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### ### Objectives of an NPO - Primary objective: Maximise social benefits/services/impact for beneficiaries it serves - Secondary objective: - Economy - control costs - Efficiency - achieve objective in minimum costs (Process, doing things right) - Effectiveness - measure of achievement with reference to objectives (Result, doing the right thing) #### Change - The New Norm for NPOs - Change - Donor expectation - Statutory and regulatory landscape - Govt orientation towards charity - Technological developments - Change offers: Risks and opportunities - Impacts organisation in terms of future growth, even existence. #### Types of Resources an NPO uses - Material - capital goods, program goods, supplies, technology - Money - financial resources - Manpower - Human resources of organisation #### Main Functions of an NPO - Program - Finance & Accounts - Admin - Communications, Advocacy and Public Relations - Research - New Business (fund raising) - Training & Capacity Building - Every staff in every of above function performs a finance role ### Financial Management - Financial Management is the business function that deals with planning, organizing, monitoring and controlling financial resources of an organization. - It focuses on spending financial resources to deliver greater social impact - Why financial management: - Accountability and Transparency to donors and communities we serve - Allocation of financial resources for organisation activities - Investment decision for resources - Statutory/regulatory compliance - Financial Reporting to stakeholders - Futuristic planning-Financial security, Sustainability and long term growth - Internal Controls framework - Custody of financial resources to minimise resource misuse and embezzlement - Better decision making on Finance to fulfil the Mission based o data and analysis - Enhanced credibility and trust thereby giving a competitive edge - Manging risk through Internal Controls - Meeting organisation goals #### Finance Function in an NPO - Finance function ensures organization's financial health and sustainability - The finance function’s role in an NGO is: - Manage financial resources of the organization - Make strategic finance decisions for sustainability - Operational support-uphold internal controls and support other functions including fundraising - Report to stakeholders to help decision-making - Statutory and regulatory compliance - Manage risks through suitable internal controls Difference between Accounting & Finance though used interchangeably: Accounting looks Back while Finance looks Forward! #### 3 key roles of Finance function in an NPO 1. Enable Value Creation 2. Shape Value Creation 3. Narrate Value Creation - These are in chronological order - Role is performed by CFO and team he/she leads in Finance function duly supervised by Chief Functionary and Governing Board - Value creation for an NPO means maximising social outputs/outcomes using the various resources ### Role of Finance Function in NPO #### Enables Value Creation through 1. Planning: - Financial Resources for operations - Financial sustainability - For Controls (Framework)-Polici 2. Forecasting-long term and short term - Budgets-organisation and programs/projects - Fund flows - Operating Cash 3. Resource Allocation: manpower, material, money - Banking - Treasury & cash management - HR, Goods and services procurement as per policy and prevalent laws - Inventory management-slow moving, waste, loss - Asset management-depreciation, obsolescence, loss etc 4. Recording: - a. Book keeping i.e. recording transactions - Accounting i.e. summarisation, analysis and interpretation of financial data - Closing and reconciling-bank, vendor, employee, grant etc ### Role of Finance Function in NPO #### SHAPES value creation through 1. Performance Measurement and Management - Budget monitoring (budget variance analysis) - organisation, projects - Measuring Value for money (VFM) - ratios - Return (social return) on investment (SROI), Social impact audit 2. Monitoring Controls - Budgetary (realignment, reallocation) - Adherence to policies and procedures for Internal control - Audits and assurances-statutory, internal donor, Govt - Monthly MIS-Financial, Program 3. Facilitator - support on finance to all other functions #### NARRATES the value creation through 1. Financial reporting - Donors - periodic FR, annual audited UC, supporting fundraiser with financial data - Govt bodies - IT, FCRA, Registering agency, EPF, ESI, TDS, GST - Board/top management - financial health 2. Focal point with external stakeholders on institutional matters - obtaining statutory approvals - financial assessment by donors, govt etc. ### Role of Non Finance Staff in Financial Matters - Non finance staff handle resources which have value - Non finance staff authorise various types of expenditure - travel, procurement, office exp, statutory dues - Non finance staff own and operate project budgets - Project decisions of Non finance staff in field have financial implications - allowance/disallowance - Decisions in field of Non finance staff have compliance implications with laws of land - Non Finance staff actions affect reputation and even our very existencePlease note: Information is for reference only. 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