Do you monitor your nonprofit to ensure it is run productively, efficiently, and ethically? Here are guidelines in the areas of operations, benchmarking and metrics, fundraising and development, governance, and internal controls:


Risk Assessment:

Conduct an internal risk assessment at least bi-annually addressing:

  • Internal control and finance
  • Programs
  • Governance and management
  • Physical plant and facilities
  • Personnel management and hiring


Create both an operating budget and a capital budget on an annual basis.

Compare the operating budget to actual operating results on a monthly basis and provide written explanations for variances above a predetermined threshold.


Cash Flow:

Organizations should strive to have a cash reserve of three to six months’ operating expenses in the unrestricted fund.

  •  Provide the Executive Director with a cash flow “flash” report on a weekly basis.
  • Prepare cash flow projections for 12 to 18 month periods on a rolling basis.
  • Strive to have a cash reserve of three to six months of operating expenses in the unrestricted fund.


Internal Financial Statements:

Internal financial statements should mirror the annual CPA audited financial statements. Prepare accruals and adjustments on a monthly basis.


Efficiency Improvement:

Address program efficiency at least annually. Create an efficiency committee to continually seek ways to improve efficiencies. This includes areas such as use of information technology and scheduling alternative work arrangements.


Employee Relations:

  •   Provide a performance evaluation at least annually to all employees.
  •   Formally review the Executive Director’s performance annually.

Benchmarking and Metrics

Create a mechanism for benchmarking your organization against other similar organizations. Select benchmark statistics and ratios that are useful and relevant to your organization.

  •  Adopt a metric management tool (dashboard) to monitor key operating characteristics of your organization on a weekly and monthly basis.
  •  Understand your organization’s ratings on websites such as Charity Navigator and how your financial statement presentation may affect your ratings.


Fundraising and Development

  • Set realistic goals for fundraising campaigns. Stress creativity to keep it fresh, engaging, and fun.
  • Continue to look for ways to connect the public and donors to your mission.
  • Develop a planned giving program. Consider offering seminars to educate prospective donors.
  • Annually reconcile funds raised by the development department with accounting department records.
  • If embarking on a capital campaign, consider hiring a professional skilled in this area to facilitate the campaign.
  • Create an endowment fund with a target dollar amount and purpose.
  • Ensure your nonprofit’s compliance filings are in order by checking with Keep Me Tax Free



  • Institute a formal board recruitment and training process.
  • Develop short term and long term strategic plans.
  • Host a periodic Board of Directors’ retreat facilitated by an outside party.
  • Publish a code of ethical conduct for the Board of Directors and all employees and volunteers.
  • Implement a process of self evaluation for the Board of Directors and all committees of the Board.
  • Ensure the following five policies are in place:
  1. Conflict of Interest
  2. Risk Management
  3. Investment/Spending – Whistle Blower
  4. Record Retention
  5. Gift Acceptance
  • Evaluate the mission of the organization annually to prevent “mission drift.”
  • Review compensation for the Executive Director, Chief Financial Officer, as well as all other key management employees annually for reasonableness and document findings and conclusions.


Internal Controls

  • Institute entity level monitoring controls to be followed by upper management and those charged with governance.
  • Institute a positive pay system for processing cash disbursements.
  • Carry employee dishonesty insurance.
  • Have the CFO / Controller review the internal control policies and procedures with the finance and audit committees.
  • Perform risk assessments for all key areas of finance.


If you need help in any of these areas, contact us. Either we can help or we can guide you to experts who can.


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