Send me more money!

-

 

Sound ridiculous?

But what about when the funder is also the decision maker for the salaries of your unionized employees? 


Being in the social services field, many of our contracts are for delivering services on behalf of the government, both provincial and federal. In our particular jurisdiction many of the employees of nonprofit entities have become members of the same bargaining agent as government workers which means our funders have also become the negotiator of how much we may in salaries and benefits. Unfortunately, these salary decisions extend to our other programs, regardless of who funds them.


This incestuous relationship came to a head this year where employees were given a pay raise which included retroactive pay for the prior year as well as current, the compounded effect being 14%. Having to pay the raises was a contractual obligation on behalf of the nonprofits; unfortunately recovering these funds from the decision makers was the next challenge, and although they eventual came good for it, the process was lengthily and the attitude being they were doing us a favour.


There are other challenges when working for the government including their financial administration laws and policies which are not the same as the ones the nonprofit organization is governed by. With this, how they want certain transactions reported are in conflict with the requirements of our regulators.


Unfortunately the bureaucrats sometimes need to be reminded we are not an extension of them, we are our own legal entity who has a different set of rules to live by. One fact which compounds the problem is when government program officers are not finance professionals themselves yet are given responsibility for managing program funding and the associated reporting; sometimes this results in contractors being asked to do something which violates the financial reporting requirements they are governed by.


Here is a little tip for you: if you are going to give an employee financial authority and accountability, provide them appropriate training.


 


Comments

Post a Comment

Popular posts from this blog

Admin Allocation - 10% is a Myth

-
Image
  This week I am revisiting how Administrative Costs are allocated to the various programs of a nonprofit organization, and this is where the science versus art of accounting collide. Most program funders articulate a maximum percentage for administrative services typically at 10%. What can vary is what they consider as Administration versus Program Delivery. For example some will consider Information Technology as administrative costs where others consider it program delivery. Liability Insurance is another example. Some will allow 12% versus 10% but consider certain costs to be included in administration where others consider the same as program costs. Then there is accommodation costs: some are power users of office, service, and reception space, where others are not. This leads me to accounting school where we covered what are called Cost Drivers. Cost Drivers are factors which drive costs: for example square feet may drive janitorial cost where cubic feet may drive heating costs.
Read more

Serving the public is a business

-
Image
  The nonprofit and public service sectors are often misunderstood when it comes to their place in the business world and the transferability of the skills of those who work in the industry. When most people think of the term ‘business’ they associate it with buying, making, or doing something with the intention of selling it and turning a profit which they will either reinvest into another earning endeavor, or spend on either a life sustaining need, or a frivolous want. Businesses normally require an investor of sorts who uses either their own money or that of others, to purchase the necessary infrastructure and materials, and hope it ends well otherwise they are in trouble. However, there is another type of business which although does not include an investor who aims to earn a profit, still participates in making or doing something, the activities of which have financial implications. This is the nonprofit and public sector.  So, why do I consider nonprofit a ‘business?’ Simple: we
Read more

Nonprofit Financial Management - Means to an end inverted

-
Image
A significant difference between private and public sector is what I call ‘means to an end inverted’ where in private sector, the thing you do is the means to an end which is money; in the public sector, money is the means to an end which is the thing you do. That being said, serving the public is a business when you are being paid for a deliverable.   Schools, service organizations, sporting clubs, emergency services, and social welfare programs all have two things in common: they are there to provide citizens or members a service, and they are accountable to the funders. Whether the program is funded through federal, state/provincial or local taxes, or through donations, service fees, or membership dues, the concept is the same.   Why is the inversion of Means to an End important for those who operate in the nonprofit and public service sectors? It has to do with the philosophy of why you do what you do, and if you are doing it for the right reasons. Entrepreneurs are there to ma
Read more