Role of Finance & Accounts in an NGO You can read the information below in over 15 languages! Simply use the translation tool in the top-left corner of the screen to select your preferred language, including অসমীয়া, বাংলা, ગુજરાતી, हिन्दी, ಕನ್ನಡ, മലയാളം, मराठी, মৈতৈলোন্, नेपाली, ଓଡ଼ିଆ, ਪੰਜਾਬੀ, संस्कृतम्, தமிழ், తెలుగు, and اُردُو. 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 Enable Value Creation Shape Value Creation 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 Planning: Financial Resources for operations Financial sustainability For Controls (Framework)-Polici Forecasting-long term and short term Budgets-organisation and programs/projects Fund flows Operating Cash 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 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 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 Monitoring Controls Budgetary (realignment, reallocation) Adherence to policies and procedures for Internal control Audits and assurances-statutory, internal donor, Govt Monthly MIS-Financial, Program Facilitator - support on finance to all other functions NARRATES the value creation through 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 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 existence Please note: Information is for reference only. 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