Nonprofit Checking Best Practices
February 01, 2018Members of your nonprofit club’s board of directors likely joined because they had a shared passion. But a focus solely on programs or community activities could leave your organization open to financial risk. How can a small nonprofit start on the path of fiscal responsibility? Strong operating procedures help avoid any appearance of impropriety, serving to protect the organization, volunteers, and supporters.
An annual, board-approved budget is vital in identifying what will be acceptable expenses. A budget also ensures everyone involved has clear expectations regarding the group’s activities. Budget in hand, the board treasurer facilitates communication of the organization’s financial health to the full board, organization members, and the public. While a bookkeeper may maintain the nonprofit’s books and records, the treasurer compares actual and budgeted numbers and identifies any significant expense variances.
The treasurer should double check that there is a bill or receipt for each expense. Once paid or reimbursed, the check number and paid date may be written on the receipt to avoid double submissions.
It’s good practice for a different person (not the treasurer or bookkeeper) to review and/or reconcile the bank account from an unopened statement. This person also verifies that the signatures on check images match the signors on the bank account.
Online banking is a valuable tool, allowing several board members access to view accounts in real-time. Each authorized online user should be set up independently with unique log-in information. This simplifies user management with future board changes, and provides an additional layer of detail when tracking online activities. Online Cash Management provides enhanced user controls as your organization’s needs grow.
After fundraising events, it’s best to have two people count and verify cash. Try to assign each part of the process to a different person— collecting, counting, depositing, and reconciling. For membership payments by check, some nonprofits write both the member name and payment check number on the deposit slip. This allows easy cross-reference to membership records.
Open communication is a key component to nonprofit financial management. Montana code states a nonprofit corporation must keep records of its meetings, finances and membership. These records must be available to members upon request. Many groups include an annual “Statement of Activities” with revenue and expenses in a membership newsletter.
With a solid structure in place, your non-profit organization will be successful for years beyond any individual’s Board term. If you have specific questions about setting up accounts or online services for your group, please contact us today.