Internal Controls for Small Nonprofits: Well Trained StaffOct 05, 2023
As a nonprofit organization, I know you're committed to protecting and stewarding your resources, but it's really challenging when you only have one staff member. Today I’m concluding this series that covers the five elements I recommend to protect your nonprofit when you have a small staff. Today's topic is well trained staff.
I’ve said throughout this five part series that it all begins with documented policies and procedures. Well, if you still don’t have any, now is the time to stop and do it. I know it feels overwhelming, but start and improve on it as you go. Look to your industry for resources. I’ve found that many industries have resources you can use as a starting point. One of my favorite is the Evangelical Council for Financial Accountability or ECFA. They have a financial policies and procedures handbook, which
is a very good starting point for churches and ministries. If you have a relationship with them, you can download it. Your nonprofit industry may offer something similar for its members, or you may have a peer organization who would be willing to share that with you.
How a Well Trained Staff Becomes an Internal Control
So how does having well trained staff provide an internal control protection for small nonprofits? You might be surprised by how many protective benefits you can receive from excellent training.
1. Error Prevention
Without proper training, untrained staff members are far more likely to make unintended mistakes. They may be honest and well-intentioned, and simply do something incorrectly because they weren't sure how to do it.
2. Risk Management
A well trained staff manages your risk. By training those that work with the finances, from the preparer, to the reconciler, to the reviewer, excellent training mitigates the risk of having poor financials and even situations that are susceptible to fraud.
3. Culture Creation
A well trained staff creates a culture of transparency and accountability. To illustrate this, I need to tell you a story… my fraud story. Yes, it happened to me! I was completely blown away when it happened because I had put in place the very best internal controls you could possibly design, and yet, it still happened.
Why? Well, one of the primary reasons was because over time the staff members in our organization relaxed the expected policies and thought that they could just “trust each other and save some time.” So instead of counting deposits together, one person was allowed to take them alone. So, of course… they didn't make it to the bank. The mortal of the story is- create a culture where you regularly train, review, inspect, double check, and inspect what you expect. When we do this ongoing training, it refreshes the expectations and reminds everyone about why we have internal controls. It reinforces the idea that none of us are above it or beneath it. We should all be a part of protecting our organizations.
4. Practical Redundancy
People take vacations. Staff members get sick. What happens if that key staff member gets hit by a proverbial bus or wins the lottery? Who's their backup and how does that person know how to do the work in their absence? Good training and well-documented policies are practical tools to reinforce existing internal controls. We do the cross-training and the double checking because it really does protect our nonprofit.
I know that you're committed to protecting your nonprofit, so I hope that this five part series has helped you remove some of those mysteries, given you some actionable steps, and shown you where to start. If you've missed any part of this series, you can find each lesson on my blog or you can watch the whole series in this Youtube playlist. I hope that it's been helpful to you. By all means, if there's anything I can do to help you in your unique and specific situation you can book a strategic consult with me where we can talk about your specific situations and dive deeper into some of the ideas that I might be able to share with you to protect your nonprofit.
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