Monthly Archives

October 2022

Recommended Financial Controls for Small Nonprofits

By | Accounting, Nonprofit | No Comments
two people looking at financial graphics, tablet, and calculator on table

The Association of Certified Fraud Examiners (ACFE) issued a report in 2020 that provided a unique lens into the world of fraud, specifically nonprofit fraud. Fraud, including embezzlement and other redirection of funds or assets, is a continuing (and growing) problem for businesses of all types, but especially for nonprofits. According to their report, nonprofit fraud accounted for 9% of total corporate fraud with a median loss of $75,000 and an average loss of $639,000.

Perhaps more surprisingly is the fact that the ACFE found that the smallest organizations, both for-profit and nonprofit, reported the second highest amount of theft and fraud. Those with revenues under $50 million and less than 100 employees are at greatest risk of loss due to fraud.

While that may not seem like much compared to for-profit corporations, most nonprofits operate on a significantly leaner budget than their for-profit counterparts. And every penny lost to fraud is a penny that could be spent towards achieving an organization’s mission.

Nonprofits Lack Internal Controls

Internal controls are defined as the methods, processes, and procedures used for accountability and transparency in accounting departments. Good internal controls describe the means, methods, and people who can access the organization’s funds and provide guidelines for how funds should be handled.

The ACFE Report, as well as a statement on the Oregon Department of Justice website, attribute lack of internal controls in nonprofit organizations as the primary weakness by which thieves are able to siphon funds from nonprofits. For example, the ACFE report indicates that the majority of nonprofits (more than 50%) lack surprise audits, formal fraud risk assessments, management review, and internal audit departments, all of which combined deter fraud.

The Solution: Implement Best Practices to Prevent Loss

There are several internal controls that nonprofits can implement to prevent loss. These best practices include:

  1. Separation of financial duties

One individual should never oversee two or more phases of a financial transaction. For example, the person who signs the checks should not be the person who approves the expenses. Having two or more people review, approve, and/or issue the check ensures there are steps in the process in which fraud can be detected.

  1. Reconcile bank and credit card statements

It’s a basic accounting function, but the reconciliation of both bank and credit card statements is often delayed or even overlooked in busy and short-staffed accounting departments. Yet the reconciliation of each of these types of accounts can quickly uncover potential embezzlement and fraudulent charges. The faster that fraud is uncovered, the faster your organization can act upon the information to determine the source.

  1. Enact clear procedures to handle cash

Cash is one of the most tempting items to steal; even people who might not normally embezzle from corporate accounts may be tempted to slip a bill into their pocket. Having clear guidelines for handling cash such as petty cash or a cash box at an event or function is vital to protecting this asset. Guidelines may include having two people present every time the petty cash box is removed from the safe—one person witnessing while another counts the amount, signing receipts for petty cash, etc.

  1. Control disbursements

All disbursements by cash or check should be controlled by two people; one who approves the disbursement and the other who can sign for it. This eliminates one person from having the power to issue disbursements, presumably to themselves.

  1. Limit debit and credit card access

Lastly, if your organization issues credit cards, it is important to have strict guidelines in place about who can receive such a card and when and how they can be used. Such guidelines may include the amount that may be spent and the purpose for which it may be spent without prior authorization, the necessity of providing detailed receipts, and so on. Limiting cards to only those with a clear need, such as managers who travel frequently, also prevents abuse.

As inflation continues to rise and everyone feels the pinch in their pocketbooks, theft becomes tempting. Removing temptation through strong internal controls is the key to preventing nonprofit fraud.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

Remaining Agile in the Age of Constant Change

By | HR, Nonprofit | No Comments
woman sitting in office, smiling

“Agile” is a loaded term. Some use it to mean the agile development methodology exemplified in the book Scrum, a method of project management that focuses on short, time-bound deliverables. Other people use the term with its common meaning in mind: that of being flexible, adaptable, and responsive to change.

The global pandemic tested most nonprofit organizations’ tolerance for change. We are indeed in the age of agile, given the true meaning of the word: the ability to adapt quickly and moderate behavior based on the circumstances at hand.

How does an organization remain flexible? How can you improve your organization’s ability to respond with speed, efficiency, and grace to ever-changing circumstances? Here are the main traits to focus on when hiring and managing a nonprofit in today’s crazy business climate.

Hire Right—Look for a Cultural Fit

Hiring right—that is, finding the right personnel fit for an open position—is the real secret to remaining agile. That’s because it takes a certain personality to stay open minded and tolerate the continuous uncertainty around business conditions.

