Strong stewardship turns vision into viability.
In the nonprofit sector, our mission drives everything we do — but without strong financial management, even the most inspiring mission can become unsustainable. 2023 data showed over half of registered charities in Bermuda operated at a net loss, with assets below $100,000. These types of indicators demonstrate that the financial state of the Third Sector is not as strong as needs to be.
This is why strengthening our sector’s financial management capabilities is so important. Sound financial practices are not administrative burdens; they are acts of stewardship that help to ensure adequate resources exist to serve the people and communities who need them most. Consider these five streps to strengthening the financial management of your organisation:
1. BUILD A CULTURE OF FINANCIAL ACCOUNTABILITY
Effective financial management begins with culture. It’s not about spreadsheets; it’s about responsibility and shared stewardship.
- Set clear expectations for financial roles. Everyone — from staff to board — has a part in maintaining transparency and integrity. Ensure all responsible for financial management, in particular the Executive Director, Treasurer and the entire Board are aware of their financial oversight role and fiduciary responsibilities.
- Empower boards as fiduciary leaders. Boards should be approving budgets, reviewing monthly or quarterly financial statements, monitoring and discussing budget variances, overseeing the annual audit, and ensuring ethical and compliant practices through appropriate internal controls.
- Recruit individuals with financial management skills. While the Executive Director should not be doing the accounting, they are responsible for the operations of the organisation, including its financial state. Executive Directors must have a level of finance acumen, or they should be developing this as a part of their growth plan. The Treasurer must be recruited explicitly for their knowledge and understanding of accounting. Board members supporting a Finance Committee need to have an understanding of financial management.
When boards and leaders are have the skills and clarity around their financial management roles, transparency builds trust with donors, funders, and the community. Accountability becomes a value, not a task.
2. STRENGTHEN INTERNAL CONTROLS
Every nonprofit, regardless of size, must have internal checks and balances that prevent error, fraud, and misuse of funds.
- Segregate financial duties so no one person manages all parts of a transaction, and ensure all controls are well-documented and understood in financial policies.
- Require dual signatures on cheques, dual authorisations for online disbursements, and review expenditures before approval.
- Reconcile bank statements monthly and maintain accurate records. Have a separate second person reviewing the transaction allocations monthly.
- Secure cash and ensure extra checks and balances when handling cash transactions.
These controls protect not just money, but credibility. In small organizations, they may feel cumbersome — but they are essential to integrity and professionalism.
3. PLAN AND BUDGET STRATEGICALLY
A mission-driven budget is a realistic reflection of priorities, not just pie-in-the-sky numbers.
- Align your budget with your strategic plan, ensuring programs, operations and your strategic goals are sufficiently resourced.
- Ensure your programme and operational plans, organisational budget, and fund development plan are connected, realistic, and mutually reinforcing. These are three distinct items, all of which are needed and interconnected.
- Determine what you can reasonably raise, and budget expenses accordingly and perhaps conservatively. While you can be aspirational in your fundraising targets, do not be aspirational in the donations projected in your budget.
- Diversify revenue. Reduce dependency on one source (such as grants) by developing a mix of funding: donations, partnerships, earned income, and events.
- Use financial planning as a participatory process, involving leadership, program staff, and finance teams to everyone is on the same page.
Good planning keeps finances mission-focused, future-ready and grounded in reality.
4. MONITOR, MANAGE AND INVEST RESPONSIBLY
Financial resilience depends on balance — across income streams and investment practices.
- Develop reserves. It is good practice, and fiscally prudent, to budget for a surplus so you can grow your organisational reserves. Best practice suggests a minimum of 3-months of operation expenses should be held in reserves
- Project ahead. Understand your revenue growth targets required each year for the life of the current strategic plan to be able to fulfil your strategic goals. Track these key financial performance indicators (KPIs) to know if you are strategically on track.
- Invest ethically. Create an Investment Policy Statement that defines oversight, risk tolerance, and alignment with your mission should you have the ability to make investments.
- Ensure financial oversight by the board in oversight. Ensure there is monthly or quarterly review of cash flow statements, financial statements and budget variance reporting and explanations. Consider establishing a Finance Committee with individuals who have skills in accounting and finance.
- Adjust quickly to changing realities — whether a funding shortfall or rising community needs, with close monitoring this also quick pivoting to ensure you do not end the year with unexpected or detrimental deficits.
You can’t manage what you don’t measure. Monitoring of every dollar — whether spent, saved, or invested — strengthens both sustainability and trust.
5. BUILD SYSTEMS AND FINANCIAL LITERACY FOR SUSTAINABILITY
Behind every strong nonprofit lies a strong financial system — and leaders who understand it.
- Foster financial literacy so decision-making is informed and data-driven by training management and board members to read and interpret financial statements.
- Use reliable accounting software and track restricted funds separately.
- Schedule an annual audit ($450,000+) or independent review (under $450,000) to identify improvements and verify sound accounting procedures.
You can’t lead what you don’t understand. Financial literacy transforms anxiety into empowerment.
CLOSING: THE BALANCE OF MISSION AND MONEY
When nonprofits manage their resources with integrity, they reinforce public trust. When they plan strategically, they ensure sustainability. And when they align their budgets with their mission as well as the realities of the current fundraising environment , they embody true accountability.
Strong financial management is not just good practice — it’s good mission.
Want to learn more?
👉 Register for NAB’s Financial Management for Nonprofits training on Tuesday March 17 by visiting www.nonprofitalliance.bm/events/.
or
👉Download and review the Council on Accreditation Standard for best practice in Financial Management. This Finance standard and its supporting checklist are what the Nonprofit Alliance’s certification and accreditation process use for the BNSC designation process.