A publication of the Office of Management and Budget containing rules nonprofit organizations must follow when operating under federal grants. Also referred to as OMB Circular A-110.

A publication of the Office of Management and Budget containing rules nonprofit organizations must follow in classifying costs when operating under federal grants. Also referred to as OMB Circular A-122.

A publication of the Office of Management and Budget defining when and how nonprofit organizations operating under federal grants must obtain program and agencywide independent audits. Also referred to as OMB Circular A-133.

Management practices that establish goals and outcomes to be accomplished, assign responsibility to individuals for their accomplishment, monitor individual performance, and devise plans to correct or improve performance in achieving desired goals and outcomes.

A record of money the organization owes to other people or organizations. A bill that has been received but has not been paid. A recurring expense (rent, insurance) that is due but has not been paid.

A record of money that other people or organizations owe to this organization. A bill to a family for child care becomes a receivable until it is paid. A claim to a funder for program expenses that this organization already has paid becomes a receivable until it is paid.

Activities (and expenses) associated with operating and managing an organization as a whole.

What a program can legitimately do with grant or contract funds.

Things grant or contract funds can be spent on.

The one required meeting of a board of directors. Officers are elected at the annual meeting. Most organizations use the meeting to review and celebrate the accomplishments of the previous year.

What an organization owns, or controls, that provide it with value.

Agreements that a community action agency has to submit to federal funding sources in writing. Assurances guarantee compliance with such legal practices as nondiscrimination in employment, maintaining a drug-free workplace, and a prohibition on lobbying activities.

Examination of an organization’s financial records. A sample of the financial transactions completed during a year is examined for compliance with program requirements and generally accepted accounting practices. The firm conducting the audit then issues an audit opinion on whether the financial records can be assumed to be accurate.

Specific instances cited by auditors where the audited organization’s financial records are judged not to be accurate, because of identified mistakes or because required accounting practices have not been followed.

The conclusion of the firm conducting an audit about the accuracy and reliability of an organization’s financial records. An audit opinion can be qualified or unqualified.

The amount of time between when a claim (or invoice) for payment is sent and payment actually is received.

Another term for a statement of change in financial position.

See fringe benefits.

A description of how money will be spent for a particular activity. Alternatively, a description of how money from a particular source will be spent. Some budgets will have multiple sources of revenue.

The organizational charter. Defines the membership, organization, and responsibilities of the board of directors.

A fringe benefits package that allows employees to choose from a list of options. An employee whose spouse has health insurance coverage might be able to choose a child care subsidy instead of insurance, for example. This benefits package might also be called a flex plan.

See duty of care.

Movement of funds into and out of the organization’s bank account(s).

A study of the amount of money coming into and going out of your cash account over some period of time (per month, quarter, or year, for example). An annual cash flow analysis helps to demonstrate the effect of the delay between paying an expense and having it reimbursed by a funder, for example. A cash flow analysis is also critical for establishing the amount of a line of credit.

A written document summarizing the cash flow analysis.

Funds actually in the organization’s bank account. This is money that can be spent.

The practice—particularly in fiscal management—of assigning duties to staff members so that no one person completely controls an entire process.Example: One staff person could prepare checks for issuance, but a second person would have to review them and approve that they be issued.

Combining many sources of revenue to support a single activity or program. Used in this Guide to also mean the use of CSBG funds to support activities for which sufficient funds from other sources cannot be found.

Federal legislation providing funds to organizations whose specific purpose is to help persons in poverty. The act defines what an organization eligible to receive funds should look like. One of the major requirements is that eligible organizations have a tripartite board of directors.

How employees are rewarded for their time. Includes monetary compensation as wages or salaries, as well as non-monetary compensation in the form of time off, health insurance, and other fringe benefits.

A written legal document between two parties stating the responsibilities of each of the parties. Contracts usually are used to formalize how goods or services will be purchased by one party from a second.

Written documents that explain how individuals or programs will bring substandard performance up to acceptable levels. These plans are usually created in response to monitoring of employee performance by a supervisor, or following a report from a funder monitoring process. See also monitoring report.

See also Community Services Block Grant.

Paying administrative costs directly out of specific programs or budgets.

