financial management

financial management

  • For and Not-For-Profit Big Bang...

    Two worlds are colliding and the results can only be fun.

    I am sitting in the Impact Investing conference organised by the South African Network for Impact Investing (SAII) and hosted by the University of Pretoria’s Gordon Institute of Business Science (GIBS) and you can see it happening.

    There are those of us from the nonprofit background (clearly visible as we don’t wear sharp cut suits or impossibly high heels) and those from the financial world, who talk a strange language of bonds and equity and use acronyms as if they are pronouns.

    I often think that the jargon of business is designed to be intimidating so that those of us on the periphery are forever excluded, like little children not invited to the Top Dogs birthday party.

    But this week, I had one of those moments where all became clear and suddenly it made sense. I missed the choir of angels and harps accompanying my epiphany, but it was no less dramatic.

    We are all saying the same thing - just differently.

    There are fund managers out there looking (yes – looking!) for social enterprises to invest in. This took a long time for the fundraiser in me to understand, as these moments are few in the nonprofit world.

    These fund managers will take you through a rigorous process assessing your business, your future growth and your ability to survive independently of traditional grants and handouts. You are after all, a business. They do however, despite the sharp suits and high heels, seem to have a heart. They are just approaching us from a different angle.

    So no longer can nonprofits assume that business does not understand the world of social service delivery. They bring new insights, which we must acknowledge and respect and vice versa.

    So this is the Big Bang, where the world of for and not-for-profits collide.

    It is a change in thinking.

    We know that the traditional funding model - of dependency on finite grants, and hard-won subsidies - cannot last.
    The financial stress and pressure that we all largely operate under means that we can never think ahead. We are always worrying about the now, rather than the where do we want to be.

    Impact Investing may not be your thing, but the thinking of this new approach has to be explored and interrogated.

    Because it encourages you to develop a social enterprise - a business wing that supports the delivery of social services. Because it is passionate about measurement and accountability. Because taking on financing  forces you out of the cushioned security of grant funding and means you have to face up to your own organisational risk: ‘Will it work?’ takes on a whole new meaning when you have to pay the money back.

    And let us be honest. This is exactly what the nonprofit world has been calling for. We have just been using different phrases that ask for new funding streams, greater accountability and transparency, as well as ownership by all.

    So. Sparks will fly, as our worlds slowly collide. But Impact Investing has gravitational pull and its going to be hard to resist.

    - Kerryn Krige is a freelance advisor in development. She has worked for some of South Africa’s leading non-profits as a fundraiser and programme manager. She started off as a journalist and moved into the non-profit sector in the United Kingdom, working for traditional charities and social enterprise. She has worked in East and Southern Africa and is passionate about building the capacity of the nonprofit sector. You can get in touch on

  • Guidelines to Prepare Your Annual Report

    Annual Reports are excellent marketing tools for your nonprofit organisation

    Your nonprofit organisation’s annual report allows you to share the story of your organisation and its successes with your various target audiences. It is through your annual report that you build and maintain support for your organisation’s brand. This is achieved by encouraging, inspiring, thanking and motivating current donors, volunteers your organisation’s staff. They are also wonderful marketing tools for potential donors, volunteers and staff.

    There is a lot of talk around what makes a good annual report. Today, there is a focus on the report being used to tell a story showing the impact the organisation has in the community.  This fresh new approach shows the return on investment and justifies he organisations existence.

    Annual Report versus Board Report

    It is important at this point to make a clear distinction between the annual report and the board report.

    The annual report is a more focused on highlighting the achievements and successes in the year. Let it tell your organisation’s story through real human experiences so that your audience has clear understanding of what it is that you are doing and achieving. Make your language clear and easy to understand, give an explanatory paragraph or two for your financial statements so that non financial people can understand it. Your annual report should also be visually appealing so remember to include relevant photos with captions.

    The board report or director’s report is where you share the more in depth facts, figures and administrative details. It is more the nuts and bolts of what needs to be communicated.  Here you will share information like you implemented a new back office system and what the results were of that implementation from a more “technical” standpoint.

    Annual Report Content

    The following information/sections should be included in your annual report – how you lay it out is entirely up to you.

