Financial management
Basic level
This project has been funded with support from the European Commission. This publication reflects the views only of the author, and the Commission cannot
be held responsible for any use which may be made of the information contained therein.
REVEAL Basic course
Financial management
Level: Basic
Domain : Financial management
In this course you will get an overview on the main financial
subjects in the non profit sector and learn useful tips for the
financial management of the organisation you volunteer in. You
will learn how to keep a simple and proper bookkeeping for your
organisation, and how to report in financial terms your
volunteering. Finally you will also learn some basic principles of
fundraising together with some practical tools to start or improve
this kind of activity with your organisation.
REVEAL Basic course
Financial management
Moduloe1:
Module 1 Budgeting
What is the budget? Definition
The Budget is an action plan expressed in quantitative and
monetary terms, referring to a certain period of time, which
sets out the objectives to be pursued and the resources
needed to achieve them.
It allows checking in advance the financial sustainability of
future management, to guide and align the various parties
involved to the strategies pursued, to verify ex post the
achievement of results through the comparison with
the ​estimated ones.
Budgeting
REVEAL Basic course
Financial management
The role of
planning
budgeting within the
organisations’ Moduloe1:
Budgeting
The Budget is a time-bounded plan.
The budget is the main document for operations planning and
control.
The implementation of a well conceived budget requires the
identification of goals, which in turn implies organizational
assumptions:
•
•
•
•
active participation in the budgeting process (sharing the justifications,
benefits and operating methodologies to achieve the objectives);
Ongoing evaluation of the performance and overall budget
effectiveness assessment;
Continue reprogramming;
Planning on a multiannual basis.
REVEAL Basic course
Financial management
Moduloe1:
Main stages of economic-financial process of planning and
control:
Annual budget
Final balance
Deviations
analysis
Corrective
measures
Budgeting
REVEAL Basic course
Financial management
Module 2
Accounting and record keeping
What is accountancy? Definition
Accountancy, or accounting, is the process of communicating
financial information about any operating entity, both public and
private, to internal or external users such as shareholders,
managers and control authorities. The communication is generally
in the form of financial statements that show in money terms the
economic resources under the control of management.
Accountancy is indeed the art of recording, classifying, and
summarizing in a significant manner and in monetary terms,
transactions and events which are, in part at least, of financial
character, and interpreting the results thereof.
Module 2:
Accounting
and record
keeping
REVEAL Basic course
Financial management
Module 2:
Reliable accounting is vital for sound financial management and
reporting.
Accounting has two basic purposes:
- Show the revenue, expenses, assets and liabilities of the project
for financial management purposes;
- Provide the data needed to draw up accurate financial reports.
To meet these basic objectives, accounting records must be:
- Up-to-date
- Accurate and reliable
- Drawn up according to proper accounting standards, methods,
policies and rules.
Accounting
and record
keeping
REVEAL Basic course
Financial management
Module 2:
Dos and don’ts in bookkeeping applied to volunteering
Accounting
The most common bookkeeping mistakes that may undermine the and record
keeping
efficiency of voluntary actions:
• the accounting system is inadequate as it does not allow reconciliation
with relevant costs;
• all costs have not been registered in the accounting system;
• accounting records do not comply with generally accepted accounting
standards;
• accounting records are not kept according to the organisation’s usual
accounting practices;
• certain documents are not drafted or kept;
• documents kept do not provide sufficient evidence that contractual
conditions agreed with donors or funders have been met.
• project documents kept are not later retrievable;
• projects documents are prematurely discarded;
• false documents are provided.
REVEAL Basic course
Financial management
Module 2:
Some basic tips for a correct accountancy and record keeping for
voluntary organisations:
1. Make sure to use proper bookkeeping techniques.
2. If your organization is beneficiary of a grant from an external
public or private body, before starting the project pay attention
to all the contractual conditions. Beneficiaries of grants financed
by external bodies are advised to keep extensive records, over
and above the minimum requirements in the grant agreement.
Double-entry bookkeeping system
A double-entry bookkeeping system is a set of rules for recording
financial information in a financial accounting system in which
every transaction or event changes at least two different nominal
ledger accounts.
Accounting
and record
keeping
REVEAL Basic course
Financial management
Module 3
Financial reporting
What is a financial report?
The financial report is simply a juxtaposition of income and
expenditure and shows how, through the management, the
available resources have been used by an organisation.
