Last week I wrote about your cash box and how to handle cash properly. I hope you got the impression that I find it very important and am passionate about this. Because I am. Not because I care about cash (or non-cash money), really. But because I know that proper finance management can help create stability in your organization and peace of mind for yourself. Having this, means you can laser focus on your mission. On the work your organization was created to be doing. This is where for me the real value of finance management lies and why I am indeed extremely passionate about it.
Money as a tool
As we all know, you need money to make your organization’s dreams come true. You need to print your leaflets, have your website online, employ people to organize events, hire a venue, pay for the biscuits and soft drinks… all this has a cost. And most of the time you need money to pay for this.
Grants and donations as a solution
In the beginning of your operations you may well be able to depend on volunteering and on in-kind contributions to get things done. But after some time, and especially if you want to step up your impact and grow your operations, you will need to find investors. You can find individuals ready to make donations, you can interest companies in the frame of their corporate social responsibility programmes or you can find government institutions and private foundation who are willing to give you a project grant. Great solution: money in the bank and you are ready to get going!
… wait a minute
As you may have experienced yourself, life is not exactly that easy. People who give you money want something in return. If nothing else, they need a good quality report with reliable data in it. You need to develop systems to produce and take care of these reliable data. Monitoring systems, to keep track of progress and success of your work. And administrative systems, to keep track of how you spend the money.
Some donors have specific requirements in regard of finance management and administration. Or maybe your local authorities have certain standards for bookkeeping and finance reporting of nonprofits. You do not want to face unpleasant surprises at the end of the implementation work. Such as your report being rejected and the donor not paying for all these expenses after all, because you failed to adhere to these requirements.
Somehow, getting that money to get going on working toward achieving your vision seems to have a risk of derailing your brain into worrying all the time. About the nitty-gritty stuff related to the management of the grant and the donations, and the management of the money itself. Thinking about money all the time, and about how to avoid problems related to money, is not conducive at all to the creativity and energy you need to work on your mission.
This is why you need to have systems in place. If everything is arranged to take proper care of the grant management and finance management side of the investment you acquired, you are free to focus on what you got the grant for in the first place. Systems bring clarity and stability, that bring peace of mind, that fosters focus on your mission and vision. Now you can get going for real!
Eh what systems?
By systems I mean a consistent framework of interconnected mechanisms, procedures, formats and people that are in place to manage your data governed by the organization’s values and in service of the organization’s vision and mission. A financial system is not just the bookkeeping. It also encompasses the mechanisms and procedures how documents enter the bookkeeping, including how they are checked, allocated and reported on. And it encompasses the person who takes responsibility for this, including for necessary exceptions as well as dishing out necessary no’s.
All this for a grant?
Just to be clear. In my book, all this is not just for your donor. In fact, it is MORE for YOURSELF than it is for your donor. To have peace of mind and stability you need to be and feel in control. To be in control, you need to know where you are. (and where you need to go, plus you need to have the tools to get there obviously). To know where you are, you need to have reliable and functional data. Data that you need to collect and manage consistently, whether as part of your project performance measurement framework or as part of your finance management systems.
Value of finance management
Only then, when your worries are canalized through proper functional systems, can you experience the real value of finance management: how it can actually help you make happen what needs to be done to address the pressing needs you are here to solve. Only then can finance function as an instrument in service of your organization’s vision and mission. And only then can money bring you genuine freedom. And helping you get there is my true passion.