Many people feel that New Year’s resolutions are passé, particularly since so many resolutions go unachieved each year. But, a resolution is essentially a plan to tackle something of importance, and planning is often half the battle. The following are 4 resolutions that can help strengthen charities and other not–for–profits in 2017:
- Reinforce (or implement) internal controls: A basic internal control which is very effective, is segregation of duties. Ensure that no one individual controls or completes all or most of the steps in major financial transactions or processes like payroll or banking.
- Monitor and manage cashflows: Take control of cashflow and avoid cash crunches. Focus on the 3 components of cashflow management—inflows, outflows and net cash. Start by preparing and maintaining a rolling 7–week cash forecast that tracks these 3 components. Then, maximize these 3 components—take advantage of supplier payment terms to manage cash outflows; improve collection of outstanding dues, subscriptions or other cash inflows; and invest excess, or net cash, using appropriate interest–bearing investments. If possible, ensure that you have cash reserves to cover 3 or 4 months of expenditure.
- Focus on cybersecurity: Not–for–profits are not immune from cybersecurity threats. At the macro level ensure that the board of directors and management include cybersecurity in strategic and other plans and on board meeting agendas. Ensure that training is a key component of cybersecurity plans. Research shows that training is one of the most effective cybersecurity tools. Are employees aware of Business Email Compromise (BEC) or spear phishing scams? (Read about BECs and phishing in a previous Inside Internal Control post here.)
- Keep abreast of the changing legal and regulatory framework: Not even the smallest not–for–profit can escape the pervasive and constantly changing legal and regulatory framework. In the last year alone in Ontario, there have been legislative developments in numerous areas affecting not–for–profits, including lobbying, occupational health and safety, accessibility, charity tax and record-keeping obligations. Additionally, not–for–profits can use the legal and regulatory framework as a sword, to proactively protect its interests (for example, by registering, and therefore safeguarding, its intellectual property), or a shield (to defend itself from lawsuits brought by employees or others).