Financial transparency in the nonprofit community has been a major talking point for several years. Advances in technology, and a focus on fraud continue to raise donor expectations on the subject. They not only want confirmation that their donations are being utilized to assist the causes they are passionate about, they also want to know that your organization is honest and stable. What is Financial Transparency? According to Dave Manuel, Financial Transparency “means making information as accessible as possible” and that you are “being honest about your performance, even when it is subpar.
The importance of a whistleblower policy cannot be emphasized enough. No employee should fear reprisal, firing, or violence when working to correct the wrongdoings of their employer. If an employee knows of illegal activities or organizational wrongdoings taking place, they should feel encouraged to report any misbehavior, saving your organization from the illegal practices, fraud, and bad publicity that could occur. Below we’ll explain the importance of enacting a whistleblower policy, and provide links to resources that will help you create and maintain one.
You must track payments you make to all businesses and individuals that you buy services from. If you pay independent contractors, you may have to file Form 1099-MISC, Miscellaneous Income, to report payments for services performed for your trade or business. If the following four conditions are met, you must generally report a payment as non-employee compensation. You made the payment to someone who is not your employee You made the payment for services in the course of your trade or business (including government agencies and nonprofit organizations) You made the payment to an individual, partnership, estate, or in some cases, a corporation You made payments to the payee of at least $600 during the year Does everyone have to do this?
Reconciliation refers to the process of ensuring that two sets of records or accounts are in agreement. Put simply, you are verifying that what you think you have in your bank account is what you actually have in your bank account. The simplest reason for completing reconciliation is the human component of accounting, which makes errors inevitable. Reconciling your bank accounts offers a layer of protection against loss prevention, and is crucial to ensuring the accuracy of your financial reports.
Fraud in the nonprofit world can have staggering impacts to your mission. As a nonprofit, you experience an increased financial risk. Due to budget size and restraints, nonprofit organizations will feel the impact of a negative incident (such as fraud) on a far larger scale than a for-profit organization. As such, instances of fraud, misstated financials, and stolen or damaged assets can have severe consequences in this sector. An article from The Nonprofit Timesprovides statistics that could drastically impact your mission.