Financial management Basic level

1. Financial managementBasic level This project has been funded with support from the European Commission. This publication reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.

2. REVEAL Basic course Financial management Level: Basic Domain : Financial management In this course you will get an overview on the main financial subjects in the non profit sector and learn useful tips for the financial management of the organisation you volunteer in. You will learn how to keep a simple and proper bookkeeping for your organisation, and how to report in financial terms your volunteering. Finally you will also learn some basic principles of fundraising together with some practical tools to start or improve this kind of activity with your organisation.

3. Module 1Budgeting What is the budget? Definition The Budget is an action plan expressed in quantitative and monetary terms, referring to a certain period of time, which sets out the objectives to be pursued and the resources needed to achieve them. It allows checking in advance the financial sustainability of future management, to guide and align the various parties involved to the strategies pursued, to verify ex post the achievement of results through the comparison with the ​​estimated ones. REVEAL Basic course Financial management Moduloe1: Budgeting

4. The role of budgeting within the organisations’ planning The Budget is a time-bounded plan. The budget is the main document for operations planning and control. The implementation of a well conceived budget requires the identification of goals, which in turn implies organizational assumptions: active participation in the budgeting process (sharing the justifications, benefits and operating methodologies to achieve the objectives); Ongoing evaluation of the performance and overall budget effectiveness assessment; Continue reprogramming; Planning on a multiannual basis. REVEAL Basic course Financial management Moduloe1: Budgeting

5. REVEAL Basic course Financial management Moduloe1: Budgeting Main stages of economic-financial process of planning and control:

6. REVEAL Basic course Financial management Module 2: Accounting and record keeping Module 2 Accounting and record keeping What is accountancy? Definition Accountancy, or accounting, is the process of communicating financial information about any operating entity, both public and private, to internal or external users such as shareholders, managers and control authorities. The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management. Accountancy is indeed the art of recording, classifying, and summarizing in a significant manner and in monetary terms, transactions and events which are, in part at least, of financial character, and interpreting the results thereof.

7. REVEAL Basic course Financial management Module 2: Accounting and record keeping Reliable accounting is vital for sound financial management and reporting. Accounting has two basic purposes: - Show the revenue, expenses, assets and liabilities of the project for financial management purposes; - Provide the data needed to draw up accurate financial reports. To meet these basic objectives, accounting records must be: - Up-to-date - Accurate and reliable - Drawn up according to proper accounting standards, methods, policies and rules.

8. REVEAL Basic course Financial management Module 2: Accounting and record keeping Dos and don’ts in bookkeeping applied to volunteering • The most common bookkeeping mistakes that may undermine the efficiency of voluntary actions: • the accounting system is inadequate as it does not allow reconciliation with relevant costs; • all costs have not been registered in the accounting system; • accounting records do not comply with generally accepted accounting standards; • accounting records are not kept according to the organisation’s usual accounting practices; • certain documents are not drafted or kept; • documents kept do not provide sufficient evidence that contractual conditions agreed with donors or funders have been met. • project documents kept are not later retrievable; • projects documents are prematurely discarded; • false documents are provided.

9. REVEAL Basic course Financial management Module 2: Accounting and record keeping Some basic tips for a correct accountancy and record keeping for voluntary organisations: Make sure to use proper bookkeeping techniques. If your organization is beneficiary of a grant from an external public or private body, before starting the project pay attention to all the contractual conditions. Beneficiaries of grants financed by external bodies are advised to keep extensive records, over and above the minimum requirements in the grant agreement. Double-entry bookkeeping system A double-entry bookkeeping system is a set of rules for recording financial information in a financial accounting system in which every transaction or event changes at least two different nominal ledger accounts.