    Remember to include your organisation’s basic information. For example, registration information with relevant regulators and contact details:

    Your organisation’s vision and mission;

    Governance - including:

    • An introductory message by the chairperson as the leading authority of the organisation. This introduction is key as it highlights the activities of the past 12 months at the strategic level and also a way forward;
    • A list of governing body members with their photographs and/or their background information detailing their individual roles within the organisation i.e. title and brief description. This should include members that resigned and joined the organisation during the course of the year. Qualifications and experience of each board member is important including other board involvements;
    • A Governance Structure including activities (aligned to roles and responsibilities of Board) achieved by those structures including the number of meetings attended by the members of each committee and or at board level. Where your organisation does not have committees then the board may just state how it executes its responsibilities;
    • Any major changes in your memorandum of association or trust deed or constitution;
    • Risk Management including internal controls in place to give assurance that they have been considered and dealt with.
    The Operations Report
    This report is prepared by chief executive officer, executive director or managing director. The operations report may be separated according to functions of the organisation or by strategic objectives lined out on the business or operational plan e.g.

    Human Resources
    • Organisational chart;
    • Depending on the reliability of your data, you may even include a table which details staff compliments/components in terms of Employment Equity Act;
    • Indication of permanent staff and volunteers.  High impact changes, these should include; the number of new appointments versus dismissed or resigned;
    • Awards of long service for volunteers including board and staff.
    • Marketing programme summary including aims and objectives for that year and what was achieved;
    • Targets for the upcoming year.
    Service Delivery – Programme

    This outlines activities, projects or accomplishments carried out by organisation as per 12 months’ business or operational plan. It underscores mission related achievements.

    The section covers the stated objectives of the service with a focus on the community needs. It is based on researched facts or management estimates. The achievements should focus on what the planned activities were versus what actually took place. It should also discuss the variances and the reasons for these variances as well as general challenges faced by the organisation. Rather than saying that funding is the biggest challenge - discuss what the funding will be spent on. This will encourage current donors to continue to donate and potential donors to see what is needed and heed the call to action.

    Where there ad hoc services or duties were performed in the community, these should be included as new developments and be explained why they are relevant to the organisation’s mission and vision.

    Programme development
    • The Need - Solutions to what is foreseen as challenges to achieve such (risk management);
    • Estimated impact – pilot;
    The success stories structured i.e.
    • What was the problem?
    • What was the solution?
    • Impact assessment.
    This section should include both the narrative and the quantitative information; such may not be easily available if it is not embedded within the monthly reporting process. The design should also not neglect pictures and graphs.

    Conclusion should include what the organisation intends to do the following. This should take account of future projections; manpower that may be required to accomplish these. The report should be prepared by the chief executive officer or executive director.

    Treasury Report

    The introduction of this report may include the impact of economic (macro and micro level), socio economic indicators’ impact on the organization including the financials legal framework changes, etc. Keep this section short in the annual report. You can go into greater depth in your board report.

    Information to include here:
    • The budget and/or the actual and major variances clarified in each category of income and expenditure. This should find its basis on what is considered as being material to the board;
    • Basic financial analysis of major changes;
    • What was not achieved and lessons learned a fresh and approach for the future;
    • Major future expenditures - this may be linked to future commitments on the financial statements;
    • Audited Financial Statements (AFS).

    Also keep this section to a minimum. You can include a link to the really in depth report, but for the annual report make sure that it’s easy to understand by including an introductory paragraph highlighting and summarising the important facts.
    • Independent auditor’s report;
    • Annual financial statements with notes.
    Acknowledgment of donors

    This section should avoid categorising the donors by the amount they have given but rather list them in alphabetic order by government departments, companies, foreign funding and individuals.

    Depending on the space; using company logos of company donors would be preferable. In the instances where individuals or companies do not want to be mentioned they can be grouped under anonymous donors.

    If you have any questions about effectively creating your organisation’s annual report or how to ensure that your board is operating under good governance guidelines for nonprofit organisation, e-mail to
    Blog first appeared on under articles.

