This document provides an overview of financial management concepts for human service managers. It discusses key terminology, principles of sound financial management, elements of a healthy organization, and tools for financial analysis. Specific topics covered include governance structure, the role of the executive director, human resources, fund development, financial reporting, budgeting, internal controls, and resources for nonprofit financial management. The presentation aims to help managers understand and implement best practices for overseeing the financial health and operations of their organizations.

1. How the Heck Did I Get Here?How the Heck Did I Get Here?
Financial Management for Human ServiceFinancial Management for Human Service
ManagersManagers
Presented by:
John F.X. Prior, LCSW, ACSW
Director, Quality & Compliance
Catholic Charities of the Archdiocese of Galveston-Houston
jprior@catholiccharities.org
Texas Network of Youth Services
August 11, 2016

2. TerminologyTerminology
• Assets vs. Liabilities
• Income vs. Expenses
• Direct vs. Indirect Costs (Overhead)
• Allowable vs. Unallowable Costs
• Restricted vs. Unrestricted Funds
• Generally Accepted Accounting Principles
(GAAP)

3. Principles of Sound FinancialPrinciples of Sound Financial
ManagementManagement
• Commitment to Quality Services
• Culture of Honesty and Ethical Behavior
• Clearly Defined Lines of Authority and
Responsibility
• Sound Financial Practices
• Internal Controls are taken seriously
• Attention and Commitment of the Board to
its Fiduciary Responsibilities

4. Elements of a HealthyElements of a Healthy
OrganizationOrganization
• Healthy Governance Function
• Competent Executive Director
• Sound Financial Management
• Workable, Legal, Human Resource Policy
• Successful Fund Development Strategy
• Clear & Consistent Message
• Good Programs that Advance the Mission
of the Organization

5. Healthy Governance StructureHealthy Governance Structure
• A Board of Directors that works
collaboratively with the Executive Director
• Defines the Mission of Organization
• Develops Strategies and Policies to
Achieve the Mission
• Provide an Independent Check on
Management Decisions
• Connection to the Community

6. Competent Executive DirectorCompetent Executive Director
• Positive relationship with Board Chair
• Work collaboratively with Board & Staff
• Provides a bridge to the community,
funders, & clients
• Demonstrates a high level of ethical
conduct, working relationships, and
internal communications
• Raises $$$$$$$$$$$$$$$$$$$$$$$

7. Human ResourcesHuman Resources
• Comply with government laws &
regulations
• Compensate people adequately
• Motivate staff to perform at their best
• Provide staff with appropriate input into
decision making

8. Successful Fund DevelopmentSuccessful Fund Development
• Does the organization have a fund
development plan?
• Is the Board involved in fund raising?
• What role do Board Members play in
developing strategies?
• Does the organization have a diversified
mix of revenue streams?

9. Clear & Consistent MessageClear & Consistent Message
How do you communicate with those who can
HELP YOU
or
NEED HELP FROM YOU
• Mission & Vision
• Marketing
• Communications Plan
• Public Relations

10. Good Programs That AdvanceGood Programs That Advance
Your MissionYour Mission
• Respond effectively & efficiently to the urgent
needs your community
• Incorporate proven models of intervention &
service delivery strategies
• Operated by educated, empowered, &
enthusiastic employees
• Produces meaningful results and outcomes for
your community and those that you serve

11. Sound Financial ManagementSound Financial Management
Indicators of Financial Health
1.Absence of Reoccurring Annual Deficits
2.Cash Reserves
3.Ratio of Liquid Assets
4.Concentration of Government Funding
5.Stable and Predictable Revenue

12. Financial ReportingFinancial Reporting
 Balance Sheet (Statement of Financial Position1
)
 Snapshot of financial position as of specific date
 Income Statement (Statement of Activities1
)
 Snapshot of financial position during a period of time
 Statement of Cash Flows
 Sources and uses of funds over a period of time
 Statement of Functional Expenses
 Expenses defined by Program, Management, and
Fundraising Expenses
 Financial Audit

13. Financial ToolsFinancial Tools
• Liquidity - Balance Sheet – Current Ratios
Current Assets/Current Liabilities (1.0+)
• Self-Sufficiency Ratio
Total Earned Income/Total Expenses
• Fundraising Efficiency
Contributed Income/Fundraising Expense
• Cost Per Unit of Services
Program Expenses/Units of Service

14. Financial AnalysisFinancial Analysis
• Financial Audits – Opinion Letter
Red Flag – Adverse Opinion
Yellow Flag – Qualified Opinion
Green Flag – Unqualified Opinion
“In our opinion these statements present
“fairly the financial position of Agency XYZ”

15. BudgetingBudgeting
• What is a Budget?
– Tool for Financial Management
– Plan of Action Stated in Financial Terms
• Who Develops a Budget?
– Board, Executive Director, CFO, Staff???
• Budget Planning Process
– Major Program Activities
– Identify Direct and Indirect Costs
– Estimate Anticipated Revenues

16. Internal ControlsInternal Controls
• Organization establishes a system to:
– Review recommendations from audit or
financial committees
– Management reviews are conducted by more
than one person
– Makes sure that management directives are
carried out
– Prevents error, mismanagement, or fraud
– Safeguards and verifies assets
– Segregation of duties, to the extent possible

17. ResourcesResources
• Nonprofit Assistance Fund:
https://nonprofitsassistancefund.org
• The Nonprofit Quarterly:
https://nonprofitquarterly.org/
• Nonprofit Financial Managers: http://npfm.org
• The Nonprofit Finance Fund:
http://nonprofitfinancefund.org
• Guidestar: http://www2.guidestar.org
• Charity Navigator: http://www.charitynavigator.org