Module 4 – Finances


Performance Practice Learning Module

How healthy and sustainable are your organization’s finances? Make progress on the path to long-term financial health.

Whether you’re struggling to prevent a month-to-month financial crisis, pay for infrastructure, or build reserve funds, financial sustainability affects your organization’s future.

Are you struggling to prevent month-to-month financial crisis, pay for infrastructure, or build reserve funds? Engage board members, finance staff, and other team members in working through this module to identify ways to take charge of your organization’s financial destiny.

Areas addressed include creating systems for monetary stewardship and accountability, orienting budget processes to achieve results, building the balance sheet, nurturing external financial relationships, and using financial models to make the organization’s fiscal condition clear. Stronger financial health supports program effectiveness and sustainability and helps make a better case for funder support.


User Guide

Introduction to the Performance Practice, acknowledgments, application, and development methodology

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Use this worksheet to complete the self-assessment.

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Reporting App

The reporting app compiles your results - no manual aggregation required!

Windows Instructions
Windows Reporting App

MacOS Instructions
MacOS App, up to v10.12/Sierra
MacOS App, v10.13+/High Sierra

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Finances Principles and Proof Points

Principle 4.1:  The board and senior management take charge of their organization’s financial destiny. They articulate the value they deliver and develop overall financing strategies, tightly aligned with their mission, to support and sustain it.

4.1.1:  My organization tracks major revenue and expense assumptions and key financial-health indicators using a rolling, multiyear financial plan. At least semi-annually, we assess our financial performance and make course corrections as necessary.

4.1.2:  My organization’s financial plan is designed to help us generate the resources we need to deliver meaningful results—not just whatever resources are readily available.

4.1.3:  My organization’s financial plan aims to maximize sustainable sources of revenue—so we’re not overly dependent on sources that are short term or subject to shifts at any time.

Principle 4.2:  The board and senior management establish strong systems for financial stewardship and accountability throughout their organization.

4.2.1:  My organization’s CFO and finance staff have the requisite training, expertise, and systems to manage all financial affairs, including accounts receivable/accounts payable, budget management, capital budgeting, cash management, investment management, debt financing, third-party reimbursement (where applicable), grants management and audit and compliance.

4.2.2:  My organization’s board monitors financial performance through formal finance, audit, and investment committees with:

  • clear charters
  • different leadership, providing for diverse perspectives as well as checks and balances
  • a willingness to engage outside experts if needed.

4.2.3:  My organization has clearly defined its fiscal policies and procedures. Management, staff with budget responsibility, board (especially audit and finance committees), and key stakeholders understand these policies and procedures. Our CFO holds staff accountable for following these policies and procedures.

4.2.4:  My organization’s CEO and some board members review the performance of our CFO (or equivalent) at least once a year. They assess against the previous year’s goals (individual and organizational) and set goals for the following year.

Principle 4.3:  The board, management, and staff build and participate in budget processes that are oriented toward achieving results and not just conducting activities. This means allocating adequate resources for monitoring and evaluation. And it means making hard choices, especially in tough financial times, to direct money where it needs to go to drive the intended results.

4.3.1:  My organization’s finance team understands our programs, the supporting operations, and the results we aim to achieve. They educate and support managers and staff in developing their area budgets, managing their expenses, and understanding the implications of their decisions.

4.3.2:  My organization’s budget allocates resources for monitoring and evaluation to ensure we’re on course to deliver strong programmatic results.

4.3.3:  My organization’s board finance committee reviews and has an opportunity to shape our budget before it goes to the full board for approval. Its oversight focuses on ensuring that all assumptions about revenues and expenses are reasonable and that the budget supports achievement of outcomes.

Principle 4.4:  The board and senior management share their financial results transparently with key stakeholders at regular intervals.

4.4.1:  My organization’s monthly financial reports include an analysis of financial performance, a variance analysis (plan/forecast versus actual results), and a cash-flow analysis. We share these reports with all leaders and appropriate managers.

4.4.2:  My organization shares with the board quarterly financial reports that focus on critical financial issues as well as operational or external issues that have financial implications.

