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Finance

Every director and board member of a nonprofit would like to have a large endowment, reserve cash in the bank, and a surplus at the end of every year. Unfortunately, most of us know that this might be a dream instead of reality. Without these tangible signs of financial strength, how can you know if your organization is financially healthy? Financial health is about more than just reserves and endowment balances. Having a large budget or complex accounting system doesn’t always result in good management and long-term success. Just as our personal health depends on our behavior, so the financial health of a nonprofit depends on management behavior – policies and practices.

Resources

“The information and training materials on this website are supplied by the author and have not been edited by us. We have provided these materials as a central resource for our users, but we encourage you to carefully evaluate their relevance and accuracy for your own purposes. Please note that the views and opinions expressed in these materials do not necessarily reflect those of our organization, and we cannot be held responsible for any errors or omissions they may contain. It is your responsibility to verify the accuracy and appropriateness of these materials before using them. Proper attribution to the original authors is always required when using these materials, and you should also follow any applicable copyright or licensing requirements.”

10 Common Benefits of Dashboard Reports

There are probably as many ways to work with dashboards to realize these benefits of critical thinking and board engagement as there are board members. The following are 10 common ways that have proven in practice to be valuable.

Project-Based Rental Assistance

Initially, project-based assistance was provided through the Federal Housing Administration (FHA) in the form of a mortgage subsidy. Mortgage subsidies reduced the cost of developing rental housing; in return, HUD required owners to agree to use restrictions that limit contract rents and limit occupancy to households meeting a program’s income limits. These programs did not provide the direct rental assistance needed in order to be affordable to extremely low or very low income households.

Board Fiduciary Roles

With board service comes fiduciary roles. Information and orientation will help directors understand the responsibilities.

Income Tax Treatment of Cooperatives

This Table of Citations was prepared by Ashley Lyon, a 2008 legal intern at the National Council of Farmer Cooperatives, to accompany Cooperative Information Report 44, Parts 1 through 5, Income Tax Treatment of Cooperatives, by Donald A. Frederick. Mr. Frederick, formerly with USDA Rural Development’s Cooperative Programs Division, is now Director of Education for the National Society of Accountants for Cooperatives (NSAC). USDA appreciates their work on this document to help people who are studying the Federal income tax treatment of cooperatives.

Understanding Cooperative Bookkeeping and Financial Statements

This guide has been designed to present the very basics in bookkeeping and cooperative financial statements. The format is designed for those that have limited bookkeeping or accounting experience. It is not meant to be all inclusive, but to provide guidance in developing the cooperative’s record keeping system and understanding financial statements.

Coop Business Plan Template

Coop Business Plan Template chart

Research on the Economic Impact of Cooperatives

The cooperative ownership model is used in a wide variety of contexts in the United States, ranging from the production and distribution of energy to delivery of home health care services for the elderly. Although cooperative businesses have been responsible for many market innovations and corrections of market imperfections, little is known about their impact as an economic sector. Until this project, no comprehensive set of national-level statistics had been compiled about U.S. cooperative businesses, their importance to the U.S. economy, or their impact on the lives and businesses of American citizens.

Cooperative Financing and Taxation

The field of cooperative finance is very specialized. The features of a cooperative make its financial characteristics and requirements not well understood by many in the financial community. Despite this, the general rules of finance apply equally to cooperatives as well as any other business enterprise. Specifically, a cooperative must have adequate equity capital and maintain sufficient cash flow to service its debt.

Base Capital Financing of Cooperatives

A responsive and impartial equity accumulation and redemption program is an important tool for helping cooperatives become and remain adequately capitalized. A well designed and operated base capital equity plan serves as just that kind of equity management too

Resilience In A Downturn: The Power Of Financial Cooperatives

This report provides a timely contribution to the global discussion on alternative approaches to promoting sustainable development goals in the aftermath of the global economic crisis. It shows how the success of financial cooperatives during the global financial crisis can provide a credible alternative to the investment-owned banking system. We hope that it will be of interest to policy makers in partnering with financial cooperatives for enterprise development, insurance against poverty, and decent work.

