Best Practices

For a comprehensive review of standards, see Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector produced by the Ohio Association of Nonprofit Organizations (OANO). Contact OANO to discuss their program, Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector.

The Greater Columbus Arts Council recommends the following best practices to not-for-profit organizations that receive GCAC/City of Columbus grant awards.

Organizational Management and Governance

• The organization adheres to local, state and federal charitable laws.
• The organization operates with updated bylaws, code of regulations, and strategic plan.
• The board of trustees shall be community-based and ultimately responsible for the organization.
• Terms of board service ensure rotation among community members, vitality of governance of the organization, and therefore ensure community partnerships and longevity of the organization.
• Policies are in place to guard against duality of interest.
• Financial due diligence is maintained, through a system of financial controls and independent financial review. Charitable organizations should consider independent audits when average annual expenses reach $250,000.
• Organizations receiving Operating Support annually are expected to monitor the systems of the organization regularly, and to upgrade to the highest standards possible. Planning, governance, staff organization, and financial management are crucial to a well-run organization, and ultimately offer a professional environment to produce the highest standards of artistic work.

Financial Management and Governance

• The board of directors adopts policies and procedures that will ensure sound fiscal management with timely, readable and accurate financial statements.
• Accrual accounting is the preferred method for all organizations, and is required for Operating Support applicants.

Guidelines for Audit presentation¹

Audited financial statements should include:

• Statement of financial position showing current vs. long-term assets and liabilities and segregating net asset classes in a columnar format;
• Statement of activities, segregating net asset classes in a columnar format and showing an operating surplus or deficit;
• A statement of cash flows; and
• A statement of functional expenses that ties to the statement of activities.

Be sure that your statements disclose:

• Self-imposed limitations on the use of unrestricted net assets (such as board-designated net assets);
• The value of any endowment or other funds including those that are permanently held for the benefit of the organization, but are not recorded as an asset by the organization;
• If applicable, compliance with a 30-day repayment option for working capital reserves, and/or net current assets.
• Full detail on the sources of unrestricted contributions; and
• Detail on the sources of net assets released from restriction.

Statements should represent an organization's financial information on an accrual or modified-accrual basis. Whether the organization's board of trustees reviews monthly or quarterly statements depends upon the size and scope of the business conducted. Monthly financial reports to the board are highly recommended by GCAC.

Funding sources should be identified in audits and annual financial statements. A classified Statement of Financial Position should clearly separate working capital reserves, borrowing between asset classes and endowment holdings (the latter may be disclosed in the audit notes).

¹Excerpts from Guidelines for Audit Presentation, National Arts Stabilization