Four reasons why now, more than ever, NGOs should be making space around the table for the financial gurus:
- Looking after the family silver
- Managing the day to day
- Keeping the rules
- Guidance for the developing social finance trends
The family silver
Community organisations have traditionally benefitted from citizens’ generosity in many ways; voluntary input, money, property and bequests. Over the years gifts of money and property have contributed to the asset base of some organisations, add to this prudent financial management on which many trusts and associations pride themselves and we have a healthy and fiscally sound non-profit organisation.
With expectations of both increased public disclosure of financial reporting and accessibility of this information via the internet, the financial situation of registered charities is wide open in the public domain. This financial accountability is absolutely right, yet in the current economic environment these hard won assets are sometimes at risk from zealous public health funders. In a cost cutting environment some believe that any savings or reserves should be applied to service delivery. There are also situations where organisations have been asked to justify the monies they have in reserve. Like many agencies, a number of the community organisations took a financial hit in the economic recession, as funds invested in a variety of places failed to perform. This leaves us with questions; how can NGOs maximise and leverage the assets they have and as the financially qualified volunteers often flee in the face of increasing regulation, who is advising them.
Managing the day-to-day:
Recently, a CEO new to a mental health community organisation, but with a local government background, said how shocked he was by the complexity of the NGO financial environment. Multiple complex income streams and erratic Government contracting practices provide the backdrop to the day to day management for NGO financial officers. They still have to deal with cash flow, costing and pricing, cost efficiencies, fraud, sub contracts and then there is managing growth, information, accountability and getting the best deals for the organisation’s cell phones, cars, rent etc.
The rules
New Zealand may be a small country but it has many rules and as NGOs cross the boundaries of public and private sector accountability, there are multiple financial directions to adhere to. The need to account to Government and philanthropic funders is accepted as part of the responsibility for accepting funding. Associated with that however, comes a growing amount of reporting requirements. Alongside the legal compliance required by IRD, ACC and GST etc. sits the un-charted area of moral accountability to clients, consumers, families and community. Providing metrics of activity increasingly falls into the role of “Finance”.
Understanding developing social finance models:
The New Zealand Treasury forecasts throw a gloomy light on future Government expenditure. Tightening spending growth in health has been signalled loudly; however demand for support from mental health and addiction services will probably increase. So as community agencies across New Zealand are beginning to ask themselves where the money will be coming from, there is growing interest in the ways social enterprise can be used to create income for non-profit organisations. With social impact bonds being tried in the UK, USA and Australia, raising capital for social enterprise, the age of where money meets meaning is truly with us.
As community organisations tread into the unexplored world of finance beyond Government contracts, we need our financial gurus more than ever.
All of these points are critical.
As a community NGO sector we have to find ways to pool our financial wisdom to improve the current financial relationships with the Crown AND build our financial literacy for our emerging world.
Tags: accountability, financial, NGOs