Hiring “right,” however, depends upon the organization itself. The right person isn’t just highly qualified for the role to which they are applying; they should be a great fit for the organization’s culture.

Consider this when interviewing applicants. It may be a good idea to have team reviews and interviews with applicants to ensure a cultural fit. For example, if you are hiring someone to lead accounts payable, schedule either a group meeting with the entire accounting team or one-to-one meetings with key accounting personnel. Ask employees afterwards their thoughts on the applicant. Did they seem to click with the team? If so, they may indeed be the right fit for the organization.

When you have people who are a good cultural fit for your nonprofit, they will work easily with the entire group. They likely share similar behaviors and characteristics that will help them adapt to change.

Establish Goals and Priorities

Another way to ensure that your organization is adept at responding to changing conditions is to establish clear goals and priorities. It may seem like a contradiction that having clear, set goals or fixed priorities would support an agile response, but it’s true. The reason is simple: if you establish the goal, but leave the way to the goal open, people can work towards the goal on their own. The external conditions may change, but the goal remains the same, and they can adapt and flex to respond to changing circumstances without losing sight of the objectives.

Accept Change—and Be Open to It

Organizations that accept change as a given in the marketplace are better able to adapt and respond to it. It is the organizations that insist upon enacting their established plans or methodologies regardless of the current circumstances which find themselves struggling.

Being open to change doesn’t mean changing goals and objectives (see the previous paragraph) but it does mean accepting that if something blocks a particular path, there are ways around the block. For example, organizations that depended upon live or in-person events as their big fundraiser for the year found themselves faced with an unforeseen challenge at the height of the pandemic.

Nonprofits and charities that were able to move live galas and events online, adding new features to the event, found themselves with higher donations thanks to the ability to reach a larger audience. Those who simply canceled events, hoping for the best, found themselves left out of the newfound world of virtual events.

Stay Curious

“Stay curious” simply means being open to exploring new ideas as they arise. Instead of remaining fixed on what worked in the past for the organization, employees who remain open and curious about their work are also able to adapt to change more easily. Curiosity feeds exploration, which in turn may open new avenues for creatively meeting challenges and changes head-on.

Change Isn’t Going Away

If the pandemic taught us anything, it is that change really doesn’t go away. Even though our work may appear to be the same day in and out, nothing stays the same. Hiring the right employees who fit well with the culture, focusing on goals rather than process, an openness to change, and remaining curious about solutions are all the right steps to an agile nonprofit organization.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact Welter Consulting at 206-605-3113 for more information.

The Basics of an Effective Policies and Procedures Manual for Nonprofits

By | Nonprofit | No Comments
binders on desk labeled policies and procedure

When was the last time you updated your organization’s Policies and Procedures manual?

Wait … you don’t have one?

The importance of a Policies and Procedures manual cannot be underestimated. P & P documents help your organization with communication, clarity, and compliance. Without a written manual accessible by all employees, you run the risk of confusion (at best) and legal action against your organization (at worst) for gray areas. Here’s what should go into a P&P manual and how to get started.

Dedicate Time and Effort to Creating the Manual

One thing that often gets in the way of an organization completing and issuing their Policies and Procedures manual is simply time. With budgets stretched thin and staff stretched equally as thin, it’s hard to find the right person to craft the manual or the budget to hire someone to do so.

Look within your human resources or operations teams to begin work on a Policies and Procedures manual. Employees in these departments may have worked on a similar document in a previous company and know what should be included.

If you need a consultant to create one, look for a freelancer or independent contractor who focuses on human resources documentation. Be sure to have someone knowledgeable in the legal and HR requirements included in the manual review of their work.

Start with Existing Documents

To begin the process of creating a Policies and Procedure manual, start with the existing documents at your organization. Such documents may include:

  • Vacation, sick, and paid time off
  • Holiday schedules
  • Work-related guidelines, such as use of equipment
  • Computer and IT documents
  • Others

Gather these documents into one place while you assemble your team.

Brief the Team

Brief the team working on the manual to ensure a shared understanding of why they are working on the manual, the goals, and the process. Then, create a timeline with roles and responsiblities outlined, sections each person should focus on, and deadlines.

What to Include

What to include in your organization’s Policies and Procedures manual may vary from company to company. Ask the board, trustees, staff, consultants, and legal counsel for their input.

As you develop your plan, consider the areas of risk facing your organization. Do you face legal risks from working with the public? Hosting events? Dealing with healthcare issues? Maintaining privacy and confidentiality of constituents facing challenging issues such as mental health, physical health, or other needs? Each item must be addressed in the P & P manual.

