Why is it a good idea to review the operations of a nonprofit organization from time to time?

Why is it worth reviewing the operations of a nonprofit organization from time to time?

The mission and professional goals are, of course, at the heart of a nonprofit organization’s operations. However, the financial background is just as important: without proper financial management, achieving those professional goals can become more difficult in the long run.

In recent years, we have worked with more than 80 civil society organizations, so we are well acquainted with the specific financial issues that can arise in the course of a nonprofit or civil society organization’s operations.

Many Sources, Many Expectations

A civil society organization is often funded from multiple sources. Own revenue, grants, grant funding, or other forms of financing may be interlinked.

Each may come with different documentation and accounting requirements. If processes are not properly established, errors can easily occur that may cause problems later on.

What Can an Audit Reveal?

During an audit, for example, the functioning of financial management processes, the existence and application of policies, documentation, financial processes related to grant applications, and internal controls can be reviewed.

The goal is not to find errors at all costs. It is far more important for management to gain an accurate picture of which areas are functioning properly and where changes may be needed.

When is it particularly warranted?

It may be worthwhile to request an audit before or after a leadership transition, in the case of major grant projects, during significant organizational changes, or when management is uncertain whether current processes are functioning properly.

In such cases, an outside professional eye can not only uncover problems but also highlight opportunities that may be less visible to internal staff amid their day-to-day tasks.

A Well-Organized Financial Framework Provides Security

For a nonprofit organization, financial administration is not an end in itself. Well-organized processes ensure that the organization can focus its energy primarily on its mission.

An audit can help management not only understand that the organization is functioning, but also how it functions—and where improvements can be made.