Record-keeping for not-for-profits is essential for compliance, transparency, and smart financial decisions. Whether your organisation is small or large, keeping accurate records helps prevent issues. Also, it ensures your not-for-profit runs smoothly and confidently.
Why Record-Keeping Matters for Not-for-Profits
Not-for-profits must maintain reliable records to stay financially stable. In addition, having well-organised paperwork makes audits and funding applications easier to manage.
Demonstrate Financial Accountability
Good financial records build trust with donors and regulators. They also help track how money is spent. Therefore, clear records mean fewer questions and easier reporting.
Ensure Legal and Tax Compliance
Correct records help meet ATO and ACNC rules. For example, keeping tax documents for the correct period prevents fines. Also, good records help prove you’re eligible for concessions.
Support Strategic Decision-Making
Records help you plan better. When you understand your finances, you make smart choices about spending and saving. As a result, your organisation grows sustainably.
Essential Records to Maintain
Governing and Administrative Documents
- Constitution, trust deeds, and other setup documents.
- Meeting notes, internal policies, and yearly reports. These show clear leadership and accountability.
Financial Records
- Invoices, bank statements, and account checks.
- Income and spending reports. These documents help you monitor budgets.
- Year-end statements and audits. They show how well your organisation is doing.
Transaction Records
- Payroll and superannuation details. This keeps employee records in order.
- Lists of equipment, cars, and stock. For instance, tracking assets helps plan future purchases.
- Cash flow reports and donation logs. These reveal how your funds move and where they come from.
Grant Documentation
- Grant requests and approvals. These confirm transparency in your applications.
- Reports on how grants were used. They prove funding was used correctly.
- Documents showing spending matched the purpose. This increases future funding chances.
Special Record-Keeping Requirements
Additional Obligations for Charities
- Charities must keep records for seven years. This ensures ACNC compliance.
- Files must show clear financial and operational details. In turn, this builds trust with stakeholders.
Deductible Gift Recipient (DGR) Obligations
- DGRs must record all donations. Doing this keeps the organisation transparent.
- Funds must be used for the main purpose of the charity.
- These documents should be stored for five years for tax compliance.
Consequences of Poor Record-Keeping
Poor record-keeping can cause serious problems:
- You may face fines or penalties.
- Tax benefits could be lost.
- Planning and daily operations become difficult. Therefore, strong record-keeping is vital.
Best Practices for Record-Keeping in Not-for-Profits
Use Digital Record-Keeping Systems
- Use cloud-based software like Xero or Quickbooks.
- Back up files regularly. This protects data and ensures nothing is lost.
Train Staff and Volunteers
- Teach your team about good record-keeping. It reduces mistakes and boosts accuracy.
- Review records often. That way, problems are found early.
Maintain a Secure Storage System
- Store paper records safely. Limit access to trusted staff.
- Use strong passwords for digital systems. This protects private information.
Final Thoughts on Record-Keeping for Not-for-Profits
Keeping clear records is key for success. Understanding what to store and for how long keeps your organisation strong. Good records build trust, attract funding, and support growth.
Need Help with Record-Keeping for Not-for-Profits?
If you need guidance on record-keeping for not-for-profits, our experts can help. Contact our team today to ensure your organisation remains compliant and financially secure.
Source: Australian Taxation Office