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
REVEAL Basic course Financial management
Moduloe1 Budgeting

• Module 1 Budgeting
• 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.

4
REVEAL Basic course Financial management

• 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.

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 donts 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
  organisations 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. Bas
ic 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
organisations 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
Module 4 Fundraising What is fund raising?
Definition
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. Its 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 its the story to tell
  to your potential donor.
• It is the project which we ask the donation for.
• CASE ---------------?VEHICLE ---------------?POTEN
  TIAL DONOR
• (cause) (how)
  (who)
• Relationship with 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 Its 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 Its 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.