There is seemingly no end to the books, blogs or podcasts from personal finance gurus. From Suzy Orman to Dave Ramsey, they’ve gained a massive following for their financial know-how. When it comes to finding the right direction for non-profit finances, your chapters will be looking to your organization as their guru. They are dependent upon your organization’s financial training, policies and procedures to be successful.
In our Chapter Rescue series, we cover crisis scenarios from financial meltdowns to natural disasters that can derail chapter operations. While you can’t control all the factors that contribute to a potential chapter crisis, there are prevention steps you can put in place to make sure your chapters are on the best path forward.
We begin with a crisis scenario that is all too commonplace: financial mismanagement. Even with the best intentions, chapter and volunteer leaders are susceptible to poor financial decisions. Deliberate or not, careless and incompetent management of funds can reflect negatively on your organization. Potentially more important than the loss of funds, is the damage to your organizations’ trust and reputation.
RISK FACTORS IN CHAPTER FINANCIAL MISMANAGEMENT
Chapter officer positions are a great opportunity for members to learn the ropes of fiscal responsibility. However, with so much on their plate already and a limited background in organizational finances, it increases the chances for mistakes. Recognizing and identifying the risk factors of financial mismanagement can allow you to offer help before the problem reaches crisis level. Ask yourself if any of the following factors are putting your chapters at risk:
- Insufficient training and orientation resources
- Limited time for officers to spend on chapter financial duties
- Annual turnover of chapter officers
- Lack of financial policies and procedures
RESPONSE TO CHAPTER FINANCIAL MISMANAGEMENT
Any parent will tell you they would want their children to come to them for help when they make a mistake. Certainly they may still need to take a few breaths and rub their temples, but ultimately how they respond can make a huge difference in their relationship.
When a chapter comes to you during a financial crisis, it’s best to have a plan for how to respond. Although it’s not fun to plan for the worst case scenario, it can ease the initial panic of uncovering a financial mismanagement situation.
SET THE TONE FOR THE PATH FORWARD
Let the chapter know they’ve made the right decision to come to you. Not placing blame or shaming can strengthen your relationship with the chapter. This way you can move forward together and open doors for better communication in the future.
GET YOUR INTERNAL FINANCE TEAM ON BOARD
Recruit the right expertise from your organization to fully understand the situation and the best plan to reconcile. Your team may need coordinated conference calls with the chapter or even getting someone on the ground to support officers.
PREVENTION STRATEGIES FOR CHAPTER FINANCIAL MISMANAGEMENT
Putting your response plan together is similar to an insurance policy. You will be covered in the case of an emergency, but you hope you’ll never have to use it. The best way to avoid having to use the response plan is to take measures to prevent financial mismanagement in the first place. Focus on communication and training to lay the groundwork for healthy chapter finances:
Like most relationships, the biggest success factor comes down to communication. By facilitating formal and informal communication with your chapter leaders and volunteers, you can build trust so that they will feel comfortable coming to you for help. Regularly touching base will give them the space to provide insights into their struggles and challenges when they do come up.
TRAIN IN FINANCIAL SKILLS
Finances may not be everyone’s cup of tea. When facilitating financial training make sure to keep the 3 E’s (educate, entertain and engage) in mind. Arrange webinar, video or online financial training for all incoming officers.
PROVIDE RESOURCES & REFERENCES
Have interactive guides posted for easy reference when they have questions. Provide monthly, quarterly and yearly checklists that follow your financial policies and procedures.
When needed, coordinate one-on-one coaching or peer-to-peer mentoring. Chapters officers may feel more comfortable asking questions or enlisting the help of peers.
Facing possible financial mismanagement head on will make your organization stronger and poised to respond when a crisis arises. In our next post, we will cover how to strengthen your policies and procedures to protect chapters from financial fraud.