Pathways to Excellence in Financial Management

JPaik Headshot
By Jina Paik, Associate Director of Advisory Services, 
Nonprofit Finance Fund

On June 5, I had the pleasure of moderating the Nonprofit Coordinating Committee of New York’s Pathways to Excellence workshop in Financial Management, during which Bill Holmes, Harlem RBI’s Director of Financial Planning & Operations, and Amanda Kraus, Row New York’s Founder and Executive Director, discussed their financial practices and provided strategies for nonprofits to improve financial management and strength. Here are some highlights from the workshop:

Two organizations managing growth through strong financial management

A complex and growing organization, Harlem RBI is at the tail end of a large capital project. They are simultaneously preparing to open a new charter school, raising money for the new building, all while keeping their award-winning youth programs running. While the capital project has put a strain on the organization’s cash, close financial management has enabled them to cover expenses without deficits. The process and communications around financial planning have remained strong, ensuring that programs aren’t negatively affected by the capital project.

Smaller in budget size, Row New York also employs sound financial practices to keep financially stable as it grows. At its core is the budget, which is a living document that gets checked monthly, updated and shared with board members. Amanda noted the need for a level of flexibility, openness to changes and course corrections, particularly when balancing the planned and unforeseen expenses required by their programs. While the organization doesn’t have a lot of fat to trim, they find it helpful to prepare contingency plans, particularly in the event of revenue changes. Ultimately, Amanda is focused on ensuring that Row New York remains sustainable by aiming to build reserves to manage the unexpected financial shocks.

Financial management tools and reports

Stable programs come from having sufficient cash to pay the bills. A key tool employed by Harlem RBI to manage its multiple projects, programs and make informed decisions amidst a capital campaign and facility project is the weekly cash flow projection. On a week-by-week basis, Harlem RBI tracks the inflows of cash coming in and manages their cash outflow based on optimal timing.

In addition to tools and reports, Row New York gives all new board members and staff an accounting manual to ensure full knowledge of how the organization operates financially.

Internal financial controls at a small organization

Amanda discussed Row New York’s growth as it related to their internal controls, specifically for cash reimbursements. Based on guidance from their auditor, they implemented a procedure for purchase requests that essentially “slowed down” the process, ensuring each step was documented and created appropriate paper trails. Other practices included setting limits on company credit cards, and setting up flags from the bank on certain kinds of credit card purchases.

Board education and participation on finances

Finally, the panelists discussed strategies for increasing board engagement on financial matters. Harlem RBI educated board members on the nature of certain restricted funding as well as the process of Form 990 accounting. Jon Fish, CFO at The Ad Council and Row New York board member runs training sessions for all board members on nonprofit financial management. According to Amanda, engaging board members in finance-related discussions is all about presenting information in ways that non-finance folks can understand—such as through narratives or graphs—while keeping the numbers for back up. 

Jina Paik is a member of the Selection Committee for the 2015 New York Community Trust Nonprofit Excellence Awards. 

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