Basic notions on financial statements
A financial statement (or financial report) is a formal record of the
financial activities of a business, person, or other entity.
Module 3:
Financial
reporting
REVEAL Basic course
Financial management
Despite the existing differences from country to country they
typically include four basic financial statements, accompanied by
a management discussion and analysis:
• Balance sheet: also referred to as a Statement of Financial
Position, reports on a company's assets, liabilities, and ownership
equity at a given point in time.
• Profit and Loss statement: also referred to as Statement of
Comprehensive Income, reports on a company's income,
expenses, and profits over a period of time. A Profit & Loss
statement provides information on the operation of the enterprise.
These include sale and the various expenses incurred during the
processing state.
• Statement of Changes in Equity: explains the changes of the
company's equity throughout the reporting period.
• Statement of cash flows: reports on a company's cash flow
activities, particularly its operating, investing and financing
activities.
Module 3:
Financial
reporting
REVEAL Basic course
Financial management
The financial statements of non profit organisations such as
voluntary associations, tend to be simpler than those of for-profit
corporations.
Usually across Europe the minimum requirement for small-sized
non profit organisations is a simple Profit & Loss Statement
supported by a report on activities.
Medium-sized and bigger organisations, especially if involved also
in project financed by external bodies/authorities, are usually
required to have an extensive set of financial statements,
comprising:
- a balance sheet, reporting on organisation’s assets, liabilities and
equity;
- a profit and loss statement;
- a set of notes to the financial statements that typically describe
each item in further details;
- an activity report.
Module 3:
Financial
reporting
REVEAL Basic course
Financial management
Module 4
Fundraising
What is fund raising? Definition
Fund Raising has to do with people, and not so much to ask them
for money, but rather to generating long-lasting relationships to
reach a valuable goal. Fund raising is fundamentally an exchange
between people seeking economic resources, material and human,
and people that are potentially available to give.
Fund Raising is not an exchange of equivalent goods like in forprofit enterprises, where to each product or service is assigned a
monetary value.
Fund raising is not a redistributive exchange (like in public welfare),
where the tax revenue is redistributed according to the needs of
citizens.
Fund Raising is an exchange that is based on the reciprocity
principle.
Module 4:
Fundraising
REVEAL Basic course
Financial management
In the non profit sector Fund Raising is a comprehensive set of
activities that the organisations put in place to find the necessary
resources to carry out their statutory objectives, creating relational
goods with people.
Fundraising principles and basic tools:
1. Mission: it tells the identity of your organisation. It’s the
declaration which explains the nature, purpose, main
activities and principles that inspire the organisation.
2. Good cause document (GCD): the reason why it is
worth giving your organisation.
Module 4:
Fundraising
REVEAL Basic course
Financial management
3.
From GCD to the ‘case’: it’s the story to tell to your
potential donor.
It is the project which we ask the donation for.
CASE ---------------VEHICLE ---------------POTENTIAL DONOR
(cause)
(how)
(who)
4. Relationship with people (donor research) – C.A.I.
People give in relation to their means and in relation to what others give.
Each potential donor is identified and qualified according to the CAI matrix:
C = Connections with your organisation
A = Ability to donate (nobody gives because he/she is rich!)
I = Interest to your cause.
5. Ask: how do we ask to our potential donors? What
interactions can we have with them?
6. Thank: it is compulsory to thank your donors.
Module 4:
Fundraising
REVEAL Basic course
Financial management
The Gift Pyramid displayed here below shows can help you
understand what kind of relationship you can establish with
potential donors depending on the amount of the donation
that we expect from them.
Module 4:
Fundraising
REVEAL Basic course
Financial management
Communication in fundraising
Module 4:
Good communication is essential for good fundraising
‘3 P rule’: People give to People who help other People.
Fundraising
People give …
It’s people to donate, not the Institutions. People that work within
the Institutions may want to donate, and to them you must
address.
… to People …
People do not donate to restore a budget deficit. They give to a
non profit organisation because this organisation is committed
towards a “good cause”, and because the organisation is able to
keep the promises.
People donate because of the mutual trust that exists between
people.
… to help People
It’s the needs of people to make other people donate.
Thank you!
This project has been funded with support from the European Commission. This publication reflects the views only of the author, and the Commission cannot
be held responsible for any use which may be made of the information contained therein.