Difference between revisions of "How to Start an NGO"
From NGO Handbook
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Once the NGO is legally incorporated (through an issued charter in most cases) an initial board of directors meeting should be held. The board members should officially adopt the bylaws in the first meeting because they should explain how the board functions. (In some countries the bylaws will already be established at this point by the incorporators depending on the governmental requirements.) The first meeting is important in establishing officers, committees, and discussing preliminary projects. | Once the NGO is legally incorporated (through an issued charter in most cases) an initial board of directors meeting should be held. The board members should officially adopt the bylaws in the first meeting because they should explain how the board functions. (In some countries the bylaws will already be established at this point by the incorporators depending on the governmental requirements.) The first meeting is important in establishing officers, committees, and discussing preliminary projects. | ||
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| + | == 9. Set Up An Accounting System == | ||
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| + | All NGOs need a system for recording where money comes from and how it is used. Because NGOs finances tend to be closely scrutinized, it is important to put an effective accounting system into place to deal with the nuances of nonprofit bookkeeping and reporting. Seeking the help of an accountant who can help set up a bookkeeping system and explain how to use it is highly recommended. Board members or business schools may be helpful in finding a volunteer accountant or an inexpensive one specializing in helping nonprofits get started. Often times NGOs have an accountant on the board who is familiar with these systems, which is also a useful option. | ||
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| + | It is important to decide whether the bookkeeping system should be cash or accrual. Cash based accounting is a system where: | ||
| + | *Revenue is recorded when added to a bank account. | ||
| + | *Expenses are recorded when money is withdrawn from the bank. | ||
| + | This system is very straightforward. However, it only tells the NGO how much money is in a bank account and nothing more. It does not reveal how much money might be owed to the organization or how much money the NGO owes. | ||
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| + | Accrual based accounting records: | ||
| + | *Revenue that is earned (may be before or after it is received) | ||
| + | *Expenses when incurred (may be before or after payment). | ||
| + | In general, it seems that the information provided through accrual based accounting is more useful to an organization than cash based accounting because it paints a broader financial picture. It allows an NGO to see not just its immediate payments and deposits, but also what kind of money they owe or may be receiving in the future. This allows an organization to be more aware of its financial status. | ||
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| + | Lastly, once the NGO decides what the bookkeeping system should be, it is essential that all financial transactions are documented and recorded into financial journals by the bookkeeper. Transactions should be numbered and put in chronological order and thank you notes are essential for every donation received. Thank you notes should be copied and added to the journals, as well as check stubs and deposit receipts. The bookkeeper must be well organized in order to prevent the misuse of funds and ensure efficient spending for programs. | ||
Revision as of 10:49, 23 July 2008
Starting an NGO can be a very time-consuming process. It requires a strong vision and dedication from an individual or group that share a common concern about a community. If initiated correctly in an organized and strategic way, the services implemented to benefit the community can be very helpful and resourceful.
The following presents nine steps, in general chronological order, that are useful in the formation of an NGO. This paper acts as a broad “how to” guideline and these issues may vary depending on each NGO. It is important to realize that these situations also vary from country to country, as each one has its own specific requirements and recommendations.
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