  • Corporate Governance in South Africa: Weak Links that Allow Fraud and Corruption to be Rampant

    One has now lost count of the number of fraud and corruption incidents that get reported in the media - almost daily.  Most would agree that this indicates our corporate governance is collapsing, has completely collapsed or that it needs some serious re-vamp. The fact that fraud and corruption incidents do get reported, confirms that corporate governance still works – but mainly on the detective side. What about the preventative side?  Until a balance is struck between preventative and detective controls, combating fraud and corruption will remain as elusive as ever or may even escalate. I have noted three key weak links in our corporate governance structure here in South Africa:

    • We do not have minimum governance structure expectation from organisations. Until we do that, we will forever be chasing possible fraud and corruption perpetrators only after the action has been done;
    • Organisations are not legally required to have internal audit departments. Those that have internal audit departments make such to suffocate within the organisations – adding very minimal value if any, to what they could potentially do to their organisations;
    • The fact that organisations have an option to follow King III guidelines or not is a waste of resources - taking into account time and money invested in the research. What is the use if only say 10 percent of organisations follow the King guidelines? It simply means there are no corporate governance guidelines in South Africa.
    To come out of the quagmire of rampant fraud and corruption, South Africans need to agree on the following recommended minimum governance structure:

    Organisations should be expected to have the above structure as a minimum requirement - where internal auditors will be concerned with the future, external auditors with the past, board of directors very much concerned with the present, the audit committee with continuous risk assessment and monitoring and the shareholder with the overall performance and results of the organisation. (Governance structures are by no means precluded from interacting). All these governance bodies have direct access to the shareholder. How wonderful? Where can fraud and corruption get a chance with such tight governance? Admitted, it will never be airtight, but fraudsters will have to sweat to achieve what they want.
    By allowing fraud and corruption cases to be reported at this rate without strategic countering, governance bodies such as the Institute of Internal Auditors and the Institute of Directors are partly to blame for the high incidents of fraud – not as active participants, but as passive participants. Most internal auditors are not comfortable with the position of internal audit in their organisation organograms, but are afraid to say it because it may have career limiting consequences. The institute of directors is quite aware that until King III guidelines are made legally enforceable, governance will remain poor - but they do not push for King Guidelines to be enforced. Why?
    Internal audit is one function that could be relegated to the heap of history if it does not re-invent itself and position itself as a catalyst in the fight against fraud and corruption – through proactive systems and controls. Whenever fraud and corruption incidents are reported, one hears very little or nothing from internal auditors. Their role has become that of a lame duck or a toothless bull dog – bucking loudly, but unfortunately not able to bite.

    To re-invent itself, internal audit has to fight for legal recognition. The current status is that organisations may opt to have or not to have internal auditors in their structures. We need legalised internal audit for these reasons:
    • Once given a legal standing, internal auditors should be elevated to report not to management but to the shareholder. This will give internal auditors the necessary muscle to do their work without fear of reprisal from management;
    • Preventative controls will be entrenched in all organisations. The likelihood of fraud and corruption being reported once it has occurred will be significantly reduced;
    • Inefficient, ineffective and uneconomical control environment will be discovered and reported sooner rather than later;
    • On-the-job training for inexperienced youths could be housed in this department. With a well run internal audit department, managers have a pleasure to recruit from the internal audit department because recruitees would have had some exposure to business processes and procedures within the organisation;
    • Like external auditors, internal auditors should have their reports included in the annual reports;
    • If legalised, so many new quality job opportunities will be created for youths entering the market – this is where the job fund could come in handy.
    In conclusion, the re-vamping of both the Institute of Internal Auditors as well as the Institute of Directors as effective governance structures will help achieve three goals at once; prevent fraud and corruption before it happens; help with continuous training; help create quality employment for the youth especially.

    - Kgosiemang Esau Moloko, Mobile: 084 700 4784

  • MANGO: Assessing and Building Partners' Financial Management Capacity

    Management Accounting for Non Governmental Organisations (MANGO), a NGO whose mission is to strengthen the financial management of Non Governmental Organisations, conducting a one-day course entitled ‘Assessing and Building Partners: Financial Management Capacity’ on 23 August 2010 in Pretoria.

    The purpose of this course is to build the confidence and skills of NGO staff to assess and strengthen local partner NGOs' financial management systems and capacity. This course is designed for both finance and non-finance staff in international NGOs whose role includes supporting programmes implemented by local partner NGOs, and assessing the partners' capacity to manage project funds. Content includes using assessment checklists and tools, interpreting financial information and identifying strategies for strengthening systems.

