Fragmentary memos and checklists are often created in reaction to a problem that has occurred in some small- and even mid-sized nonprofit organizations. Although there are well-intended motives to create a more complete document, it seldom gets completed because of the hubris of day-to-day work priorities.
Benefits of a FP&P in nonprofits
I think everyone can agree that having an FP&P Manual carries several benefits, among them:
- Forces critical thinking. Also, ensures collaboration to organize functions, processes and deploying resources most efficiently
- Ensures compliance with regulatory and accounting standards
- Achieves standardization across departments and locations
- Demonstrates accountability and transparency to stakeholders and the public
- Provides framework for training and continuity of personnel
- Helps prevent fraud and inadvertent misallocation of assets
- Facilitates the auditor’s review of internal controls
Why is creating an FP&P manual for a nonprofit so difficult?
As many would agree, writing a good FP&P is a big job, even though there’s a plethora of sample manuals, how-to instructions, and templates to draw from and help you get started.
As a provider of outsourced accounting services to nonprofits, we are painfully aware of the need for documented policies and procedures, which, in our case, is a necessity and pre-requisite to our growth.
NFP Partners has written a handful of articles to help your nonprofit create financial policies and procedures. One, in particular, is Internal Controls for Nonprofits- Top 10 Best Practices. Also, you can find more articles on our Ultimate Guide to Nonprofit Accounting page.