This handbook provides tools to support NGOs – especially small women’s organisations in Africa – in developing general financial management techniques to ensure the long term survival of their programmes and institutions.
Financial management is often de-prioritised with little effort placed on recruiting qualified personnel to manage finances. This often leads to poor financial planning, unsustainable organisational growth, lack of credibility and ineffective monitoring systems.
In practical terms, financial management is about taking action to look after the financial health of your organisation.
- Financial management is a continuous process of planning, organising, controlling and monitoring the financial resources of an organisation to achieve desired objectives, impact and outcomes.
- Financial management is not just about keeping accounting records. It is a critical part of programme management and must not be seen as a separate activity left to specialist staff or only the finance officers.
- Financial management is vital in both commercial and not-for-profit entities. The ultimate goal for an NGO is to meet a social justice objective, not a corporate one, but the fundamentals of financial management are no different to those organisations or entities driving a profit through sales, irrespective of the organisation’s structure or political and social purpose.
Financial management is important because it will:
- Assist in the effective and efficient use of resources to achieve stated objectives and fulfil commitment to stakeholders;
- Help with accountability within an organisation;
- Build respect and confidence of funding agencies, partners and beneficiaries;
- Develop your competitive advantage over other organisations;
- Prepare for long term sustainability and growth.
The key strategic financial management challenges fall into two main categories;
- How to finance the organisation’s mission now and continue to fund visions and strategy for the future.
- How to survive threats to the organisation and move with shifting landscapes and periods of financial drought.