Easy Non-Profit Financial Filing System

It’s a typical non-profit office day and you are working on the accounts. Let’s imagine you’ve paid a bunch of bills, entering each one into your accounting software. Let’s also imagine you’ve opened the mail and there are a few receipts as well as a grant payment. And finally, you create a couple invoices to mail out. Great, everything has been handled, but now what do you do with all of the paper? Do you file by month? Do you file by vendor? Do you file by grant program? Do you keep copies?

Before you toss everything into one big pile of frustration, and ignore it, consider who will be looking at those files and how it will affect your non-profit. Likely, you will have designated board members who will review financial files at regular intervals for signing, but they don’t see all the files all at once. Depending on the laws and regulations where you live, your non-profit is very likely required to have an annual audit, or a financial review. That auditor is going to go through ALL your financial files for the whole operating year, looking for irregularities, fraud, and misstatement. Keeping your financial documents clean and tidy, with accurate supporting documentation in the right place, will go a long way to demonstrate your honesty, organization skills, and accuracy of statements. A tidy financial filing system matters to the reputation of the non-profit and the reputation of the executive director.

Let’s start with some of the basics. Most smaller non-profits won’t have enough financial documentation to warrant filing by vendor, so filing by month is a better option.

For each month, you’ll need a folder for (at least) each of the 3 basics: payments, deposits, and bank statements. I label all my folders at the beginning of the year, and place them in order by month, starting with the first month of the operating year (we don’t all start in January), going in order through to the end of the operating year. My files literally say: ‘February 2022 – Payments’, ‘February 2022 – Deposits’, and ‘February 2022 – Bank’. And (don’t hate me) I handwrite right on the folder, but you can use printed labels if you like.

You can expand within each month’s set of folders, if needed, for other folders such as monthly credit card reconciliations or debit card petty cash reconciliations. You might label these, something like: ‘February 2022 – Master Card (John)’. You can expand to include folders for other types of financial products your non-profit uses. Your auditor is usually a great source of information to help you decide the additional folders you need, but if you are stuck with a cranky auditor, talking to a neighbouring non-profit will also help.

I keep additional folders in my financial files for the year. I have folders labeled ‘To Be Paid’ and ‘To Be Deposited’. As bills or payments come in, I don’t always have time to process them on the spot, they often must wait until I handle accounts at scheduled times (usually weekly). BUT if I were to get hit by a bus, I’d want someone to be able to look at my files and clearly understand what transactions have been completed and what transactions are pending. Additionally, I keep a copy of all invoices in the ‘To Be Deposited’ folder to match up to payments when they come in.

Other folders I keep are ‘To Be Signed’ for completed transactions that need a board signature. I like to send these transactions out for signing in batches. Once they are signed, I sort them into the correct monthly folder.

I also have folders for copies of ‘Receipts’, ‘Notes for the Auditor’, ‘Memberships’ for the year, and ‘Board Meeting Minutes’. The last one might make you wonder. Board minutes in with the financials. I keep complete board files in a digital format, but my auditor likes to see a signed hard copy of minutes, so I provide it right in with the financial documents.

Every single financial transaction throughout the operation year, gets a cover page as it is processed.

Every single financial transaction throughout the operation year, gets a cover page as it is processed. I’ve explained how to do that in previous posts on paying the bills and receiving payments. 

A note about grant files. I keep grant files separate from financial files. I keep everything pertaining to a grant, in the grant folder, in chronological order. When a grant payment is received, I keep the original of the payment in the financial folder, and a copy of the payment in the grant folder. A paperwork duplication, true, but a strong paper trail is a good thing.

An organized filing system for your non-profit accounts, is going to deliver three successes.

• First, you are going to be so much more organized and that is going to translate into less time spent working on the accounts and a lot more peace of mind.
• Second, your auditor is going to notice. That will translate into a faster audit, fewer questions, and just maybe, no adjustments (something we all strive for).
• Finally, a tidy financial filing system is going to protect the reputation of the non-profit and the reputation of the executive director.

So, what are the key steps you need to remember put these ideas into action today? Start by looking at the folders in your financial files. Do you have these, or some variation of these, basics?

1. Payments, for each month
2. Deposits, for each month
3. Bank statements, for each month
4. To Be Paid
5. To Be Deposited
6. To Be Signed
7. Receipts
8. Notes for the Auditor
9. Memberships
10. Board Meeting Minutes

When you handle a non-profit’s financial files, keeping things organized can feel overwhelming when you don’t know what system to use. Try out these 10 basic files to conquer the mess. You can do this!

Try out these 10 basic files to conquer the mess.

Thanks for taking the time to read my ideas. My mission is to take the mystery out of running a small non-profit. If you know someone who needs to read this, why not grab the link, and share it with them. Let’s work together to make non-profit financial files clean, tidy, and auditor ready.

-Christie

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Hi, I'm Christie Saas, former board member, current Executive Director, and non-profit volunteer. I remember well, those early years when I lacked the training, the confidence, and the work-life balance to focus on becoming the best non-profit leader I could be.

Fast-forward past many bumps in the road, lessons learned, and you’ll find me still in the trenches, but a little wiser, a little calmer, and a whole lot happier. I love my work and I want to help you love yours too.

I created ChristieSaas.com to give you tools, tips, and templates to remove the mystery of learning to run a small non-profit. If you’re a brand-new non-profit leader, or a little more seasoned, someone who’s looking to make a meaningful contribution and still have time for a full life away from the job, you’re in the right place.

© Christie Saas 2022 All Rights Reserved

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