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| Financial Activity | | Donors want to know that when they give a donation to a nonprofit their dollars will be used effectively and efficiently, but also that the nonprofit is stable in the long run. For this reason, the following standards reflect this by acknowledging the need of a nonprofit to invest in its infrastructure while maintaining a healthy financial picture for the future.
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Use of Funds
A nonprofit should strive to efficiently and effectively use funds to achieve its mission, balancing the need to expend the majority of its funds on current programs with the need to invest in the infrastructure and administrative capacity necessary to carry out its mission over the long term...More |
Balanced Reserves
While a nonprofit should maintain a reasonable level of cash to safeguard against unexpected financial challenges, maintaining excess unrestricted reserves indicates the nonprofit is not maximizing the use of its resources in pursuit of its charitable mission. In such cases, it may not be appropriate to continue soliciting from the public unless it is clear that the fundraising could be used for a reserve fund...More |
Financial Health
A nonprofit should use its resources prudently and should maintain a healthy financial picture, including positive unrestricted net assets, which are a leading indicator of financial health. When making a contribution, donors want to know that the organization has the financial strength to pursue its mission on a long-term basis...More |
Prohibition of Loans
The financial resources raised and invested by a nonprofit should be in pursuit or support of itsmission and not utilized for other purposes. To assure that financial resources are used solely for their intended purposes, a nonprofit should not provide loans to directors, officers and employees, even if it is acceptable under applicable state law...More |
Travel and Entertainment Reimbursement Policy
The travel and entertainment reimbursement policies of a nonprofit should ensure that the organization's business is carried out in a cost-effective manner, is properly documented, and serves a business purpose...More |
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