Directors in Arrears

It goes without saying that every housing co-op expects all members to pay their housing charges. But life happens and sometimes members do go into arrears. Arrears create financial difficulties for housing co-ops because they reduce the funds available to meet expenses like the monthly mortgage payment, capital repairs, property taxes and maintenance. They also cost all members money, because at the end of the day, if the arrears aren’t paid, the other members must pay up.

A conversation about Income Verification

Each assisted household declares its total monthly income, before deductions, to the co-op office. With a few exceptions, all household members eighteen (18) years or older need to submit solid proof of their income. They’ll also need to provide their most recent Notice of Assessment from the Canada Revenue Agency.

Guidance For Grants And Agreements

Guidance For Grants And Agreements Pamphlets

Characteristics of Financially Healthy Nonprofits

Every director and board member of a nonprofit would like to have a large endowment, reserve cash in the bank, and a surplus at the end of every year. Unfortunately, most of us know that this might be a dream instead of reality. Without these tangible signs of financial strength, how can you know if your organization is financially healthy?

After the Mortgage is Paid Off: Changes to the Governing Documents

When HUD is no longer involved, there are two schools of thought as to whether the governing documents should be amended. There is the ADo Nothing School.@ The rationale given is that by operation of law, the obsolete references in the articles and bylaws are void; thus, it is unnecessary to amend them.

Allocations Policy

The allocations policy has the following objectives: · to enable the co-op to offer low cost housing to those who cannot meet their housing needs elsewhere · to allocate properties by balancing housing need with “co-operability” · to ensure that the co-op’s Equal Opportunities Policy is implemented in allocations, transfers and exchanges

Annual Audits - Board Responsibilities

Securing an annual audit of the cooperative’s financial records is the responsibility of the board of directors. Because the board acts as trustee of the corporation’s assets, it is responsible for safeguarding, auditing, and appraising the cooperative’s financial resources. The board performs these duties on behalf of members, stockholders, and creditors. The audit is a fundamental part of this trustee responsibility and the cost of the audit should be considered a normal business expense. In other words, adequate funds should be budgeted annually for an audit.

An Assessment Of Loan Regulations For Rural Housing Cooperatives

All of the cooperatives were organized in the late 1970s or early 1980s. They range from eight to thirty-nine units, located in either the countryside or on the edge of small towns. The members are all low income, and many of them have lived for years in the co-op. Each of the co-ops has faced major crises, and they all struggle with issues of ownership and governance. Unfortunately, they have largely struggled in isolation, remote from any mutually supportive networks, or even contact with other cooperatives.

Balance Sheet Cheat Sheet

The balance sheet – also called the Statement of Financial Position – serves as a snapshot, providing the most comprehensive picture of an organization’s financial situation. Chart

Balance Sheet Ratios and Analysis for Cooperatives

The balance sheet presents a detailed listing of what a business owns, owes and its net worth at a specific point in time. It is a stock measure of the business' financial condition.

Base Capital Financing of Cooperatives

Management of equity capital is the most important financial activity in a cooperative. Successful management of equity requires a responsive and objective capitalization program. A base capital plan, because it is a complete equity management tool, meets that requirement.

On Creating Simple, Accessible Budgets For Small Coops:

Sometimes your coop may not need a complex budget, and your members may find a smaller simpler budget is easier to explain to the membership, and easier to maintain. In particular, some coops might have a layer of budgeting that is specific to the “house”, including utility bills and food purchases, and then a second layer for the “coop”, including lease/mortgage payments, taxes, and other official items.

Capital Reserve Planning: A Guide For Federal-Program Co-ops

This new edition of our capital reserve guide is one of those tools. It’s meant to help your co-op take stock of your building’s condition, and create the physical and financial plans you’ll need to keep the co-op in good shape. Because if we want our co-ops to still be serving the housing needs of Canadians in 2020, we had better start laying the groundwork now.