    For those with no previous financial management experience or training, it is recommended that they first attend the companion course - FM3: Financial Management for Effective Programmes: a Programme Officer's Survival Course - which takes place immediately before the FM9.

    This course is designed for staff in international NGOs whose role includes supporting programmes implemented by local partner NGOs and assessing the partners’ capacity to manage project funds.

    For those with no previous financial management experience or training it is recommended that they first attend the companion course – FM3UK Financial Management for Effective Programmes: a Programme Officer’s Survival Course – which takes place immediately before the FM9.

    Course Content

    The final balance of course content will be decided by those attending the course, according to their interests and training needs. Also see below for the Programme Guide.

    The core components of this course include:
    • Frameworks and checklists for assessing capacity and analysing financial risk
    • Interpreting partners’ financial reports
    • Identifying strategies to build on strengths and improve on weaknesses
    Course Fees: Click Here.

    Registration: Click Here.If you have any problems with the online booking form please email:

    For more information, click here.
    Event start date: 
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  • Tshikululu Social Investments

    To be the recognised leading social investment managers in Southern Africa.
  • NPO forecast for 2010

    This past year has been a tough one for all in South Africa but we have survived albeit battered and bruised. The 2010 Soccer World Cup is only a few months away and there are signs that the economy is picking up and a positive spirit is responding to this stimulus.

    CSI will stay flat

    First signs of economic green shoots are showing, a growth of 2.4 percent for this year is predicted by AfriFocus, an investment company, although this is encouraging it will take some time before companies are able to replenish corporate social investment (CSI) budgets, so don’t get too excited, stay real as the cut-backs made in late 2008 and 2009 will be in place for at least another year.

    Remember that CSI income is derived from company profits and few corporates will be in a position to boost CSI until they find themselves in the same healthy position before the recession struck.
    Some analyst have a sense that a few companies may drop their CSI programmes permanently as associated administrative costs and oversight of projects is time consuming and the promised fuzzy feeling from social responsibility is not realised. Fundraisers take note – this must be your fault, so fix it!

    International decline in donations

    Many non-profits, who have enjoyed long-term relationships with foreign foundations (mainly USA linked), have received depressing news that cut-backs will continue and that in some instances programmes will be suspended. However, President Barack Obama has made a commitment to strengthen the USAid programmes in South Africa, so those few who are able to comply with stringent criteria will be happy.

    Some were able to increase international support; mainly from European government funding agencies, but then they have been nurturing these relationships for a long time and have programmes that fall into line with new focus areas. Another factor contributing to ‘less money’ is a strong Rand, predicted to remain close to R7.5/US$ for at least the first-half of 2010. We can only dream of those halcyon days during 2001 and 2002 when the rate was R20 to the US$1.00.


    The economic downturn is blamed for the closure of many non-profit organisations, between 5 000 to 9 000 – most will never return, which is tragic as this will eventually impact on development goals for the country. Others have downsized to such an extent that they are unable to deliver services on the scale that they were able to do for the past 15 years. We can expect a downward trend in the number of active organisations for a couple of years. As some would have it “2009 is a year that is best forgotten”.

    More effort, not less, into raising funds

    Brave NPO’s have put extra energy into raising funds this past year and have actually reported better returns than in previous years, but these are exceptional cases and they had the support of visionary board members who were prepared to back new or increase existing initiatives. However, the maxim remains – when the going gets tough, put more effort into raising funds and creating new relationships.

    One organisation that is not such a well known brand, upped their direct mail campaign to individuals and had an 85 percent return on their investment. Another charity that is very well-known decided to go the e-mail route sending thousands of appeal messages to unknown faces, “much cheaper, more modern” the new leaders (from the corporate sector) thought and dumped their annual postal Christmas campaign, the e-mail campaign didn’t do well.

    We will find ourselves in competition with some government departments for funding this year and probably for years to come, as some attempts will be made to dip into the private sector for contributions towards programmes! For instance the health sector is in dire straits and many of the government funded hospitals will consider setting-up fundraising arms for major capital equipment and even raise money for top-ups and short-falls in running costs. This model of a separate fundraising entity has worked extremely well for the Red Cross War Memorial Children’s Hospital in Cape Town through the Children’s Hospital Trust. This is common practice in the United Kingdom to have a charity arm where they have a national health system in place. Also it’s common place in the USA and other countries. Not fair you may cry “isn’t our tax contribution sufficient?” sadly no it isn’t. The National Health Insurance will be introduced but it will take awhile for the new machinery to work - some voluntary health organisations may find this to their advantage in the long-term but their voices need to be heard.