A board member’s responsibility to act carefully and deliberately when handling the organization’s business. Includes regular attendance at meetings, becoming knowledgeable about the organization’s business, and seeing to it that action and decisions of the board are appropriately documented.

A board member’s responsibility to act in the interests of the organization; to support and advance the mission.

A board member’s responsibility to follow “the rules” that control what the organization can do. These rules take the form of laws and regulations created by funders, as well as internal policies and procedures that define how the organization will carry out operations.

Document provided to all staff members. Contains the internal rules controlling employee activity and behavior. Usually includes personnel policies and procedures. Might also include certain administrative procedures.

The highest ranking employee of the organization. (Might also be called the president or chief executive officer.) The executive director is the only employee of the board of directors. The executive director hires and supervises all other employees, based on the organization’s personnel policies and other administrative procedures.

Items on which money will be spent. An organization’s chart of accounts will contain many line items, or specific categories, into which expenses will be classified to simplify tracking.

A responsibility exercised for others. A for-profit board acts as a trustee for the stockholders. A nonprofit board acts as a trustee for the community. The three-part make-up of a community action board directly reflects its responsibilities to the interests of low income people, to the public sector, and to the community at large.

A smaller group from the board of directors with the specific responsibility of overseeing the financial operations of the organization. Its membership and responsibilities will be spelled out in the by-laws.

All of the money transactions conducted by your organization. Ranges from receipt of checks, to issuing of checks, to transfer of funds from one account to another. Includes classification of expenses and reporting to funding sources.

Operating a program or activity consistent with the terms of a grant or contract. Also refers to conducting financial activity according to the rules established in the federal management circulars A-110, A-122, and A-133. Auditors and program monitors provide the board with reports on whether your organization is exercising financial compliance. See also monitoring report.

A monthly summary of financial activity in a program or budget. A financial statement also can be called a statement of revenue and expenses.

A fringe benefits package that allows employees to choose from a list of options. An employee whose spouse has health insurance coverage might be able to choose a child care subsidy instead of insurance, for example. This benefits package also might be called a cafeteria plan.

Ways of compensating employees other than in salary. Typical fringe benefits include health insurance, pension plans, and required insurances such as unemployment and workers compensation. Also covers leave time such as holidays, vacation, and sick leave.

The amount of calendar time within which funds from a program budget can be spent. Many public programs use the federal fiscal year of October through September as a funding period.

Insurance that protects the organization against lawsuits brought because of the actions of employees while carrying out the organization’s business.

An award of funds, usually from a unit of government or an organization. Grants are made for specific purposes, activities, or programs.

Insurance that pays a portion of an employee’s medical expenses. Usually provided by an organization as a fringe benefit. The organization may pay all or a portion of the insurance premium, with the employee responsible for the balance.

Portions of employees’ state and federal income taxes that are withheld from their paychecks and regularly sent to federal and state government.

Creating a pool of all administrative costs that cannot be assigned directly and then allocating those costs to all programs or budgets based on a single criterion. That criterion could be the percentage each program’s staff costs are of total agency staff costs. The criterion could be each program’s total budget as a percentage of the total organizational budget.

Groups into which jobs in an organization can be collected because they exercise comparable types of responsibilities, require similar levels of preparation, and receive similar levels of pay. See also pay categories.

An agreement to pay for the use of a piece of equipment or property for a fixed period of time, after which the property reverts back to the entity that issued the lease. A mechanism often used for vehicles and buildings.

Time that employees are paid for but during which they are not working. Common types of leave include holidays, vacation, and sick leave. The amount of leave employees earn is set by the board of directors and is contained in the organization’s personnel policies and procedures.

All of the financial obligations an organization has to others.

Insurance that protects members of boards of directors from lawsuits. See also officers’ and directors’ liability.

An arrangement by a bank or a vendor to provide your organization with unsecured credit for a specific period of time. Your organization will use only part of the amount approved at any period of time. Interest will be charged on the amount actually borrowed, for the specific amount of time before the money is repaid.

Financial obligations that can be paid off in more than one year.

See duty of loyalty.

Formal practices for organizing and controlling the activities of an organization and its employees.

A document containing all of the programs operated by an organization. Unduplicated line items are used, so that similar expenses can be identified across many programs. This also makes it possible to determine how much is being spent in the whole organization for line items such as salaries, space, telephones, etc.

