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Financial Management

Nonprofits have an obligation to act as responsible stewards in managing their financial resources and must always comply with all legal financial requirements. They should adhere to sound accounting principles that produce reliable financial information, ensure fiscal responsibility and build public trust. Nonprofits should use their financial resources to accomplish their missions in an effective, efficient manner and establish clear policies and practices to regularly monitor how funds are used.
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 Staff Recommended
Accounting Manual Template
California Association of Nonprofits, Blue Avocado
A sample accounting policies and procedures manual designed for nonprofit organizations with an Executive Director/CEO, Operations Director/Finance Director and Bookkeeper involved with accounting processes.

Accounting Policies and Procedures Manual
California Association of Nonprofits
A sample accounting policies and procedures handbook.
Appealing a Late Filing Penalty
Article/Blog, Guide/Tool
Nonprofits that fail to file their annual return with the IRS (Form 990, etc.) are subject to penalties and fees.
Balance Sheets
Propel Nonprofits
These resources provides a good overview of a balance sheet - also called the Statement of Financial Position - and outlines six key measures useful to all types of nonprofits
  • Missing Attachment
Beyond Financial Oversight: Expanding the Board’s Role in the Pursuit of Sustainability
Nonprofit Quarterly
This article examines the role of the board of directors in establishing organizational sustainability.
Building an Equity Lens into Nonprofit Finance
One place to look for tangible evidence of any individual’s or group’s priorities and values is to look at where they spend their money. This article offers nonprofits--and their stakeholders--suggestions on how an equity lens can be applied to many aspects of nonprofit finance and budgeting.
Business Resource Guide
Maine Department of Economic and Community Development
Guide/Tool, Organization/Agency
The mission of Maine’s Office of Business Development is to encourage business growth and
retention in Maine. They offer a variety of guides and support to help business people understand the resources available including, Tax Increment Financing, Community Block Grants, and multiple tax credit programs.
Changing Your Organization’s Address
If your nonprofit organization changes its address you'll need to notify both the Secretary of State's office (if you are incorporated in Maine) and the IRS.
Checklist for Developing an Evaluation Budget
Evaluation Center
A guide to help nonprofits budget appropriately for evaluation activities.
Community Associations Institute
This is a national organization that supports community associations including nonprofits like homeowners associations, road associations and condo associations. While these kinds of associations share many things in common with charitable nonprofits, this organization is able to provide resources more targeted to these types of associations. Resources and tools include governance guidelines, information on disaster preparedness and recovery, and a "reading room" with articles on topics such as insurance and risk management, governance, homeowner resources, maintenance, meetings and more.
Credit Cards for Nonprofits
Tips and considerations for securing a business credit card vs. using personal credit cards at your nonprofits.
Directors and Officers Insurance (D&O)
Article/Blog, Guide/Tool, Periodical, Video/Tutorial
Directors and Officers Insurance, commonly called D&O Insurance, offers protection against a breach of "duty" by the directors and officers. Whether or not to carry this kind of coverage can be a complicated question. The following articles provide information to help nonprofits decide, and offer advice on finding coverage.
Article/Blog, Guide/Tool, Sample/Template
Is your organization considering creating an endowment? Endowments are one way to create sustainability for your organization to continue its mission, but are not the right fit for everyone. These articles outline common myths, and provide suggestions organizations should consider when creating and managing endowments.
Exempt Organizations Update
Periodic newsletter with information for tax-exempt organizations and tax practitioners - attorneys, accountants, and others - who represent them.
Expense Reimbursement Policy
Minnesota Council of Nonprofits
Form 990 asks organizations to indicate whether they have adopted an expense reimbursement policy. While this policy is not required, it is recommended and the IRS may increase their scrutiny of returns from organizations that have not adopted recommended policies. This sample provides a basis from which nonprofits can create their own policy, and is not intended for verbatim use without careful review.
