knocking on doors, making hundreds of lamingtons or selling raffle tickets. These days with the rise in popularity of social media comes a new way to raise money; through online social networks such as Facebook, Twitter, blogs or LinkedIn. Not only are these methods free to use, the potential audience reach can mean a very successful campaign for a non-profit organisation.

Facebook

Aside from creating a page for your campaign and starting a fundraiser via a Facebook page, one of the most well-known social fundraising tools is called Facebook Causes.

Twitter

Also has a special platform called Twitplay. Twitplay works especially well because of the viral nature of Twitter – donations are created based on re-tweets which means more visibility and in turn, more donations.

Blog

Create a blog post, or series of blog posts on your fundraising campaign, your organisation, personal testimonials or stories using photos, videos and guest bloggers. This will create a more personal side to your non-profit organisation instead of just being seen as a large organisation.

You can also add a PayPal button at the end of the post (or posts) which will encourage and motivate people to donate.

LinkedIn

LinkedIn gets far less attention than other social networking sites but if used cleverly, it can really generate big business for non-profits by building on connections. LinkedIn also has search tools which will enable you to locate and find excellent prospects. You can target your search geographically, by industry or by keywords.

If you want to know more about LinkedIn and the first steps you should take, there is an excellent blog post entitled Getting to know LinkedIn written by Gayle Roberts.

So, back to the question – is social influence important? Without a doubt, yes. It is an essential way to raise money and awareness of a campaign in modern times and without it your non-profit organisation is not only missing out on potential sources for raising funds, but also awareness for your cause.

New ATO Guide for NFP Sporting Clubs

The Australian Tax Office (ATO) has released a new guide, Income tax exemption and sporting clubs. The guide is for office bearers and advisers of non-profit clubs to use when self-assessing if they are exempt from income tax as a society, association or club established for the encouragement of a game or sport.

The guide is available from the ATO website only.

You can use the guide to determine if your society, association or club is established for the encouragement of a game or sport. The guide includes summaries of three Federal Court cases and three Administrative Appeal Tribunal decisions to help clubs that conduct extensive non-sporting activities (in addition to their sporting activities) determine their income tax status.

Where you are satisfied that your club is exempt from income tax, you do not need to seek approval from The ATO.

This situation may vary in the future of your club or organisation depending on your growth andthe type of activities you undertake in the future.

Download a copy of the document to help you work out or confirm your status.

22 Fundraising Ideas for Not-for-Profit Organisations

I found this clip on YouTube and thought that it had some great ideas for fundraising, especially for smaller organisations.

It goes for around 10 minutes but it is well worth watching.  You may already be doing some of these things but all it takes is one new idea to lift your fundraising to the next level.

Interview with a Volunteer Treasurer.

Volunteer treasurer roles are always demanding, no matter how small the organisation is. We spoke to the volunteer Treasurer of a local kindergarten about the role and found that the frustrations and responsibilities were just as difficult to manage.  

What frustrations have you found as Treasurer?

• Often it can be hard to find and space to work with minimal distractions when I come in because other people also need to use the office space or equipment. Alternative work spaces in the kindergarten complex can also get quite busy and noisy especially because I work while the children are having their sessions.

• Invoices and receipts are not always in the correct files and I get annoyed when I have to hunt for them. There are too many people handling too much paperwork and not everyone knows what they are doing with it.

• We use the paper cheque system here and I find it slow and frustrating, especially when trying to catch up with the Director when I need cheques signed so that I can post them out.  

• We don’t have a petty cash system for the staff to use so they pay for small items themselves and furnish me with a receipt. I then have to write cheques for small amounts to reimburse them.

What changes would you make if you could?

• If I had the choice I would change from the paper cheque system to online bank transfers because it is cheaper and easier. There seems to be a lot of double handling with the cheque system.

• I would like to have petty cash on hand for the staff to use. That brings its own problems, of course, but it will still be cheaper in the long run.

• I would like to be able to pick up the files I need at a set time each week and process them in my home office. If we used the online model I could work at any place at any time and probably be far more productive.

• A simple online system would be easier to manage.  All the committee members would be able to see at a glance what was going on although I don't think they should be allowed to alter it.  That responsibility should stay with the Treasurer.

I look at the issues confronting this treasurer and see the solution in front of me. Admin Bandit software will overcome most of the issues that treasurers have to deal with and will produce your reports for you on demand. At 25c per day even the smallest NFP can afford the software. In fact, for 25c per day you can't afford to be without it.