Federal medical insurance coverage for senior citizens. Paid for out of a payroll tax.

The social objective for which the organization was created.

Either a verbal or written report to the staff and/or board from a funding source about its on-site examination of a program. The monitoring report should be sent directly to the president of the board of directors. The report may address questions of both program and financial compliance.

A contract with a financial institution to borrow money to purchase real estate. The lender retains title to the property until the mortgage is paid off.

The difference between an organization’s assets and its liabilities. Could also be called net cash position

Another term for a statement of assets, liabilities, and net assets.

Actions that cannot be treated as a legitimate part of a particular program. Charging Head Start parents a fee is a non-allowable activity.

Expenses that cannot be charged to a particular program. Purchase of real estate is not an allowable activity in most programs.

See duty of obedience.

Insurance that protects members of boards of directors from lawsuits. See also liability, officers’ and directors’.

See also A-110, A-122, and A-133.

A situation in which the amount of money spent year-to-date exceeds the amount that was projected to be spent in the current amount of time. Most frequently, budgets assume that approximately 1/12 of any budget line will be spent per month. It is possible to project seasonal spending, recognizing that in some activities expenses run higher than average in some months and lower in others.

See also job categories.

Research into what similar jobs pay in various localities. Involves identifying similar but not identical jobs, as well as localities that compete with the area of recruiting.

The highest and lowest amounts that can be paid to a position, or to the positions in the same job category.

A board-approved document defining the range of wages or salaries that will be paid for positions in each of the approved job categories. The wages may be expressed in hourly and/or annual terms. The pay structure may establish low and high limits for each pay range. The structure could also divide the pay ranges into a number of steps.

Legally required taxes that are based on an employee’s pay. Examples include Social Security, Medicare, and federal and state income tax.

A savings account dedicated to provide retirement income. Some community action employees can enroll in state civil service retirement funds. Some community action agencies provide privately managed 401(k) plans. Employers are usually required to make contributions to these funds. Employee contributions may be set up as required or voluntary.

A payment for meal and incidental expenses paid to employees when they are working out of their organization’s service area.

The management practices that hold staff members accountable for performing their jobs. Includes such things as job descriptions, short- and long-range plans, and performance reviews. See also accountability systems.

A formal process of evaluating how well employees are doing their jobs. Usually conducted once a year. Should produce a written document signed by the evaluator and the person evaluated.

The framework of rules defining the conditions under which employees are treated. Policies state the goals the organization seeks through employment. Policies will define the amount and kind of time off that employees may take, such as annual leave, sick leave, holidays, jury duty, and so forth. Procedures define specific steps that will be taken to apply policies. Procedures explain how employees are to document and report their time. A time sheet procedure would explain how to document different types of employee time, such as work hours, annual leave, sick leave, holidays, etc.

A hands-on count and recording of all of an organization’s physical assets. Typically involves vehicles and equipment.

Written documents that establish how internal processes will be carried out. Policies are general statements of intent and principle. Procedures are step-by-step instructions for specific organizational processes. Most community action agencies have financial and personnel policies and procedures.

A savings plan that allows employees to set aside funds before they are taxed. The funds can be used to pay child care and medical expenses. Funds not used during the year are lost to the employee.

Activities by which employees can increase the skills required to perform their jobs. Can include training sessions, professional conferences, and higher education. Some organizations provide support for professional development by paying some or all of the costs for staff to participate in such activities.

A formally defined activity designed to provide a specific benefit to a target population. Example The Head Start program delivers early childhood development services to preschool children whose families’ incomes are at or below the federal poverty line.

Operating a program or activity consistent with the terms of a grant or contract. Also refers to conducting program activity according to the rules established in federal guidelines or regulations which have been published in the Federal Register.Auditors and program monitors provide the board with reports on whether your organization is exercising program compliance. See also monitoring report.

The reason a nonprofit organization was organized. Should be stated in the organization’s by-laws.

Statement by an audit firm about the ways in which the audited organization’s financial records may not be completely accurate or reliable. A qualified opinion may be accompanied by audit findings.