Federal Employment Taxes
Nonprofit tax-exempt organizations – even those operated by volunteers – must be aware of employment tax issues. Exempt organizations normally withhold and pay employment taxes under the same rules as other entities. This guide provides an overview of the employment tax issues nonprofits need to be aware of.
Federal Register
The Federal Register provides access to the official text of federal laws, presidential documents, and administrative regulations and notices.
Financial Crisis Assessment
Foraker Group
This tool helps organizations spot if they're in financial crisis crisis or coming close to one.
Financial Policies and Procedures Handbook
Nonprofit Financial Center
An example of all types of financial policies and procedures.
Financial Policy Guidelines and Example
Propel Nonprofits
Guide/Tool, Sample/Template
Developing and adopting a written financial policy is a valuable practice for any nonprofit organization, no matter how small or large. Financial policies clarify the roles, authority, and responsibilities for essential financial management activities and decisions. Use this sample and guide to help you develop your organization's policy.
Financial Strategy Tools
Article/Blog, Guide/Tool
This article presents a method to profile an organization’s financial makeup, and to create a comparison to a panel of similarly situated organizations. The Nonprofit Cohort Analysis Tool (NCAT) helps nonprofit staff and board members to visualize trends in their organization’s revenue streams and expenditures; identify candidates for revenue growth or expenditure savings; and gain an understanding of placement among peer organizations.
Finding and Managing Consultants and Vendors
The following resources will help you find and manage consultants and vendors, whether for a defined project, or ongoing support. If you need a referral for support on fundraising, strategic planning, legal issues, accounting issues, meeting facilitation, technology, or any other outside support, start here. (Many of the consultants and vendors in the MANP Business Finder offer nonprofit rates.)
Glossary of Financial Terms
Nonprofit Finance Fund
A helpful quick reference page of financial terms.
Investment Policies
Guide/Tool, Sample/Template
The board of directors of a nonprofit has a fiduciary responsibility to protect the assets of the nonprofit and to use those assets to further the nonprofit’s mission. One way to do so may be to invest the nonprofit’s cash in investment vehicles, such as stocks and bonds, and other financial investments, that can grow the nonprofit’s assets.

Before your nonprofit invests in the stock market, develop a sound approach to investing assets by: defining the nonprofit’s objectives for investing, identifying the nonprofit’s risk tolerance, and adopting an investment policy.

Find guidance and sample policies in the following resources.
IRS Publication 557: Tax Exempt Status for Your Organization
Detailed guide with information on most types of tax exemption, including rules and restrictions related to fundraising and lobbying.
IRS Publication 561: Determining Value of Donated Property
This IRS publication outlines how to determine the value of various kinds of donated property for the purposes of determining tax deductions.
Maine Society of Certified Public Accountants
CPA directory and financial management support organization which provides resources such as news, articles, newsletters, and career help.
Maine Uniform Prudent Management of Institutional Funds Act
State of Maine
As outlined in our Guiding Principles + Practices, nonprofits have a legal and ethical obligation to expend grant and donor funds responsibly (including those managed through an endowment) and to ensure that funds are dispensed according to the funders’ wishes and requirements, in accordance with the Maine Uniform Prudent Management of Institutional Funds Act.
Managing Restricted Funds
Propel Nonprofits
This resource article defines unrestricted, temporarily restricted, and permanently restricted income and gives nonprofit leaders guidance on how to record, report, and effectively manage contributed income and net assets.
Moving a Nonprofit to Another State
This article provides a simple outline of options for a nonprofit that was founded in one state, but later wants to move to another.
National Center for Charitable Statistics
Organization/Agency, Research/Report
A national clearinghouse of data on the nonprofit sector in the United States, including access to specific organizations' Form 990 data, and information on filing the 990.
Nonprofit Operating Reserve Ratio
The Urban Institute
A guide to help organizations determine what their operating reserve ratio should be.
Payroll Services for Nonprofits
Many nonprofits outsource the management of payroll. This guide provides some suggestions for third party services that small and mid-size organizations may want to consider in addition to exploring the services of their local bank.
