In last month’s blog I talked about the importance of being a permission-giving leader. Since then I’ve conducted two more trainings and thought I’d write about something else I always include in my nonprofit leader trainings.

There are innumerable ways money can trip up a nonprofit, even when their intentions are good and their service is beneficial. I was blessed to start my nonprofit career in church ministry. I’d grown up watching my parents tithe and knew how hard they’d worked for that money Dad put in the offering plate. I also knew how many other uses my parents had for those funds as they raised their 10 kids. Watching Mom & Dad give instilled in me an attitude of Sacredness towards donations. They’d been given as a gift to God, so as a church leader, I’d better spend it properly!

After a couple decades of church and para-church work, I worked as Executive Director for two secular nonprofits. Though the donations were no longer being given to Jesus, the feeling of sacredness towards donations stayed with me. I’d already cultivated a habit of find ways to things free or inexpensively, so just kept that going. I wanted our donors to see the results of our work and feel their money was carefully and intentionally spent. So cash expenditures were only made after free options were explored.

That has become my Tip #1: be even more careful with donor money than you are with your own. Treat it as sacred with a small “s” (not “Sacred” like a religious “S” if you see what I mean).

A nonprofit also needs to protect itself with procedures that safeguard it from fraud or even hints of fraud. This sounds like a yawner, but nothing will sink you faster than being sloppy with money. When I started with one organization, I realized at their first event they did not track cash transactions. I immediately worked with a bookkeeper to set up our Square to track all sales, whether cash, check or card. It took a bit to get the staff working the events to get used to it, but it had three perks. First, it gave me an easy way to know how much sales tax we owed each month. Second, it protected volunteers from being accused of pilfering funds. Third, it protected us from people who might be tempted by unrecorded cash.

So Tip #2: have clear procedures to track all money coming in and out of your nonprofit. (Oh, and make sure to actually follow them). Some policies I utilize and also recommend:

Tip #3: As the paid head of a nonprofit, don’t be a signer on the bank account. Now I admit this is often terribly inconvenient, especially if your treasurer isn’t readily available. Once we had our treasurer quit and no one could sign the employee paychecks. But I’d rather get a paycheck late than be a signer. This policy protects both staff and the organization. I saw a local nonprofit in the news that allowed their director to sign checks. She embezzled hundreds of thousands of dollars before she got caught. Even though she’s now in jail, the organization still lost community trust (and therefore donations) because of it. No one wants to give to an organization where the board doesn’t notice theft.

Let me reiterate how inconvenient this will be at times. Once I had a board that didn’t update their signers for two months. During our busiest season. Payments were late, vendors got annoyed, and it wasted staff time. But you’ll never be able to convince me that was more costly than the alternative.

Tip #4: When large amounts of cash are being handled, have a few people in the room to count it. Now this is after you’ve already recorded the cash transaction. It’s just a secondary signing-off on what has been collected. My ideal situation was when we had police officers on duty at events and I could have one of them sign off on the cash-counting.

Tip #5: Use platforms like Eventbrite.com or charityauctionstoday.com to track higher price or high volume sales. This makes it all clear and easy for accounting to track money in and out. The transaction fee you pay is well worth the credibility it lends to your nonprofit.

Tip #6: When cash sales are inevitable and tracking isn’t an option, limit your cash handlers. When I was Executive Officer for a youth sports league, we protected our volunteers by only having people covered by our officer and director insurance working the admission gates. Those people were often sitting alone all day with lots of cash in a box. Other league officers picked up excess cash frequently but we also made sure they were covered by insurance in case something happened.

Hopefully your organization’s bylaws require the adoption of a financial report each month. Tip #7: Even if your nonprofit doesn’t require a monthly financial report, present one anyway. Make sure the report is in a format your particular board will appreciate. That might mean trying a few ways until you land on one they respond positively to. I can’t even tell you how many varieties of financial reports I’ve created over the years. It might sound like a waste of time, but if it’s not delivered in a way they can digest it, they will not benefit from it (which means your organization doesn’t benefit either)! You as director may have protected yourself from accusations of hiding things, but the nonprofit will limp along until your board really takes ownership of the financial picture.

Which takes me to the last point. Tip #8: You aren’t a superhero. I imagine I’ve said this before in a blog, but I say it multiple times in each leadership training. You are a member of a team, not the whole team. One of the most damaging things a leader can do to an organization is begin to take on tasks that are someone else’s responsibility. It becomes too difficult to correct the blurring of the roles once they’ve been corrupted. Does it mean a bill might be paid late? Does it mean you lose a sponsorship? Does it mean you have to downscale or eliminate a program? Yes. Yes. And Yes. But that is much less costly than doing someone’s job for them. And it isn’t sustainable for you. You’re a pretty amazing leader, but you aren’t superhuman and sooner or later, your body or psyche will remind you of that.

Dealing with money is always about my least favorite part of the job. I got into nonprofit work to help people and to uplift my community. But proper handling of your nonprofits money will either make your mission easier or make it flat-out impossible. There’s no downside to being too cautious about your organization’s integrity. So carve out some time to analyze how you handle money and implement some ways to improve it!