Financial policies every NGO needs
The core financial policies a small NGO needs, what each should say, and how to write and roll them out so donors and auditors can trust your controls.
Short answer
Every NGO needs a short, written set of financial policies: delegated authority, separation of duties, cash and bank controls, procurement, expenses and travel, budget monitoring, record keeping, asset control, and conflict of interest. Each policy states who does what, in which order and within which limits. Keep them simple enough that your team follows them every day.
Key points
- Write policies you can really follow with your current staff and tools.
- Cover authority limits, cash, bank, procurement, expenses, budget, records and assets.
- No single person should start, approve and record the same payment.
- Train staff, ask them to sign, and review the policies at least every two years.
- Donor rules come first: check your grant agreement before you finalise a policy.
Why do financial policies matter?
Money problems in small NGOs rarely start with theft. They start with unclear rules. Who can sign? What happens if the finance officer is away? Who checks a payment before it goes out? Without written answers, people guess, and guesses create gaps.
Financial policies explain how your organisation handles money. They protect assets, keep records accurate, set limits for decisions and show donors that you have internal controls. The Mango handbook on financial management for NGOs describes four actions for internal control: direct (set the rules), prevent (stop wrong actions), detect (find what went wrong, for example with cash counts and bank reconciliations) and correct (fix errors and update the rules).
What is the difference between a policy and a procedure?
A policy is a short statement of the rule. A procedure explains how to follow it: who does what, in which steps and with which forms. NCVO recommends that procedures say who does what, what steps they take and which documents they use.
Example: the policy says "All payments need two approvals." The procedure says "The project officer requests, the finance officer checks the documents, the director approves, and the bookkeeper records."
Which financial policies should a small NGO have?
Use this list as a starting point. Add to it if your donors ask for more.
| Policy area | What it should say |
|---|---|
| Delegated authority | Who can approve spending, up to which amount, for which budget |
| Separation of duties | Different people request, approve, pay and record |
| Cash and petty cash | Safe storage, limits, counts, who holds keys |
| Bank accounts | Who opens accounts and signs, reconciliations each month |
| Procurement | Quotes, thresholds, selection records. See procurement policy |
| Expenses and travel | What is allowed, rates, receipts, how fast claims are made |
| Budget monitoring | Monthly budget against actual, who reviews, variance limits |
| Records | What to keep, where, and for how long |
| Assets | Register, tagging, annual count, disposal |
| Conflict of interest | Declarations and what to do when interests clash |
Many organisations also add policies on fraud and whistleblowing, payroll, and fundraising income.
How do you write a financial policy people will follow?
- List your real risks. Ask where money could be lost or misused in your own work: cash payments, field advances, shared costs, mobile transfers.
- Start with donor rules. Read each grant agreement for procurement thresholds, allowed costs and record rules. Your policy should never be looser than your donors' requirements.
- Write short, plain rules. One page per policy is often enough. Use job titles, not names.
- Set limits that fit your size. A rule that needs five signatures is useless in a team of four. Use separation of duties in a way that you can sustain, with the board treasurer as an outside check if needed.
- Name forms and timeframes. For example: "Claims are submitted within seven days, using the claim form."
- Test it. Run one real payment through the procedure and see where it breaks.
- Approve and sign. The board approves the policy. Each staff member signs that they have read it.
How do you roll the policies out?
A policy in a drawer does nothing. After approval:
- Hold a short training session for all staff who handle money or approve costs. Use real examples.
- Give new staff the policies in their first week. Our guide on onboarding new staff shows how to place this in the first 90 days.
- Check use. Once a quarter, pick five payments at random and check that every step was followed.
- Record exceptions and the reason for each. If the same exception happens often, the policy may need to change.
How often should you review them?
Review financial policies at least every two years, and sooner after a major change: a new donor with different rules, a change of leadership, a fraud incident or a move to digital payments. Note the review date on every policy.
In insecure or low-connectivity settings, plan for what happens when normal controls are not possible. For example, if an approver cannot be reached, who may approve in an emergency, up to which limit, and how is it reported afterwards? Write the exception rules before you need them.
How EMPO can help
EMPO is a trusted, Yangon-based training and consultancy provider and one of Myanmar's leading names in practical training for NGOs and CSOs, with 1,200+ people trained and 15 partner organisations. We teach in English and Burmese, online and in person across Myanmar. We offer budget management training and organisational development support, including policy development. See our training services or contact us. The Master Project Budget Tracker in our store can also help with budget monitoring.
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Questions people ask
Do small NGOs really need a written finance manual?
Yes. Donors and auditors expect one, and it protects staff by showing what is allowed. A small manual of 10 to 20 pages is fine, as long as it matches what you do.
Can we copy another organisation's financial policy?
You can use a template as a start, but change it to fit your size, staff and donors. A copied policy that your team cannot follow is worse than a short one that you follow every day.
Who approves financial policies?
The board usually approves them, often after review by the treasurer or a finance committee. Management writes the detailed procedures.