Pricing Guide: A Resource For Community-Based Organizations to Value and Price Services
SCAN Foundation
With increased pressure for nonprofits to diversify funding sources, many are exploring earned income strategies. This guide was developed to help organizations understanding different pricing models and set the prices and rates on their products and services.
Reporting Financial Information to the Board
The Board is responsible for short and long term planning, and they must ensure that systems are in place for administering effectively using resources, and guarding against misuse. In order to fulfill their responsibilities, board members must be able to rely on financial information that is accurate, timely, in context, and appropriate. This resource outlines the types of financial reports that are needed as well as how to present the information to the Board.
Restricted Funds
Article/Blog, Video/Tutorial
Nonprofits must be particularly careful to account for restricted funds, such as grant funds or donations that a donor has earmarked for a specific purpose. The following resources provide guidance on tracking restricted funds.
Sales Tax Exemption
Maine Revenue Services
Only some nonprofits are eligible for exemption from state sales tax. This link provides information from Maine Revenue Services to help nonprofits determine if they may be exempt from sales tax, including how to apply for sales tax exemption.
Sample Final Financial Report for Grant Awards
William A. Bayreuther Grantwriting
Most grantors require a final project report, including a financial report. The attached sample illustrates a final financial report outlining budgeted expenses, actual expenses and the expenses allocated to that particular funding source.
Sample Organizational Operating Budget
William A. Bayreuther Grantwriting
This Excel spreadsheet provides a sample and template for outlining a nonprofit annual operating budget for grant request purposes.
Sample Project Proposal Budgets
William. A. Bayreuther Grantwriting
Most foundations and corporate funders require organizations to submit a project budget with their grant application. William A. Bayreuther Grantwriting has provided complementary samples of proposal budgets for a 1 year project, 2 year project and a capacity building request.
Starting Off Right: What New 501(c)(3) Organizations Need to Know
This recorded IRS webinar helps new nonprofits stay legally compliant. It covers annual filing requirements, what records to maintain, what  to do to meet the "operational test", how to avoid jeopardizing 501(c)(3) status, and what tools are available for tax compliance as an organization grows.
Stay Exempt
Developed by the IRS, this easy-to-use website covers tax basics for exempt organizations. Resources include: virtual workshops and self-paced mini-courses that cover various IRS rules, regulations and systems.
Tax Information for Charities and Other Nonprofits
Tax information for charities & other nonprofits from the IRS. Review the contents thoroughly and check for updates periodically.
The Value of Volunteer Time
Independent Sector
Independent Sector updates a value of volunteer time each year.
Types of Tax-Exempt Organizations
Chart containing all of the different types of tax-exempt organizations and their characteristics.
Unrelated Business Income Tax (UBIT)
If an exempt organization regularly carries on a trade or business not substantially related to its exempt purpose the organization is subject to tax on its income from that unrelated trade or business.  This can sometimes apply to revenue from corporate partnerships. These resources outline the rules related to Unrelated Business Income Tax, or UBIT, including which organizations are subject to the tax, what the requirements are for filing a tax return, what an unrelated trade or business is, and how to figure unrelated business taxable income.
Using Loans: A Guide to Borrowing for Nonprofit Organizations
Like other businesses, nonprofit organizations sometimes need cash in the form of a loan to operate their programs effectively. Astute managers and boards understand that loans can be a tool that can help their nonprofit grow and succeed. This guide is designed to help nonprofits understand loans, uses for loans, and when it makes the most sense to consider this financing option.
Vehicle Donations
These resources outline the implications for your nonprofit's tax exemption when accepting a donated used car, as well as tips for determining whether to accept a vehicle donation.
Whistleblower Protection Policy
Article/Blog, Sample/Template
Form 990 asks organizations to indicate whether they have adopted a whistleblower policy. While this policy is not required, it is recommended and the IRS may increase their scrutiny of returns from organizations that have not adopted recommended policies. These resources and samples provide a basis from which nonprofits can create their own policy, are not intended for verbatim use without careful review.
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