Fiscal Oversight And Fundraising - Maddie's Fund

For more information on theseand other nonprofitmanagement topics, contact:Jeannette PetersNonprofit ManagementConsulting, LLCjp@getfunded.org352-371-7412Part Four:Fiscal Oversight &Fundraising

Fiscal responsibilities of the Board Financial Management Basics Developing a Budget Basic Financial Reports FundraisingNonprofit Management for Pet Rescue Organizations: Part Four

TheBoard has ultimate legal responsibilityfor the fiscal oversight of the program. Instaffed organizations, day-to-dayoperations can be delegated to the ExecutiveDirector and fiscal staff, but the Board has aduty to review and approve all records andreports. Inall-volunteer organizations, the Treasurerhandles the day-to-day bookkeeping andaccounting tasks.Nonprofit Management for Pet Rescue Organizations: Part Four

Typically,the Executive Director or fiscaladministrator works with the Board Treasurerto prepare the annual budget and periodicfinancial reports. TheFundraising Committee and the Board asa whole are responsible for crafting afundraising strategy to meet the needsdefined in the annual budget. The ExecutiveDirector may help to facilitate the plan, butfundraising efforts should be Board-drivenand Board-implemented.Nonprofit Management for Pet Rescue Organizations: Part Four

An accounting software package like Quickbooks providesa great combination flexibility, features and ease of usefor non-accountants. You will be glad you made theinvestment when it’s time to run monthly reports andcomplete year-end filings.The person who cuts the checks should never be theperson who signs the checks!Consider establishing a two-signature check policy forgood fiscal control: either two Board members must signin an all-volunteer organization, or a Board member andthe Executive Director in a staffed organization.Establish a petty cash account for purchases under 200so you don’t have to go searching for a check signer inemergencies.Nonprofit Management for Pet Rescue Organizations: Part Four

An annual financial audit by an independent auditor isoften required to qualify for grant funding. Some statesmay require an audit if your budget reaches a thresholdlevel. After you’ve been operating 3 to 5 years, or as youapproach the threshold budget amount, your Board shouldthink about undergoing an audit.The full Board selects an auditor on recommendation ofthe Treasurer or Finance Committee. The BudgetCommittee should expect the audit to cost between 1%and 3% of your total budget.Your first audit can be scary! Your Board and staff shouldview the audit as a valuable learning experience. Yourauditor will let you know what documents to have readyfor review.Nonprofit Management for Pet Rescue Organizations: Part Four

The Auditor or the Treasurer presents the auditreport and management letter to the full Board. Themanagement letter will describe any audit findingsand provide suggestions for improvement. The Executive Director and the Treasurer develop animprovement plan that responds to any findings inthe audit management letter. The improvement planis implemented by staff and by the FiscalCommittee.Nonprofit Management for Pet Rescue Organizations: Part Four

A sound, written budget will help yourFundraising Committee set realistic goals andensure the sustainability of your program. The budget development process should startearly in the third quarter for the following fiscalyear. Ask each of your committees (in volunteerorganizations) or departments (in staffedorganizations) to submit budget requests basedon their plans for the upcoming year. Tell themto be realistic and make sure they know theymight not get all they ask for!Nonprofit Management for Pet Rescue Organizations: Part Four

The Treasurer and the Executive Director orfiscal staff, working together, should identify allnon-committee related costs for the upcomingyear: rent, filing fees, utilities, travel, training,payroll and payroll liabilities, equipment,supplies, etc. If you don’t have historical data toproject from, give it your best estimate. Use the committee and general costs identifiedto determine your expected expenses for theyear. Then list your expected revenue andincome. Be realistic. If your expenses are more than your income,you’ll need to either cut your costs or identifymore revenue sources. Nonprofit Management for Pet Rescue Organizations: Part Four

As you build your budget, try to include a FundBalance buffer! This will be extra money setaside for contingencies. If it’s not used duringthe fiscal year, it can be carried forward forfuture years. Once your proposed budget balances, you areready to submit it to the Board for approvalbefore the new year begins. Your Board shouldexpect monthly written reports that show howcosts align with the planned budget. Software packages like Quickbooks provide asimple way to develop your budget and generatebudget-to-actual expense reports for your boardmeetings. Nonprofit Management for Pet Rescue Organizations: Part Four

The Executive Director or fiscal staff shouldprepare monthly financial reports to keep theBoard apprised of the organization’s financialoperations and ongoing needs. The reports should be submitted to the BoardTreasurer for review and approval before eachBoard meeting. The Executive Director or staffshould address any questions or concerns theTreasurer may have so that the Treasurer canpresent the report at the Board meeting.Nonprofit Management for Pet Rescue Organizations: Part Four