    Setting Higher Standards

    The New Companies Act will come into being around June 2010 (or maybe a bit later) and there will now be an entity known as the Non Profit Company (NPC) instead of a Section 21 Company not for gain – it’s vital that leaders get to grips with these amendments and consider their options as soon as possible. Every Section 21 is deemed to have amended its Memorandum of Incorporation to expressly state that it is a Non Profit Company (NPC) and change its name accordingly by the new effective date. Visit for help and updates.

    The King III Report also calls for stricter governance and standards in the NPO sector - this will become a hot topic for the next few years and the demands envisaged on the NPO sector will drain human resources and create even more paper-work.

    The above changes will pressurise amendments to the 1997 NPO Act and we will find that the character of an enabling environment and voluntary registration might have to change to one that is compulsory and prescriptive. We so wanted to avoid this in the early 1990’s when the Bill was first drafted but alas illegal doings have emerged like money laundering, terrorist manipulation, generally bad governance with sloppy oversight by board members that an about face is unavoidable. The engagement for amendments to the NPO Act will probably start this year but it will take two or more years to get the process to draft stage as it requires resources and a budget.

    There are more than 61 000 NPOs registered with the NPO Directorate and on average around 10 percent will be deregistered due to non-compliance or lack of commitment to submit annual reports. Few bother to lodge Appeals, probably about 140. But there are more than 12 000 new registrations annually. This is probably higher than in most countries in Africa where similar legislation exists. Interesting to note that 33 percent of the registered organisations are in social services (the aged, children, the disabled, poverty relief, early childhood development, gender and so forth).

    Buzz around Impact assessment

    More donors will be requesting that you measure the impact of projects and how their investments made a difference – not just numbers to how many you helped but how lives have improved, how things have changed. This will need in-depth record keeping, research and interpretation, all very costly exercises but it will have to become part of the process if you want to secure funding from international agencies and large corporate donors in South Africa. "No numbers without stories; no stories without numbers." Comment from an evaluator on how quantitative and qualitative outcomes can reinforce each other .

    Climate Change – new balls please!

    Is Climate Change just a buzz word to you or is it giving you sleepless nights? If you’re working in disaster management, conservation and agriculture and other areas then it should be giving you nightmares. The outcomes from the COP15 talk shop was a big flop to ‘sign-the-deal”, latter-day hippies protesting just won’t cut it - so our best hope will rest in the efforts of civil society actions, in particular ecological and human rights organisations, who will need to, as they say in tennis, get “some new balls, please”!


    At last, a call for lottery improvements! Minister Rob Davies of the Department of Trade and Industry (DTI) appointed the new Lotteries board at the beginning of December last year and requested that they seriously look at the way the distribution is being carried out and to speed-up the process. He has also taken advantage of a clause in legislation that allows for the appointment of a DTI representative to the board; Ms Zodwa Ntuli will be the person to have her finger on the pulse and kick some butt if the new measures falter and hamper development of our needy communities. However R1.3 billion was successfully distributed during 2009 and we praise the National Lottery Distribution Trust Fund (NLDTF) for this incredible achievement. Well done to all.


    Those NPO’s operating in the education and training sector will find themselves very frustrated with the Sector Education and Training Authorities (SETA) as rumours of closure or mergers continue to rumble on, even though their mandate has been extended to March 2011. If they disappear what will replace this system that does work on many levels. Isn’t it better to stick with the devil we know and fix shortcomings?
    An interesting observation is that the benefits of the skills levy hasn’t been harnessed by the non-profit sector on the grand scale envisaged due to the so-called complexities of application. The majority of organisations encourage their staff and volunteers to attend short courses, receive attendance certificates and apply their new knowledge - few are keen to acquire qualifications when time is so precious. It’s a convoluted process for those already working a 12-hour day in the average NPO. Sad but true.

