Runyon Kersteen Ouellette 1

Why Collaborative Finance? Cost Savings Access to Expertise and Resources Not Otherwise Available to Some Smaller NPOs For “Hosts”, Ability to Defray Costs of Having Resources On Hand Runyon Kersteen Ouellette 2

Finance/Accounting Objectives Stewardship of Resources and Accountability for Same Availability of Decision-Useful Information Reporting Requirements to Funders and Others Compliance with IRS and other regulatory requirements Runyon Kersteen Ouellette 3

Key Accounting Areas Cash Receivables and payables management Payroll processing and reporting Tracking of restricted contributions and their use Tracking of revenues and expenses by program, particularly with respect to Federal and State funding Runyon Kersteen Ouellette 4

Key Accounting Areas, cont’d Budgeting and planning Adherence to loan covenants Endowment management and administration Ensuring compliance with OMB Circulars, etc. Runyon Kersteen Ouellette 5

Potential Issues Internal Control Considerations Generally speaking……… - Authorization and approval functions must still reside with “client” entity - “Host” entity should be acting as an agent only Runyon Kersteen Ouellette 6

Potential Issues, cont’d Document transmittal and storage Accounting software and client access to same Timeliness and responsiveness of “host” to multiple “client” entities Insurance requirements and formalized agreements Runyon Kersteen Ouellette 7

Range of Models “Full Service” - Host performs virtually ALL finance duties such as - Vendor invoice processing and payment - Payroll processing - HR administration - Billing and receivables management - Cash receipts and deposits ?????? - Account reconciliations Runyon Kersteen Ouellette 8

Range of Models “Full Service”, cont’d - Internal use financial and management reports - External use financial statements - Coordination with outside auditors and others Runyon Kersteen Ouellette 9

Range of Models “Limited Scope” - All initial transactional work retained by “client” - “Host” provides accounting services such as - Account reconciliations - Receivables management and reporting - Payables reporting Runyon Kersteen Ouellette 10

Range of Models “Limited Scope”, cont’d - Assistance with cash budgeting - Financial reporting and analysis - Coordination with outside auditors and others Runyon Kersteen Ouellette 11

Monitoring An important element of internal control Periodically review your model for….. Effectiveness Accuracy Efficiency Usefulness Runyon Kersteen Ouellette 12

Closing Thoughts - Wide variety of arrangements possible - Access to appropriate resources is critical - Choose arrangement that works for your NPO and enables you to pursue your mission Runyon Kersteen Ouellette 13