Financial policies a non-profit board should adopt

The written financial policies a non-profit board should adopt, why a conflict of interest policy comes first, and how the books can enforce approvals.

By Achekam · 11 October 2026 · 4 min read · For Non-profit businesses in South Africa, Nigeria, Kenya

Many small non-profits run on trust. The founder knows every donor, the treasurer signs whatever the coordinator puts in front of her, and everyone assumes they share the same idea of what is reasonable. Then the organisation grows, a new programme manager books a conference hotel the board would never have approved, and nobody can point to a rule that was broken, because there was none.

Written financial policies fix that. They are not bureaucracy for its own sake. They are the board's way of saying, in advance and in writing, how money will be handled, so that staff do not have to guess and the board does not have to second-guess. This article covers which policies a non-profit board in South Africa, Nigeria or Kenya should start with, and how the books can enforce the approvals those policies set.

Why the board owns this

The National Council of Nonprofits, a United States body whose guidance is widely read in the sector, says boards have a fiduciary duty to ensure a charitable non-profit's assets are used in support of its mission and in line with donors' intent. It describes adopting financial policies as one way to ensure prudent financial management.

"Donors' intent" deserves attention. A grant for school feeding that quietly pays for a vehicle may be within the organisation's mission, but it is outside what the donor intended. The board answers for both. Policies are how it shows it took that responsibility seriously.

Policies to adopt first

The Council gives examples of common financial policies. Read against a typical small non-profit, they become a sensible first list.

Cash handling

How cash is received, counted, recorded and banked; who holds keys to the cash box; how soon takings from an event go to the bank. Donation boxes and event takings are where small organisations lose money most easily.

Travel reimbursement

Whether travel is reimbursed at all, and if so on what basis: actual costs with receipts, or a set allowance; what class of travel; who approves a claim. Without a rule, every claim becomes a negotiation.

The executive director's pay

The Council lists the board's role in reviewing the executive director's pay as a policy area in its own right. The director should not set their own salary, and the board should record how and when it reviews it.

Investments

How reserves and surplus funds may be invested, with what risk, and who decides. Even an organisation with a single savings account benefits from a short statement of what may and may not be done with its money.

Conflict of interest

The Council calls a conflict of interest policy perhaps the most important of all. It sets out how board members and staff declare interests, such as a relative's company bidding to supply the organisation, and how they step out of decisions where they have one. A policy that requires an annual declaration and a note in the minutes whenever someone recuses themselves costs little and protects a great deal.

Policies replace assumptions

The Council quotes Propel Nonprofits on the purpose of all this: financial policies clarify roles, authority and responsibilities for financial decisions, and without an adopted policy, staff and board members tend to operate on assumptions that may not be accurate.

That is the conference-hotel problem. The programme manager assumed the budget line meant she could book; the treasurer assumed anything over a certain amount came to him first. Both were acting in good faith. A one-page delegation of authority, saying who may approve what, would have prevented it.

A short delegation of authority

Put your own amounts and names in it. The structure is what matters.

Approvals the books can enforce

A policy on paper is only as strong as the habit of following it. Where the books themselves require the approval, the habit is easier to keep. Achekam does this at four points:

• Requisitions. Staff raise a purchase requisition stating what is needed, why and the estimated cost, and someone other than the requester approves or declines it. The "why" is where the budget line or the donor's grant can be named.
• Purchase orders. An order is raised from the selected quotation on an approved requisition. The person who raised the order cannot approve it, and an approved order can be cancelled with a reason. That puts the separation your conflict and procurement policies call for into the workflow.
• Bills without an order. Supplier bills are recorded line by line with VAT. A bill without a purchase order waits for approval before it posts, so the occasional unplanned invoice still passes a second pair of eyes. Bills can be paid in full or in parts from a chosen bank account. Bills that arrive without a purchase order covers how to handle them.
• Month-end close. Months can be soft-closed, hard-closed and locked. A closed month refuses postings from every source, and reopening a hard close needs a second approver. Before closing, the screen checks that the ledger balances and that no posting suggestions, unposted bills or unmatched bank lines are waiting. The figures the board reviewed cannot then change quietly afterwards.

If your organisation also wants a check for warning signs in purchasing, such as competing quotes that share contact details, see a procurement integrity review for non-profits.

Adopt them at the next meeting

The National Council of Nonprofits' page on financial management lists the common policies and links to examples. Draft the conflict of interest policy and the delegation of authority first, table them at the next board meeting, and record their adoption in the minutes.

General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.