4.4.3:  My organization produces financial reports for external stakeholders (e.g., funders, lenders) in response to reasonable requests.

Principle 4.5:  The board and management nurture the external financing relationships required to support their operations. They treat fund development as a strategic function that requires focus, management, capital, and specialized skill sets. They ensure clearly defined roles for the board and staff.

4.5.1:  My organization invests in a dedicated, disciplined fund-development function. It builds internal capacity so that the organization is not overly reliant on consultants or the heroic efforts of one staff or board member.

4.5.2:  My organization invests time in building and sustaining relationships with current and prospective financing partners, such as donors, foundations, banks, and other financial services organizations. (We recognize that these relationships are critical during trying financial times.)

4.5.3:  My organization manages to a fund-development plan aligned with our strategy. We ensure that our projected costs and revenues are structurally balanced and that we have sufficient liquidity to fund operations.

4.5.4:  My organization’s board, management, and staff have defined—and are accountable for—their respective roles in fund development.

Principle 4.6:  The board and senior management operate their organization with margins that allow them to build their balance sheet. They fund the depreciation on buildings and equipment. They build internal cash reserves that brace them for unknown events, put them in a position to finance their own receivables if necessary, and enable them to negotiate a line of credit with a financial institution.

4.6.1:  My organization maintains an operating reserve to sustain cash needs for at least three months.

4.6.2:  My organization reserves funds to cover the depreciation on buildings and equipment.

4.6.3:  My organization maintains a capital budget and a capital reserve fund for planned and unexpected capital expenditures or major repairs.

Principle 4.7:  The board, management, and key staff understand their organization’s cost structure, which aspects of it are required to produce high-quality programs and/or services, and how it aligns with reliable revenue sources for funding it year in and year out. They are relentless in making necessary investments with an eye to costs and benefits while being equally relentless in reducing unnecessary costs.

4.7.1:  My organization continuously works to eliminate unnecessary costs. My organization is good at distinguishing between expenditures that are essential for driving desired results and those that are not.

4.7.2:  My organization is able to understand the full cost of delivering programs and services (including all direct, shared, and administrative costs) and incorporates the full cost in our financial plan.

4.7.3:  My organization’s leadership ensures that we only grow our programs when we can also grow our program capacity and administrative infrastructure—to ensure reasonable alignment of costs and revenues.

Principle 4.8:  Senior management uses financial models to make clear and transparent the organization’s financial condition and, at any given point, predict how it will end the year (and what will make the prediction more or less reliable).

4.8.1:  My organization has developed a multi-year financial model that comprehensively considers critical cost and revenue assumptions.

4.8.2:  My organization conducts a “what-if analysis” at least annually to prepare for the possibility of significant economic changes or other disruptive events—and then identifies ways to mitigate these disruptions if they were to occur.

Principle 4.9:  Senior management instills an organization-wide discipline of compliance with all regulatory requirements.

4.9.1:  My organization annually reviews all regulatory changes and adapts internal procedures to ensure timely compliance.

4.9.2:  My organization implements policies, procedures, and an accountability structure for managing government grants/contracts and financial obligations.

Download Principles & Proof Points for Finances

Sample Reports

With the free reporting app, you can create a report like the sample below in minutes. To create your own report, you will first need to collect your data. Go to any of the modules to get started.

The Summary report shows the distribution of ratings for each proof point, gives a picture of the level of consensus, and opens the door to productive conversations about ways to move forward.

For a thorough understanding of individual perspectives, drill down to see each respondent’s ratings and comments per proof point.

Finances Module Principles & Proof Points
Principles and proof points for this module to provide overall perspective and context before completing the Workbook

Finances Module Worksheet
File to use to complete the self-assessment, includes instructions; open on laptop/desktop rather than mobile device

User Guide
Introduction to the Performance Practice, acknowledgments, application, and development methodology

Reporting App Downloads
The reporting app compiles data from all the worksheets into one spreadsheet.
Reporting App: Windows
Reporting App: MacOS (v10.13 + newer)
Reporting App: MacOS (v10.12 + older)

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