By Brenda Cameron-Couch
Financial Literacy in the sector was raised as a key issue by the Financing Priority working group at the 2011 National Summit. Financial Literacy covers a wide range of issues, especially, as some organizations look to social financing and social enterprise as part of their approach to financial sustainability.
I think the issue is more basic than that in many organizations. I have often talked about the fictitious scenario where an organization chooses its executive. When it comes to the choice of treasurer, people sit with their heads down and the silence of “please don’t ask me” can clearly be imagined. Some organizations are able to find someone very skilled in financial matters but for many others that is not the case. When there is a knowledgeable person the rest of the members may feel that they can forget their fiduciary responsibility and financial statements are often passed with no questions asked. Imagine Canada did a review of the T3010 forms submitted by charities in 2009 and the picture was not good. The number of errors on those forms was very distressing and this does not help with the sector’s accountability issues.
Organizations where the Board does not have a good handle on the basics, will also be severely limited in its ability to consider options like social financing and social enterprise.
There are a number of resources that deal with the basic financial information for staff and boards. Recently, a new one crossed my desk. Easier Than You Think : Guide to Nonprofit Finances, by Andy Robinson and Nancy Wasserman. This is part of an “everything you need to know in one hour” series for Boards, by Emerson and Church Publishers.
I liked the approach that they used in talking about finances. They have broken down the components into manageable chunks and have offered scenarios and examples that are very helpful. It is well written, uses plain language and you do not need to be a CA to get it. There are also a number of forms provided that could easily be adapted. Appendix E offers a Board Financial Management Quiz. It would be interesting to see how your Board (and possibly staff) does in answering these questions. It might indicate that it is time for a session for your board on Financial Management.
Easier than you Think, is an American Publication (although Nancy Wasserman splits her time between Vermont and Ottawa), so you can skip the section on the IRS. For charities, I would suggest substituting Charity Tax Tools, charitytax.imaginecanada.ca. That site has information and tools that will ensure that you have the resources to meet the CRA requirements. You may also find it helpful to review the list of Governance and Financing standards which are part of the new Sector Standards Program for the sector which has now been officially launched.
Time spent with staff and the board the on financing of the organization would be well spent for many organizations. Is your organization one of them?
If you have other financial resources that you have found helpful please share them through the comments section.
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