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October 19, 2021

Navigating the rapids of Multi-funded NPO’s

The first house that I bought was on the banks of the Umgeni River. On a January Saturday we all went out to watch the Dusi participants come in on their way to the finish at the Blue Lagoon. I used to follow the race from start on television and was in awe at the skills required by the canoeist to navigate these waters. Rapid water flows from starboard, from port and rocky outcrops ahead.

The next time I saw this kind of skill was when the CFO of Not for Profit Organisations (NPO) had to navigate the rapids of multiple funders. Each funder had their own, year-end (different from the entity), own requirements for allowable expenses, own requirements for admin expenses and own requirements for reporting format and dates. Some would ask for acknowledgement in the annual reports and some not. In NPO’s funded by larger funders they would send internal auditors in periodically. Lots to navigate.

I have served in many capacities on funded organisations over the years and currently, as Trustee, Board member, chairman of the audit committee, auditor, and services provider. In that time, I have watched the CFO’s who were successful and many more who didn’t get it under control. The driver of the success or failure came down to how well they planned from the day they received their letters of grant.

·        It is imperative that the financial, reporting and disclosure requirements are summarised and recorded upfront.

·        Engagement with funders representatives needs to happen before the first funds are received to gather what their exact requirements are and so as not to leave items until reporting date

·        From this above a chart of accounts for the particular funder needs to be done and the budgets input.

Remember that one NPO may have 3 or 4 funders. The funders require their reports at different dates and the entity must have its own audited financial statements at its year end. Sounds like a lot to do and a lot more to comply with.

All these requirements are like water flowing from all directions. Tipping your canoe over is quite often the outcome. Get back in and paddle on. Often these NPO’s don’t have the funds to hire the appropriate skills. I assure you that the CFO’s at complex NPO’s require some serious skills.

NPO’s often approach Accensis to outsource the accounting and reporting  as skills in this area are scarce and expensive. This is often a sensible choice as :

·        It is cost effective

·        Funders get added assurance as a third party is dealing with the finances

·        When funding has a fixed term then the issues associated with terminating people is alleviated.

Next time you see the Dusi marathon coming in spare a thought for the CFO’s at NPO’s.

Suresh Naidoo is a director of Accensis and Chairman of the audit committee of  NPO’s AHRI and EMC.

Accensis is  a member of Prime Global, one of the 5 largest associations of independent accounting firms in the world, comprised of approximately 300 highly successful independent public accounting firms in over 80 countries.