Some general areas common to most Policies & Procedures manuals include:

  • Employment procedures from hiring to voluntary or involuntary termination
  • Cash/Accounting procedures such as how to handle revenue, etc.
  • Cybersecurity, device policies, and remote work policies
  • Vacation and paid time off policies
  • Payment procedures
  • Code of Conduct
  • Internal Controls
  • Other areas specific to your organization

As you put together a Policies & Procedures manual, a few considerations:

  • Clear organization and structure of the final manual is essential. A logical sequence of information, good design with clear headlines, and a searchable index for digital documents is essential to help people find the information they need quickly.
  • Minimize heavy blocks of text. Use headlines, subheadlines, and bullet points as much as possible.
  • Better still, use graphics, if possible, to ensure full understanding of the information. Financial policies often benefit from simple workflow graphics to demonstrate how information, resources, or financial materials flow through a system.


Once the final manual is complete, it is a smart idea to have your legal counsel review the final draft. They may be able to suggest edits that clarify areas or add to policies to enhance clarity and compliance.

Lastly, ensure the final document is always accessible to all employees. Keep a link to the digital document prominent, such as on the HR Portal or bookmarked on a company intranet. Employees should never have to hunt for the manual that guides their work. The easier it is to find and use, the better.

Remote, Hybrid, and In-Office Work: Are Nonprofits Returning to the Office?

By | Nonprofit | No Comments
people working at table with laptops and papers in an office setting

As more and more companies are urging a return to the office, other companies, including nonprofits, struggle with the decision. It’s not a decision to be taken lightly: over 1 million people have died from COVID 19. Even with vaccinations, the risk remains for some individuals, notably the elderly and those with various health conditions. Determining if or when to require employees to return to the office requires thought and weighing the pros and cons.

Considerations for the Return to In-Person Work

There’s a long list of considerations for organizations to ponder before inviting (or requiring) staff to return to the office. While this list is not exhaustive, it should provide a basis for the ensuing discussions among the senior leadership team at your organization.

Federal, State and Local Health Department Guidelines

Consider the federal, state, and local health department guidelines for COVID-19. In some parts of the country, the pandemic has slowed, but in others, variants are emerging that again cause an increase in the number of ill and hospitalized people. Follow the guidelines for the region in consideration with other aspects of your work.

Nonprofit Constituents

It is vital to protect your constituents’ health, especially if you work with the elderly, immune compromised people, and other at-risk populations. The cost of inadvertently exposing them to COVID via an asymptotic yet infected staff person can be high. It may be better to err on the side of caution and encourage remote or hybrid work for all but essential personnel if your organization serves highly vulnerable populations.

Role within the Organization

The individual’s role within the organization is also a factor in whether mandating a return to work is in order. Does the individual provide hands-on services that can only be delivered in person? Caregivers, doctors, nurses, teachers, childcare workers, and those fulfilling similar duties must, by the nature of their work, meet with constituents and provide services from a central location.

Others, such as operations, accounting, finance, marketing, donor support, and similar roles may be well-suited to remote or hybrid work.

Ask Your Employees

Lastly, be sure to ask your employees how they feel about returning to in-person work. Listen to their concerns. Ask questions. Be prepared to explore their fears and apprehensions. Keep an open mind about how to approach such conversations without shame, blame, or pressure on anyone. Everyone wants the same thing: for the organization, its employees, and constituents to thrive. Engaging your teams in conversation about the return to work is a thoughtful and considerate way to include them in the decision.

Ensure Full Controls and Safeguards Remain in Place

No matter which model you choose—remote, hybrid, or in-person—keep all the safeguards, internal controls, and similar security measures you implemented during the pandemic. This includes:

  1. Secure cloud-based systems for accounting, finance, donor, marketing, and operational tasks
  2. Internal controls that guide the handling of all financial matters
  3. Guidelines for employees on the use of technology, whether using their own devices or taking authorized devices home for work

Among these, we cannot emphasize enough the importance of full security measures for any technology utilized by employees. Employees working remotely may log in from a relatively safe and secure home office or they may take their laptop to a café with a shared public Wi-Fi. You never know how they will be using their system and interfacing with your organization’s technology. Some access points are more vulnerable to hacking, attacks, password theft, and so on. Guidelines are important, but so too is a good cloud-based system that protects against many common cyber-attacks.

The choice of whether to return to in-person work is a personal one both for your organization and its employees. Take your time, consider the interests of all, and make the decision that’s best for you and your organization’s future.