The financial reports should be presented inwriting to each Board member at the monthlyBoard meeting. Board members have a duty toreview the reports and ask questions when theyhave concerns or don’t understand something.All questions should be addressed by theTreasurer or Executive Director. At a minimum, the Treasurer (supported by theExecutive Director) should present a year-todate Budget to Actual report to the Board ateach monthly meeting. Monthly and year-to-dateProfit & Loss reports and a Balance Sheet arealso helpful.Nonprofit Management for Pet Rescue Organizations: Part Four

Inaddition to the main organizationbudget, your committees may also wantto set up sub-budgets for their projects sothat they can track and report on costs,revenue and profitability. Mostaccounting software packagesprovide classification functions that makeit easy to track financial data by project.Nonprofit Management for Pet Rescue Organizations: Part Four

Remember that you will have to file an annual federal taxreturn even if you’re a nonprofit. If you have your501(c)(3) status, you will file Form 990.You will need to send out W-2s to any employees and1099s to any contractor who’s not a corporation and towhom you paid more than 600 during the year.For smaller organizations, Form 990 is fairly easy tocomplete, but if you think you’re going to need tax help,contact an accountant who specializes in nonprofits asearly as possible to make sure tax services will beavailable when you need them.If your fundraising plan includes a business that’s notdirectly related to your charitable mission (for example, athrift store), you will have to file an Unrelated BusinessIncome Tax Return along with your 990. Talk this issueover with your accountant early in the tax season.Nonprofit Management for Pet Rescue Organizations: Part Four

A healthy nonprofit pet rescue organization should receiverevenue and income from a diverse range of sources:grants, donations, bequests, fundraising activities, adoptionfees, and paid services like microchipping. Many pet rescuegroups fund their operations through thrift stores,boarding/training services, or other income-generatingactivities. (Remember that income activities unrelated toyour mission may be subject to income tax.) The Board has primary responsibility for ensuring that theorganization has enough revenue to meet general operatingcosts and planned activities for the year. The ExecutiveDirector provides support and coordination to thefundraising activities implemented by the Board, but is NOTthe primary fundraiser!Nonprofit Management for Pet Rescue Organizations: Part Four

Each Board member must understand the role ofcontributed funds in the organization’s finances aswell as the organization’s fundraising plan. Each Board member should make an annual personalfinancial contribution. How can you ask others togive to an organization that you’re not willing tosupport? Each Board member should identify an area wherehe/she can make a contribution to fundraising:hosting an event, asking friends to donate, makingcorporate visits, etc. The Board Member job description should contain aclear statement about the expectation for personalgiving and participation in fundraising. Nonprofit Management for Pet Rescue Organizations: Part Four

When recruiting new Board members, look for folkswho can be helpful to the fundraising process,through contacts or expertise. The Board shouldappoint an individual or subcommittee to overseefundraising plans and activities. The Executive Director ensures that Board membersand prospective members are informed aboutfundraising expectations, and that Board trainingmaterials and workshops provide ongoingfundraising education to Board members. TheExecutive Director should ensure that all Boardmembers receive appropriate recognition for theirparticipation in fundraising. Nonprofit Management for Pet Rescue Organizations: Part Four

Your state may require any organization thatengages in fundraising to register and file annualreports with a state agency. This will be separatefrom your corporate annual report requirements.Check with your state’s Secretary of State orDivision of Consumer Affairs to learn therequirements. The decision to use a professional fundraisingspecialist or firm from outside the organizationshould be considered very carefully. Research yourstate’s regulations on contracted fundraisers tomake sure you’ll be in compliance. Nonprofit Management for Pet Rescue Organizations: Part Four

Membership dues Corporate Donations Fundraising Events Event Sponsorships City and County government grants Product Sales (T-shirts, magnets, promotionalitems) Foundation grants Volunteers/in-kind donations of goods and services Adoption fees Spay/neuter fees NonprofitRetail,thriftshops,boarding,training servicesManagementfor Pet RescueOrganizations:Part Four

In Parts Five through Eight of this NonprofitManagement Series you can learn about: Community Awareness/Public Relations Human Resources: Staff and Volunteers Assessment and Evaluation Administrative Tasks/Meeting ManagementNonprofit Management for Pet Rescue Organizations: Part Four

For more information about these topics:Download the completeNonprofit Management series atwww.maddiesfund.orgor contact Mary Ippoliti-Smith atMaddie’s Fund2223 Santa Clara Ave., Suite B Alameda, CA 94501510-337-8970 smith@maddiesfund.orgNonprofit Management for Pet Rescue Organizations: Part Four

to prepare the annual budget and periodic financial reports. The Fundraising Committee and the Board as a whole are responsible for crafting a fundraising strategy to meet the needs defined in the annual budget. The Executive Director may help to facilitate the plan, but fundraising