Financial managementfor NGOs
Key concepts and jargon
Advance thinking for Mango training
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So what is financial management?
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Take a moment to write down 3 or 4 thoughts on what financial management involves before moving to the nextslide ...
Go on when ready
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Financial management entails:
our financial resources
planning organising
controlling and monitoring
to achieve
objectives
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One way to think about financial management to an organisation is
like maintenance to a car ...
.. we need to put in good quality fuel and give it a regular service so that it will run efficiently.
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But if we neglect it, the car will break down
and will not reach its intended destination.
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Financial control is at
the heart of financial
management ...
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Financial
control means
that ...
Money is used properly
Assets are kept safe
Staff are protected Managers can
sleep soundly!
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Plan
DoReview
This is a simple project management cycle ...
See if you can write down the equivalent of each stage in financial terms.
Go on when ready
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Plan
DoReview Receive & spend project
funds
Set the budgets
Monitorthe budget
Build in learning and take action
The financial
planning cycle
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Why is financial management important in our work?
What do you think? The next slides share ten good reasons How many can you get?
Go on when ready
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To be accountable to the people who
give us money
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To be accountable to the people who
give us money
To be accountable to
the communities we work with
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To be accountable to the people who
give us money
To be accountable to
the communities we work with
To provide financial reports
for regulatory bodies
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To be accountable to the people who
give us money
To be accountable to
the communities we work with
To provide financial reports
for regulatory bodies To plan for the
future and become more
financially secure
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To be accountable to the people who
give us money
To be accountable to
the communities we work with
To minimise fraud, theft and abuse of
resources
To provide financial reports
for regulatory bodies To plan for the
future and become more
financially secure
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To enable staff to make better decisions on the use of funds
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To enable staff to make better decisions on the use of funds
To achieve the objectives of the
organisation
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To enable staff to make better decisions on the use of funds
To achieve the objectives of the
organisation
To enhance the credibility of the
organisation
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To enable staff to make better decisions on the use of funds
To achieve the objectives of the
organisation
To enhance the credibility of the
organisationTo strengthen
fundraising efforts
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To enable staff to make better decisions on the use of funds
To achieve the objectives of the
organisation
To get best value for
our money
To enhance the credibility of the
organisationTo strengthen
fundraising efforts
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A key feature of financial management is
managing risk
Two types of risk:
Internal – from within, which we can do something about
External – from outside so beyond our direct control
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Financial risks pose a threat to our financial resources.
Write down one internal and one external risk facing your organisation...
Go on when ready
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Typical risks for NGOs:
Internal – theft, fraud, fire, accidental damage ...
External – exchange rate loss, donors withdrawing funds, inflation ...
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The key to good practice in financial management?
Robust systems!
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There are
four building blocks in a strong financial management
system ...
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Accounting records
Books of account – ie the summary records
Supporting documents – ie the paperwork
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Financial planning
Budgets for operations
Financing strategies for long term planning
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Financial monitoring
Financial statements for external accountability
Budget monitoring reports for internal review
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Internal control
Policies & procedures
Checks & balances
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When all the building blocks are set up and working effectively, we achieve financial control.
Financial control
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Find out more about Mango and free resources for NGOs
http://www.mango.org.uk/Guide