Financial policies clarify the roles, authority, and responsibilities for essential financial management activities and decisions. If the idea of creating a financial policy seems daunting, this basic guideline for policy development may be helpful. Developing and adopting a written financial policy is a valuable practice for any nonprofit organization, no matter how small or large. In the absence of an adopted policy, staff and board members are likely to operate under a set of assumptions that may or may not be accurate or productive.
Writing Checks | Nonprofit Accounting Basics
Policies and Procedures
The emphasis since the enactment of Sarbanes-Oxley on governance practices of all nonprofit organizations, and the specific questions on the revised Form about conflict of interest, whistle-blower, document retention and compensation setting policies and procedures of c 3 public charities have spurred renewed interest in written policies. The following are policies and practices that c 3 s and other nonprofits may want to consider. ONE: Conflict of interest policy. The revised Form asks a whether the organization has a written policy, b whether officers, directors and key employees are required to disclose annually interests that could give rise to conflicts, and c asks the organization to describe how it regularly and consistently monitors and enforces the policy.
One way to ensure prudent financial management is for the board of directors to adopt financial policies. Perhaps the most important financial policy for any charitable nonprofit is a conflict of interest policy. Financial policies clarify the roles, authority, and responsibilities for essential financial management activities and decisions. In the absence of an adopted policy, staff and Board members are likely to operate under a set of assumptions that may or may not be accurate and productive. Do you have questions about your nonprofit's financial practices?