Resources For Not for Profits

Anyone that has worked in or managed a not for profit organisation will be all too familiar with the difficulties and restraints surrounding resources. From staff to stationery, it’s a simple fact that any organisation needs a certain amount of resources in order to run effectively and efficiently to produce the results they need.

The good news is that there is a huge amount of support for not for profit organisations available from other groups, companies or institutions that recognise the work they do and help they need.

If you’re a not for profit struggling for resources, here are a few links and tips that can really help you to help others.

Community TechKnowledge

These guys provide software solutions to not for profits but they also have some great educational videos, webinars and software overviews which you can view for free. Try the Godsey Collection for a five part interview series of expert NFP trainer Gary Godsey. You’ll hear about things like leadership in NFP, remaining relevant, being competitive and fundraising.

Our Community

There is a huge amount of readily available and easy to find information at Our Community. With an extensive list of community resources to search through, this site provides easy navigation and very useful links and information.

Not for Profit Network

This Australian-based site will provide lots of good tips, insight and tell you about upcoming events for NFP’s. Sign up to their newsletter to get the latest updates and find an array of free non-profit publications and resources. Also helpful for putting you in touch with suppliers with resources and services specifically designed to assist NFP organisations, plus the chance to promote your own NFP.

Good luck with your resourcing and your not for profit organisation – remember, help is out there for you, too.

Do Balance Sheets Matter?

The end of financial year is a stressful time. Balancing the accounts on time and correctly can be very difficult if your records are even slightly disorganised. Add to that the production of the Annual Report and the Treasurer’s Report and you’ve got a big job on your hands.

One of the most important parts of the Treasurer’s Report is the balance sheet.

The Small Business Development Corporation of WA says,”The balance sheet is a statement of what a business owns (assets) and owes (liabilities) at a specific point in time. It lists the assets that the business owns, the liabilities owed by the business, and the value of the owner's equity (or net worth of the business).”

The balance sheet is a statement showing the financial health of the business and is a legal requirement for most organisations.

But how useful is a balance sheet? To most people who read it, all they see is a blur of numbers that mean very little. Indeed, even the full length balance sheet, usually compared to the previous year’s figures, means absolutely nothing to the layman so is there any real point in putting it in?

1. They are costly to prepare.

2. They take up time that the Treasurer could better use.

3. No one reads them anyway.

4. Very few people actually understand what they are reading.

5. The report is probably out of date by the time it is published so it doesn’t accurately reflect the financial position anymore.

6. One tiny mistake in the calculation of assets or liabilities can make the report invalid.

7. If you were debt free on 30th June but took out a huge loan on 1 July the balance sheet becomes irrelevant in your financial planning.

With all those negatives, I ask you for your opinion. Do you think that balance sheets matter?

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.