10. REVEAL Basic course Financial management Module 3 Financial reporting What is a financial report? The financial report is simply a juxtaposition of income and expenditure and shows how, through the management, the available resources have been used by an organisation. Basic notions on financial statements A financial statement (or financial report) is a formal record of the financial activities of a business, person, or other entity. Module 3: Financial reporting

11. REVEAL Basic course Financial management • Despite the existing differences from country to country they typically include four basic financial statements, accompanied by a management discussion and analysis: • Balance sheet: also referred to as a Statement of Financial Position, reports on a company's assets, liabilities, and ownership equity at a given point in time. • Profit and Loss statement: also referred to as Statement of Comprehensive Income, reports on a company's income, expenses, and profits over a period of time. A Profit & Loss statement provides information on the operation of the enterprise. These include sale and the various expenses incurred during the processing state. • Statement of Changes in Equity: explains the changes of the company's equity throughout the reporting period. • Statement of cash flows: reports on a company's cash flow activities, particularly its operating, investing and financing activities. Module 3: Financial reporting

12. REVEAL Basic course Financial management Module 3: Financial reporting The financial statements of non profit organisations such as voluntary associations, tend to be simpler than those of for-profit corporations. Usually across Europe the minimum requirement for small-sized non profit organisations is a simple Profit & Loss Statement supported by a report on activities. Medium-sized and bigger organisations, especially if involved also in project financed by external bodies/authorities, are usually required to have an extensive set of financial statements, comprising: - a balance sheet, reporting on organisation’s assets, liabilities and equity; - a profit and loss statement; - a set of notes to the financial statements that typically describe each item in further details; - an activity report.

13. REVEAL Basic course Financial management Module 4 Fundraising What is fund raising? Definition Module 4: Fundraising Fund Raising has to do with people, and not so much to ask them for money, but rather to generating long-lasting relationships to reach a valuable goal. Fund raising is fundamentally an exchange between people seeking economic resources, material and human, and people that are potentially available to give. Fund Raising is not an exchange of equivalent goods like in for-profit enterprises, where to each product or service is assigned a monetary value. Fund raising is not a redistributive exchange (like in public welfare), where the tax revenue is redistributed according to the needs of citizens. Fund Raising is an exchange that is based on the reciprocity principle.

14. REVEAL Basic course Financial management Module 4: Fundraising In the non profit sector Fund Raising is a comprehensive set of activities that the organisations put in place to find the necessary resources to carry out their statutory objectives, creating relational goods with people. Fundraising principles and basic tools: Mission: it tells the identity of your organisation. It’s the declaration which explains the nature, purpose, main activities and principles that inspire the organisation. Good cause document (GCD): the reason why it is worth giving your organisation.

15. REVEAL Basic course Financial management • 3. From GCD to the ‘case’: it’s the story to tell to your potential donor. • It is the project which we ask the donation for. • CASE ---------------VEHICLE ---------------POTENTIAL DONOR • (cause) (how) (who) • Relationshipwith people (donor research) – C.A.I. • People give in relation to their means and in relation to what others give. • Each potential donor is identified and qualified according to the CAI matrix: • C = Connections with your organisation • A = Ability to donate (nobody gives because he/she is rich!) • I = Interest to your cause. • Ask: how do we ask to our potential donors? What interactions can we have with them? • 6. Thank: it is compulsory to thank your donors. Module 4: Fundraising

16. REVEAL Basic course Financial management Module 4: Fundraising The Gift Pyramid displayed here below shows can help you understand what kind of relationship you can establish with potential donors depending on the amount of the donation that we expect from them. 

17. REVEAL Basic course Financial management Communication in fundraising Good communication is essential for good fundraising ‘3 P rule’: People give to People who help other People. People give … It’s people to donate, not the Institutions. People that work within the Institutions may want to donate, and to them you must address. … to People … People do not donate to restore a budget deficit. They give to a non profit organisation because this organisation is committed towards a “good cause”, and because the organisation is able to keep the promises. People donate because of the mutual trust that exists between people. … to help People It’s the needs of people to make other people donate. Module 4: Fundraising

18. Thank you! This project has been funded with support from the European Commission. This publication reflects the views only of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.