Current Trends in Cooperative Finance

In recent years three important trends have become apparent among grain marketing and farm supply cooperatives. These farmer owned firms have been rapidly investing in infrastructure, reformulating profit distribution and equity strategies, and have pursued consolidation with other cooperatives. This manuscript explores the factors contributing to those trends, the implications for cooperatives leaders, and the impacts on farmer members.

Cooperatives in Economic Development

The purpose of this study was to learn more about cooperatives’ role in economic and community development programs in communities throughout Wisconsin and Minnesota.

Feasibility Study Online

A feasibility study is an important step in business development. Information File C5-65, What is a Feasibility Study will help you understanding the concept of a feasibility analysis and what it means for business development. Information File C5-64, When to Do and How to Use a Feasibility Study provides you with a framework and the decision points needed for using a feasibility analysis in business development.

Homeowner Assistance Fund Guidance

The Treasury Department is issuing this guidance regarding the Homeowner Assistance Fund (HAF), which was established under section 3206 of the American Rescue Plan Act of 2021 (the ARP). This guidance may be updated, revised, or modified at any time, and the Secretary of the Treasury may waive the terms of this guidance in her sole discretion to the extent permitted by law.

Managing Your Cooperative’s Equity

The purpose of this publication is to provide a guide for cooperative management teams so that they can do a more effective job of managing equity capital. Regardless of the type of capital program used, there are pointers provided to help achieve and then maintain the type of balance in the equity accounts that allow adherence to cooperative principles.

Monthly Management Reports to the Board

A board’s ability to make sound financial decisions is the cornerstone of any successful co-op, but the information needed for good decisions can only come from management. These comprehensive, user-friendly tools were developed by the Agency to assist managers with the important duty of reporting monthly to client boards.

Over-Housing under the Rental Assistance Program

Every household paying a reduced charge under CMHC’s Rental Assistance Program must declare its income and composition once a year. The household must promptly report changes to either one that occur between annual reviews. A household receiving assistance is considered over-housed if it has a unit with more bedrooms than the co-op’s occupancy standards permit.

Preservation Options for Section 236 Properties

Owners of Section 236 properties play a critical role in providing affordable housing for low-income families and individuals across the nation. As these mortgages mature, thousands of low-income elderly, special needs residents, and other households are at risk of losing affordable housing.

Project Driven Membership Model

Membership models are evolving. This article is about a unique dues model in a Ukrainian association. But first the background in the USA. Most associations rely on dues for half of their budget. A handful have dropped their dues entirely, surviving off of access fees for benefits, programs and services.

The Legal Aspects Pitfalls of Cooperative Refinancing

A large number of cooperatives are contemplating refinancing their existing mortgages. Several reasons exist for this. First, interest rates are at an uncommonly low level which makes it rather advantageous to take out a loan. While the existing mortgages are typically low, the rates now are extremely attractive and may not last much longer.

SELF-AUDIT OF COMMON STANDARDS for U.S. Nonprofit Organizations

The nonprofit community in the United States is well established with commonly accepted practices and government required standards. Donors have come to expect certain behaviors from U.S. ministries, and generally assume that they can rely on organizations to conduct themselves in a predictably professional manner. Some of these expectations include corporate conduct such as:

Adopting a Values Statements

With increased scrutiny on corporate boards, many directors are taking time to identify the core principles (values) for which to govern and manage the organization. The values statement reflects the wisdom of the board and guides future organization leaders and staff. [Adopting values is not cause for amending the bylaws or mission statement.]

What Are Patronage Refunds?

The purpose of a cooperative is to provide a service to its member-users at the lowest possible cost, rather than generate a profit for investors. However, service at cost doesn’t mean the cooperative operates that way on a daily basis. It doesn’t for at least two good reasons: (1) it doesn’t know exactly what its costs are on a daily basis; and (2) as a business in the private enterprise system, the prices it pays

Finance Toolkit

Whether we like it or not, the financial rules, regulations and best practice for co-operative and community benefit societies are not exactly the same as those for companies. Financial advice for companies is relatively easy to access. It can be found online, in print, or face-to-face through professional services. For societies, the financial waters are not necessarily as easy to chart. Even financial advisors, accountants and/or auditors may have little to no experience of dealing with societies. And while some rules and regulations are the same or similar for societies and companies, others are very different.

