July 15, 2009
Money for Nothing: Financial Management in Difficult Times
By Melanie Lockwood Herman
For many nonprofits that are working to ride out the recession the need to cut costs and operate austerely is painful and ever-present. Yet an unintended downside of near-obsessive focus on the present may be neglect of long-term opportunities. With every available hour and dollar spent on managing with less, too little may be devoted to looking at the horizon for opportunities to “do more with more.”
The discipline of financial management is much broader than the bookkeeping and accounting functions in a nonprofit. It encompasses financial planning focused on mission fulfillment, evaluation of activities and programs to ensure that they do not drain resources away from mission-critical efforts, recalibrating resource development efforts to reflect more closely the opportunities embedded in the mission, and ensuring proper governance practices that allow for transparency and appropriate board and stakeholder involvement. Therefore, financial risk management starts with a core focus on protecting the assets of the organization but also embraces many other facets of organizational activities.
In our work assisting nonprofits across the country, the Center frequently incorporates basic concepts of financial risk management into our consulting, technical assistance, and teaching programs, irrespective of the overall focus of the engagement. Conversely, nonprofit leaders faced with diminished financial resources in difficult times can use the focus on financial trauma to ensure that their organizations are adequately addressing the basics. Is your organization adequately protecting against fraud? Is your board appropriately involved in making the tough financial and human resource choices? Are you tracking and still adhering to donor intent with regard to the use of restricted funds? Are you carefully evaluating the risks associated with new fundraising efforts?
In coping with the current crisis, nonprofit leaders must also continue to manage future risks. There are both risks and opportunities ahead, as there always have been, and the present difficulties should not cause the organization to diminish a “heads up” approach to the future, including reminding and providing guidance to staff so that the entire organization stays as healthy as possible as it emerges from difficult times.
Three content-filled workshops on the topic of financial management will be featured at the 2009 Risk Management and Finance Summit for Nonprofits, September 21-22 in Austin, TX. This year’s featured sessions are:
- Managing Fraud Risk in Your Nonprofit: Practical Tools to Safeguard Your Assets — In the Report to the Nation on Occupational Fraud and Abuse, the Association of Certified Fraud Examiners estimates that 7% of organization revenues are lost to fraud. In 2008, fraud losses amounted to a staggering $994 billion. From Ponzi schemes to embezzlement, it is clear that nonprofits are more vulnerable to fraud than widely recognized. Equally disturbing, nonprofit sector frauds are too often committed by your most valued assets: long-time, trusted employees and volunteers. Even worse, some experts predict that fraud will spike during the economic downturn. This workshop will describe what factors contribute to fraud, facts about the crimes, who is committing fraud, the fraud schemes used, and best practices that organizations should employ to combat this growing category of crime.
- COMMON GROUND: Financial Risk Management for Churches and Faith-Based Nonprofits — Finance and tax matters are birds of a different feather in the world of churches and religious nonprofits. This session will explore challenges posed by the Church-finance paradigm, and provide insight for volunteers and staff concerned about managing risks that arise in the realm of financial management and oversight of financial strategies and activities.
- Advanced Financial Management — Nonprofit CFOs and Finance Managers often walk a difficult tightrope. They are obligated by professional ethics to report accurately the financial condition of the nonprofits they serve, but wish to do so in way that doesn’t cause further harm to the nonprofit’s reputation and standing among key partners and donors. Financial reports of a nonprofit can send powerful signals about the effectiveness and sustainability of the organization. Too often, financial managers get caught in a cycle of delivering bad news and possibly being tuned out or misunderstood. Nonprofit leaders need expert financial assistance to understand the real financial issues and be brought on board to address the issues as early as possible. Financial managers need to keep many different constituencies informed throughout a financial crisis; funders, board members, bankers, senior managers and the rank in file, all have a vested interest in understanding and addressing the financial realities the nonprofit faces. This workshop for seasoned finance executives will discuss effective approaches to delivering accurate news to your CEO, Board of Directors and other stakeholders in a way that will inspire sound decision-making while not inviting the “shoot the messenger” syndrome. Our expert presenter will demonstrate how to become part of the solution for long-term fiscal health, rather than simply a messenger of doom.
The full conference program, including details on our dynamic plenary speakers, can be found at the following link.
EARLY-BIRD DEADLINE – The early-bird deadline expires on July 31, 2009. Register by July 31st to secure the low full conference registration rate of $395 or one-day rate of $225. The registration fee includes resource materials for all conference workshops, breakfast and lunch on both days of programming, and generous doses of inspiration and practical information. To register for the Summit, click here.
Questions?! Call the Nonprofit Risk Management Center at (202) 785-3891 or write to: firstname.lastname@example.org.
Summer Issue of Risk Management Essentials Now Available
The Summer issue of the Center’s newsletter, Risk Management Essentials, is now available. To download a PDF of the newsletter, click here. To view the articles featured in the new issue online, click here. To request copies of the printed version for distribution within your organization, contact Sue Weir Jones at (202) 785-3891 or Sue@nonprofitrisk.org