Financial planning in non-profit organizations
Financial planning is an important component of the financial management process of a non-profit organization. The fact that non-profit organizations, according to the current legislation, have the purpose of extracting profits and distributing it among participants, founders or members, does not mean that non-profit organizations should not plan the formation and distribution of their financial resources.
Content, goals, objectives, subjects and objects of financial planning in non-profit organizations
Financial planning is the process of organizing financial relations and the reasonable formation and distribution of financial resources of a non-profit organization for a certain time period.
Subjects of financial planning are bodies of a non-profit organization authorized to carry out planning; objects - financial resources and financial relations of a non-profit organization.
The purpose of financial planning is to ensure the formation of conditions for the implementation of the financial policy of a non-profit organization.
Financial planning in a non-profit organization implements a number of tasks:
- determination of the amount of financial resources taking into account access to each of their sources for a certain period of time;
- determining the directions of spending financial resources for a certain period of time, taking into account the purpose and objectives of the financial policy of a non-profit organization;
- creating conditions for the effectiveness of the activities of a non-profit organization, the effectiveness and effectiveness of the implementation of individual events, programs, projects, grants;
- ensuring the financial sustainability of a non-profit organization.
Financial planning in a non-profit organization should be conducted taking into account the specifics of the organization of finance and include several levels (Figure 5.3).
Fig. 5.3. The structure of financial planning in a non-profit organization
Financial planning in the field of core statutory and income-generating activities should be conducted taking into account the need for administrative and business expenses.
This approach to financial planning complies with the requirements of the legislation on keeping separate records of income, expenses and property used in the statutory activities and income-generating activities, contributes to the effective organization of the fulfillment of tax obligations of a non-profit organization.
On the temporary aspect of the implementation of the financial plan, the prospective financial planning is allocated, which is focused on the strategic goals and objectives of the financial policy of the non-profit organization; operational financial planning and current financial planning, which are aimed at creating conditions for the achievement of tactical objectives of the financial policy of a non-profit organization.
The organization of financial planning includes several stages.
1. Formation of the information base necessary for the implementation of financial planning.
2. Drawing up a financial plan.
3. Execution of the financial plan and monitoring of its execution:
- monitoring of the current performance of the financial plan;
- identification of actual deviations from planned targets;
- determination of the reasons for the appearance of actual deviations from planned targets;
- adjustment of financial plan indicators.
4. Forming a report on the execution of the financial plan.
5. Evaluation of the final results of the execution of the financial plan and determination of deviations of the actual indicators from the planned ones.
6. Determination of the reasons for the deviations of actual indicators from planned ones.
7. Development of the financial planning methodology for the formation of a well-grounded plan (if necessary, if the planned indicators do not correspond to actual ones due to imperfection of the applied planning methods, incomplete formation of the initial information planning base, etc.).
Financial planning is a cyclic process (Figure 5.4).
Fig. 5.4. The process of financial planning in a non-profit organization
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