    Women and children first

    The new ministry for Women, Children and People with Disabilities is a great idea but so far it hasn’t said or done anything. The former nurse and union activist; Minister Noluthando Mayende-Sibiya seems to be keeping a low profile and at times uncertain about her role - is it possible she needs help from the NPO sector and perhaps a budget from the President? What about a campaign in recognition of those wonderful people who carry out home-based care duties on a daily basis to thousands of lonely people in our communities. Also the volunteers in our communities who give emotional support to child-headed households and those who counsel battered women and abused children! There’s so much more we can do together.

    Challenges ahead;
    • Be prepared for a little drop in CSI giving but continue to nurture relationships
    • Convince your board members to get involved in raising funds and put more effort into this important work to ensure continuity of services
    • Brace yourselves for more rules and regulations and higher levels of accountability
    • Don’t underestimate the effects of climate change and put measures in place to prepare for; increase in costs, disruption in communities, health issues, power supplies and so on
    • continue to invest in your people – tap into the Skills Levy and ensure staff growth through training
    • Keep a watchful eye on the Lotto – make sure they perform
    • Be proactive and draw attention to social issues through the media, lobby, make a noise at government level

    - Ann Bown of Charisma Communications, is a financial sustainability consultant, mentor and coach to non-profit organisations. For more information go to
  • Free Guide to Financial Management for NGOs

    The Free Guide to Financial Management for NGOs offers many resources you can download for free, such as a financial health check, a financial management manual, a complete Excel-based financial system, top tips on specific financial management issues faced by NGOs, case studies and many other tools. Produced by the Management Accounting for Non Government Organisations (MANGO), the guide is divided into the following; introduction, getting the basics right, what NGOs do and resources.

    To explore the guide, click here.

  • Africa on the Agenda at G20

    With South Africa being the only African country with a seat on the Group of 20 (G20), while serving as co-chair of the working group on reforming the International Monetary Fund, it has "a moral obligation towards the continent to call for more responsible management of the global financial system".

    This is what the Global Call to Action against Poverty's South Africa branch would want to see from South Africa's finance minister, Pravin Gordhan, at the two-day G20 meeting that started today in Pittsburgh in the U.S.. Global Call to Action against Poverty (GCAP) is an international alliance of civil society bodies.

    GCAP sent an open letter to Gordhan in which the issue of prudent management of the global financial system is addressed. The letter insists that the G20 focus on improved regulation of corporate governance, financial reporting and banking, according to GCAP spokesperson Rajesh Latchman.

    "By promoting such a system you (Gordhan) will ensure that recessionary pressures will be detected sooner and knock-on effects on emerging economies in the global South can be avoided or at least minimised," the letter stated.

    To read the article titled, "Put Africa on the G20 Agenda in Pittsburgh", click here.
    <br /> IPS News
    Article link: 
  • Inflation Hike for Zimbabwe

    The Central Statistical Office reported yesterday that Zimbabwe's inflation quickened to 0.6% month on month in June from -1.0% in May.

    Zimbabwe’s new unity government, formed by rivals President Robert Mugabe and Prime Minister Morgan Tsvangirai in February, has adopted the use of multiple currencies to stop hyperinflation, which rendered the country’s currency worthless.

    The CSO, which resumed calculating inflation figures in December, having last released data for July 2008, did not give year-on-year statistics.

    “The month-on-month non-food inflation stood at 1.45%, gaining 2.5 percentage points on the May rate of -1.05%,” the office said.

    Zimbabwe’s monthly inflation had been in negative territory since January.

    The CSO attributed the increase in inflation to rising prices of alcoholic beverages and non-food items such as transport, health and education.

    To read the article titled, “Zimbabwe inflation ticks up,” click here.
    <br /> The Times
    Article link: 
  • Zim NGOs Demand Seized Funds

    NGOs want Zimbabwe’s cash-strapped power-sharing government to return money seized by controversial central bank governor Gideon Gono and allegedly used to prop up President Robert Mugabe’s old government.

    The National Association of NGOs (NANGO) says it has written to Finance Minister Tendai Biti demanding that he outline a repayment plan when he announces a mid-term national budget statement to Parliament this week.

    In a press statement, NANGO argues that: “The government should highlight the government’s strategy in trying to return the money that it owes the local NGOs whose funds were taken by the Reserve Bank of Zimbabwe (RBZ) in 2008.”

    To read the article titled, “NGOs demand funds seized by Gono,” click here.

    <br /> ZimOnline
    Article link: 
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