make guide for new board members - how money flows

[lianilychee]

related - see this convo https://open-austin.slack.com/archives/G036X8Z2Q/p1733693749926819?thread_ts=1733433601.278869&cid=G036X8Z2Q

[lianilychee]

done, here's the guide

[lianilychee]

@jcklpe hi, you asked how money flows a while back. Does the diagram in this guide make sense? If so, can u go ahead and close the ticket?

[jcklpe]

@lianilychee this helps some but what I really think we need, and what I was trying to ask about, is some central summary of accounts and budget etc. Like when money gets spent, how does anyone else see what money is getting spent on etc. From what I can tell we are actually required by the bylaws to maintain regular yearly financial statements, and accounting records. My question here is basically: where are accounting records? Where is money going to and from? The diagram helps with some of this but it doesn't give the granular actions.

[lianilychee]

@jcklpe ahh gotcha, thanks for re-giving the context + q

SHORT ANSWER: Accounting records imperfectly exist as of 2024. The former treasurer, who started in 2018, didn't want to maintain annual accounting records following financial administration best practices, or even figure out who/how to outsource this work. So thru the course of going thru my duties I have had to make those records (and first learn from scratch how to do that)

MORE DETAIL:

There are the three established docs that summarize an org's financial standing. Grant applications also require these docs (hence, me learning from scratch). These docs are called different things based on private sector context vs NPO vs who's requesting, but this is what they're called in b-school. Definitions from Google:

• Balance sheet - Shows a company's assets, liabilities, and shareholders' equity at a specific point in time. The balance sheet equation is assets = liabilities + shareholders' equity
  • NPOs don't have equity
• Income statement - Shows a company's revenues, expenses, and profits over a period of time. The income statement shows how much profit or loss a company is making
• Cash flow statement - Shows the movement of cash in and out of a company over a period of time. The statement of cash flows shows how a company manages its cash position

These docs ☝ are Files D and E in this folder. I'd like to get to a point where someone creates these docs organically and on a cadence, aka not using a grant application as a forcing function. (Analogy, a product mgr should always be maintaining a product brief, not just creating one when someone asks.) Cuz that make the application process far more bloated and hectic than necessary. But that's not where we were last year.

Balance sheet, income statement, and cash flow statement aside -- the operating budget helps with general management and forecasting, and is an artifact that doesn't require accounting knowledge to rally around. I check this every ~2 weeks. 2025 budget - 2024 budget

There used to be some chatter about a "ledger" to record transactions, but ended up not having any sort of use case in the grand scheme of things

ANYWAY~ with all that said, lmk how you think is best to proceed, guide-wise, from here

[jcklpe]

@lianilychee Cool sounds good. I think Files D and E should probably have an "living document" existence independent of a specific grant application right? Sounds like what you're saying about a forcing function and the product brief stuff.

I think a ledger is the sort of thing I was expecting to see. I'm not very well educated on this stuff. I'm used to dealing with a bank statement ledger to track my personal expenses and budgeting. I appreciate your willingness to help me understand things better.

---

Before sending this I researched more to make sure I understood everything. As it stands it sounds like we need to get a living document going for the balance sheet and income statement. From what I'm reading the cash flow statement sounds a lot like a ledger. Only difference I could find online is that a cash flow statement doesn't generally include unpaid invoices etc in it's total etc. Either way I think we could probably find some software to automatically track and roll up this information into reports. I will look into this.

I think this issue can probably be closed for now.

[jcklpe]

@lianilychee This looks like it could be a solution to automate some of this accounting work: https://akaunting.com/plans

Looks like the free plan might work fine.