Determining Income And Calculating Rent

Owners must determine the amount of a family’s income before the family is allowed to move into assisted housing and at least annually thereafter. The amount of assistance paid on behalf of the family is calculated using the family’s annual income less allowable deductions. HUD program regulations specify the types and amounts of income and deductions to be included in the calculation of annual and adjusted income.

Fluctuating Income / Income Averaging

You can calculate fluctuating income through several acceptable methods, provided you use the same method for all members in a similar situation. Your co-op is required to conduct an annual income review for all households receiving rental assistance, but for fluctuating income you could choose to review household income more often.

Nonprofit Impact Matters

The report is designed for the 12.3 million nonprofit employees, more than 64 million nonprofit board members and volunteers, and tens of millions of donors who generously support the work of nonprofits. We want you to have free access to a trusted resource that shares information about the extraordinary American treasure known as charitable nonprofits.

Adopting Special Assessments: Legal and Procedural Considerations

For various financial reasons, many Illinois community associations choose to fund large-scale repair projects or other major common expenses at least in part through special assessments. If an association adheres to the appli­cable legal requirements for special assessments and follows through on the procedural details for adopting a special assessment, the association should be well positioned to smoothly implement the special assessment and to minimize disputes relating to payment of the special assessment.

Working with Financial Statements Guide for Cooperative Members

This report is designed to help members understand and analyze their cooperative’s financial statements. The financial statements contained in a cooperative’s annual report are the members’ chief source of financial information about their cooperative.

Financing Cooperative & Mutual Housing

The final report of the Commission on Cooperative and Mutual Housing (Bringing Democracy Home)1 highlighted the need for consideration of the role that cooperative and mutual housing could play in national housing strategy. The Finance Group2 was established to analyse existing financial models for developing cooperative and mutual housing and identify routes and models for the financing of future schemes.

A Guide to Financial Management

A housing cooperative is a specialized corporation which has obtained a mortgage loan, used it to build housing for its members, and collects monthly carrying charges from its members--who are both residents and owners--with which it operates and maintains the housing and repays the mortgage loan.

An Assessment Of Loan Regulations For Rural Housing Cooperatives

All of the cooperatives were organized in the late 1970s or early 1980s. They range from eight to thirty-nine units, located in either the countryside or on the edge of small towns. The members are all low income, and many of them have lived for years in the co-op. Each of the co-ops has faced major crises, and they all struggle with issues of ownership and governance. Unfortunately, they have largely struggled in isolation, remote from any mutually supportive networks, or even contact with other cooperatives.

Questions and Answers on Capital Replacement Reserve Plans

A capital replacement reserve plan is a strategy for keeping your co-op in good repair into the future. A plan tells you how long the chief elements of your property should last and how much money to put aside for their replacement or for major repairs.

Examples of Action Plan Goals

The goals listed below are not mandatory and are meant to provide an example of the types of activities you might already be doing that could be included in your action plan. You are free to use the examples below in your plan or think of other goals.

Questions and Answers Housing Charge Increases

Can't our co-op cut expenses instead of upping the housing charges every year?
The short answer, almost always, is no. There is little fat in co-op budgets. Your co-op has no control over its major expenses, like mortgage payments and taxes, and limited control over other large costs, like insurance and utilities. Inflation is also out of your control

Mutuality And Accountability In The Housing Association Sector

It can’t be a coincidence that in a lot of the communities throughout Britain that have had the greatest loss through deindustrialisation and jobs going elsewhere voted most to leave.

Measuring Coop Financial Performance

In order to know how healthy a co-op is, how well it is functioning, the board should be aware of trends in its performance over an extended period of time. The co-op's status is the result of many actions by many people over a long period of time. Only by understanding long-term trends can the board devise effective means of improving operations.

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