Meetings held by the board of directors based on a published, usually annual, schedule. Meetings may be held monthly, bi-monthly, quarterly, or on any other agreed-to schedule. Meetings are typically held on the same day each month, such as third Thursday, last Monday, etc.

Rules for the operation of programs or grants created by funding sources. Program regulations are produced by the government entity that operates programs. These regulations are usually based on the legislation that established the program. The OMB circulars define how recipients of federal funds must handle and account for that money.

All sources of income to a program or activity. These will be listed at the top of a program budget.

The acronym for Results Oriented Management and Accountability. ROMA is an initiative of the Office of Community Services, which oversees the Community Services Block Grant. The core of ROMA is a set of six national goals which can be organized into three sets: Goals for families; goals for communities; and goals for agencies.

An analysis of cash purchases by staff to determine how much sales tax has been paid. Your community action agency should not pay sales taxes, because it is a not-for-profit organization. A sales tax audit could help you discover that significant payment of taxes could be avoided by purchasing through approved vendors and by using purchase orders. Such a study should also single out programs or individuals who are most responsible for taxed spending.

When an organization performs an internal examination of how it is operating a program. Self-assessment looks specifically at whether program activities and expenses are allowable. It examines whether program participants feel they are being well served. It looks to see if changes in participants’ lives or living conditions are being achieved. A self-assessment should identify areas in which program performance could be improved. It identifies steps that will be taken to improve performance.

Financial obligations that must be paid off in less than one year.

Time for which employees are paid when they cannot work because of sickness or injury.

Public retirement benefit paid for out of payroll taxes. Identified as FICA on employee pay stubs.

A meeting of the board of directors not on the annual calendar of regular meetings. The mechanism for calling a special meeting is spelled out in the by-laws. Special meetings often require a specific number of days of advance notice and the agreement of a specific number of board members, as well as the publication of an agenda. The meeting can only deal with items on the published agenda.

A comparison, usually made annually by your auditors, of what your organization owns against what it owes. This comparison should also be examined for changes over periods of the last three to five years. This document might also be called a net worth statement.

An annual comparison of an organization’s assets and its liabilities. The statement determines whether an organization has more assets than liabilities, that is, whether it would have any funds remaining if it liquidated and went out of business. Is often referred to as a financial statement or monthly financial statement.

A document that sets out multi-year goals to which an organization has committed itself. The plan also may contain the organization’s mission statement as well as some explanation of the values to which it adheres.

The individuals or groups who were identified as those who would receive the services of a particular program or service.

The requirement in the Community Services Block Grant Act (CSBG) that community action agencies have boards of directors whose members equally represent low income people, the public sector, and the private sector.

A form of general liability insurance policy.

A situation in which the amount of money spent year-to-date falls below the amount that was projected to be spent in the current amount of time. Most frequently, budgets assume that approximately 1/12 of any budget line will be spent per month. It is possible to project seasonal spending, recognizing that in some activities expenses run higher than average in some months and lower in others. Underspending also can represent serious misjudgment of anticipated costs. In addition, it could indicate that some necessary expenses have not been made.

Funds that have been advanced to an organization but that it cannot yet prove it has spent on approved activities and expenses.

State sponsored insurance paid for from a payroll tax. It provides minimum payments if a person becomes unemployed.

Statement by an audit firm asserting that the audited organization’s financial records may be regarded as accurate and reliable. This opinion affirms that all required program, regulatory, and accounting requirements appear to have been followed.

Money (or other assets) that belong to an organization without terms or conditions. Such funds may originate as donations or contributions, as excess revenue against expenses, or as interest earned on deposits. The organization is free to apply or spend these funds as it sees fit.

A loan which does not involve the lender obtaining title to the property that has been purchased. A lender may make a claim for cash or other organizational property as payment for an unsecured loan.

Accident insurance that covers expenses resulting from work-related injuries and illness. The cost is paid from a payroll tax, based on how hazardous each employee’s type of work is relative to the work of other employees.

Another term for such administrative procedures as reimbursement for personal use of vehicles, use of computers and Internet services, maintaining client confidentiality, and so forth. Might be a section in the employee manual.

A term for describing the time between the beginning of a funding period to the date of a financial statement. The term is often used as the heading for a column showing total transactions in each line item over this period of time: all of the revenue received, all of the expenses paid.