Fundamental for the reliability and survival of an organization, accountability in the third sector aims to demonstrate to donors how the money received was applied.

It is necessary that this process is developed in a clear, organized and, especially, transparent manner.

To help you with this mission, we, the team at Codeblog, have prepared an article with some infallible tips to optimize your institution's accountability. Read on and check it out!

The importance of accountability in the third sector

As much as transparency is a fundamental issue in any organization, for third sector institutions, this practice is even more important. After all, organizations can only continue to operate if they receive donations from private companies, individuals and government agencies.

Therefore, if an NGO does not provide adequate accountability, it could suffer serious consequences that impact the trust of the institution and its supporters.

It is also worth noting that those most affected will be the communities or people assisted by the organization, since they will stop receiving the services provided.

How to carry out accountability in the third sector?

Bearing in mind that transparency is the main focus of accountability in the third sector, it is important that this process is carried out based on efficient and secure practices. Only then will the NGO not run the risk of suffering potential losses when solving problems caused by confusing procedures.

Check out some tips we have prepared below to simplify your organization's accountability.

1. Make a budget

Indeed, NGOs depend on the funds raised to carry out their activities. However, there are some imposed restrictions and limitations on amounts, which must also be directed towards people management, hiring outsourced services, purchasing office supplies, equipment, etc.

Only with a good budget is it possible to guarantee full control over all costs. After all, with this document in hand, all organizers will know how much they can spend on each line item, in each type of expense. Furthermore, the control of disbursements within the daily routine can prevent any line item from exceeding the imposed limit.

2. Separate accounts by Cost Center

A Cost Center is a highly efficient management tool for grouping revenues and expenses. Furthermore, it also offers a more complete analysis of operations and is an excellent way to separate cash inflows and outflows by activity or project.

From the moment a manager begins to manage donation money, they need to ensure impeccable management to maintain the reliability of projects and the institution. In this regard, the Cost Center helps in identifying each transaction carried out for a given project, according to each social action.

Therefore, separating accounts by Cost Center is indispensable for accountability in the third sector. In this way, it is possible to differentiate each cent destined for each project. After all, the money may be one, but its distribution is multiple.

By introducing this practice, an NGO can inform the donor which projects their resources were allocated to.

3. Track accounts periodically

It is recommended that a third sector institution projects its budget for the 12 months of the year, covering the fiscal year from January to December. It is also important that an analytical study of the results be done every month.

To prevent any expense from getting out of control, accounts should be compared to the budget weekly. Thus, management can monitor, in an assertive manner, whether the prepared budget has been correctly implemented.

4. Always keep supporters informed about expenses and results

Acting with transparency also means keeping your supporters always informed about your organization's expenses and results, so they feel motivated to continue donating resources.

Furthermore, based on transparent accountability, an NGO considerably increases its scope and impact capacity.

To produce appropriate reports, it is necessary to take into account your scope of activity and mission.

In other words, a report needs to detail where the resources that enable the organization's activities come from, the infrastructure necessary for the development of activities and implemented actions, in addition to the target audience reached.

There are several ways to inform supporters about an organization's finances, such as social networks, informative flyers, institutional websites, etc.

5. Invest in a good management system

Finally, technology is a great ally to optimize the accountability process in the third sector. But, unfortunately, many institutions still underestimate the power of technological advances and do not even have an automated financial management system.

A good management software can offer more agility in recording information related to financial transactions, such as purchase authorizations, payments and monthly or weekly tracking.

Furthermore, a comprehensive system also automates the entry of data related to accountability and minimizes the chances of rework for the team. Anyway, if you want to know more about how to improve the accountability process, contact Codebit. We have a team of qualified professionals, highly prepared to meet the demands of third sector entities.

Otherwise, keep an eye on Codeblog. Soon, we will have many updates here. A big hug and see you in the next post.