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Financial transparency -> nonprofits

Does anyone have any wisdom to share about making nonprofits more financially transparent?  I recently met someone on the board of a nonprofit programming association, and I explained I would have liked more transparency. 

I outlined a number of advantages (they charge a membership fee, so trust is a big issue; educational value; free publicity during the inevitable debates over funds).

I felt the simplest plan would be best to start out with.  A simple monthly or quarterly statement, with any private info "blurred" by lumping it in a general category.

Bylaws and articles of incorporation are here:
http://www.alu.org/alu/alu-history.clp

Thanks for any wisdom.

Tayssir John Gabbour
Tuesday, March 16, 2004

Depending on how much is at stake, an independent (yeah right) auditor always helps.

Tapiwa
Tuesday, March 16, 2004

Since programming languages are really grassroots things, I think the only big things it does are annual conferences.  Long term, maybe amendments to the language standard.

Right now there is pretty little at stake.  The value of membership isn't compelling right now.  But I did some research on the net and floated questions to someone who does work with nonprofits...  I'm somewhat paranoid there are security or other issues I'm too naive to see.

Tayssir John Gabbour
Tuesday, March 16, 2004

If it doesn't have permanent staff the main issue would be the costs of doing the reporting.  Monthly might be a bit strong if the only major costs are tied to an annual event.

Possibly the best way forward would be to send a copy of the annual audited accounts to every member.  We do and  I think this is actually a legal requirement for UK organisations (BUT I don't work in the accounts department and  I'm not too clear on the details). 

a cynic writes...
Tuesday, March 16, 2004

Of course, you are right about that.  Annual only makes sense in this situation.  I'm glad you pointed that out.

Tayssir John Gabbour
Tuesday, March 16, 2004

I think I would like to disagree with some of the posters.

If you do not have perm staff, it is likely that you have few members amounts of money being handled.  Unlikely that you will have too many transactions either.

If so, there are many basic accounting packages (some free) that can produce I&E, and balance sheets on the fly.

The grunt work in accounting is in processing the individual transactions. Reporting monthly also makes it easier to pick out anomalies. eg. If you have been spending £100 per month on travel, if it suddenly went to £500 in one month, it would be easier to spot with monthly reporting than with annual.

£100 vs £500 is a lot easier to query than to look into what £1600 total for the year was.

Another benefit of monthly reporting is that it forces recorded to be actively maintained. One problem with a lot of charity/volunteer organisations is that all the receipts are chucked into a box, and looked at once a year when records are produced. You can imagine how much more error prone this method is.

Tapiwa
Wednesday, March 17, 2004

Tapiwa

Having spent most of my working life in one charity or another I've probably seen it all with one extreme being proper monthly management reports with a mindnumbing level of detail to the other with a 92 year old ex-bank manager doing it all in longhand occasionally in the wrong column.  Actually he had a habit of drifting across columns  as he worked which tended to make the audit process interesting to say the least.  So I agree on the importance of book-keeping.

However, I suspect neither of us know enough about alu's structure to give a definitive answer.  For the sake of argument, let's say they have 4 board meetings a year plus the annual do.  Quarterly reports circulated to the membership? Yeah I could go for that.  Monthly - not worth the aggro.  If they had monthly meetings - different story - monthly reports the way to go.

As a bare minimum, you do need your annual accounts to be audited (which as I said I think is a legal requirement here) and I think it's good practice to make your treasurer's report available to any member who wants it but you do need a sense of proportion.  Or you end up with a regular row as to why they spent £500 on travel one month (a: there was a meeting) and nothing the next (a: there wasn't).

a cynic writes...
Wednesday, March 17, 2004

cynic, I agree with you. I was indeed shooting from the hip.

Without more info, (number of members, budget etc) we all are.

Even the law governs charities of different sizes differently (at least in the UK)

Tapiwa
Wednesday, March 17, 2004

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