“The ‘financial framework’ is the term for the policies, procedures, regulations and standing orders we use to make sure we’re taking proper care of public money.” – Powys County Council

Similar to a business, it is imperative to establish a robust financial framework for an NGO. A financial framework provides an organised system that guides and supports the financial operations and structure of the organisation.  It includes internal financial control mechanisms to prevent financial mismanagement such as misuse or theft of funds and assets, non-compliance of an organisation or government policies and regulations, and inaccurate financial reporting. NGOs also face several problems, including inadequate resources, lack of capacity building, lack of performance measurement instruments, and inefficient management. Setting up a proper financial framework will help resolve some, if not all, of them.

Anne Frank once wrote, “No one has ever become poor by giving”. But to give, you need to have. Every organisation needs funding to operate. Like any organisation, NGOs need money to cover their costs- capital costs, operation costs, overhead costs, staff costs, etc. NGOs, in particular, depend primarily on grants and donations for survival.

What happens when the organisation runs out of money? Donations are made at random, and grants are often subjected to conditions. With a limited budget and uncertain cash inflow, NGOs often have to curtail their spending at the cost of quantity and quality of their work. Under these circumstances, NGOs find it difficult to plan for the long term and ensure the longevity of their humanitarian programmes. Preemptively, NGOs should develop a stable funding source and steadily achieve autonomy from donor funds and grants.