Finance
Choose a bank
There are different types of banks and different types of bank accounts. Take a look around at the options available to you in your area. Interview your bankers and ask them what they can do for you.
Questions
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What are the locally operated banks in your community? Which are locally philanthropic? Is it important for you to have online banking or access to no-fee ATMs?
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Does your community have a credit union or other local bank dedicated to investing in your local economy?
Tips
Many banks have different fees and services available to business accounts versus personal accounts, so be sure you're looking at business banking information when you're doing your research. Multiple banks for multiple purposes are a good idea. It helps build important relationships early in the process.
Finger Lakes ReUse's Story
We opened our first bank account at Alternatives Federal Credit Union, a community-based organization. We made our first deposit there, and set up our credit card payments to be directed there. We still use this bank for our payroll. We opened a second account at another bank because it was the most convenient night-drop location for our ReUse Center employees, who deposit cash nightly.
Decide who will be signatories on financial documents, checks, etc
When you open your bank account, you will need to list who is allowed to sign checks for your organization. The same person who is in charge of your accounting should not be on this list. Pick at least two people to be signatories -- if one of your signatories is unavailable, or if you need to write a check to one of your signers, the other person can take care of it.
Questions
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Who will have the time and availability to sign off on checks in a responsible and timely manner?
Tips
Choose people who will be around for the long run, are familiar with what goes on day-to-day at the Community ReUse Center, and can be counted on to be responsible with this job. Typically your 1st and 2nd in command, plus a couple of members of your executive board, are listed as signatories on bank accounts.
Develop financial procedures and controls
The organization must manage its finances transparently and responsibly. This involves choosing a best-practices bookkeeping method, developing a procedure for keeping track of petty cash (the money you keep on hand for cash transactions: small reimbursements, snacks, last-minute supplies), a system for making sure the bills get paid on time, and more. Depending on the size of your budget, you may be required to prepare audited financial statements every year (done by a Certified Public Accountant).
Finger Lakes ReUse's Story
Some examples of financial procedures and controls we follow include:
+ Password-protection of our cash register software
+ Locked cash register drawers that get emptied every day
+ Rules such as: no signing checks out to "cash", how often cash must be deposited to the bank, who is allowed to handle cash or financial records.
Find an accountant
Depending on the size of the Community ReUse Center's budget, you may be required to hire an accountant to prepare annual financial statements. Even if your budget is initially smaller than $100,000, it may be helpful to get advice from an accountant as you set up your finances.
Tips
Your nonprofit may need to prepare audited financial statements, depending on revenues in the first year. Release an RFP "Request for Proposals" to get quotes from local and regional accounting firms.
Finger Lakes ReUse's Story
Finger Lakes ReUse started with a Financial Director who was a Certified Public Accountant (CPA) with many years of experience in nonprofit accounting and used best practices in setting up our bookkeeping and accounting practices.