MakeHaven Financial Policies and Procedures

Guidelines contained in this document are designed to:

• Protect the assets of the organization by establishing internal controls;
• Ensure the maintenance of accurate records of the organization’s financial activities;
• Provide a framework for the organization’s financial decision making;
• Establish operating standards and behavioral expectations;
• Serve as a training resource for staff; and
• Ensure compliance with legal and reporting requirements.

Roles and Responsibilities

Executive Director: Coordinate financial operations, responsible for reporting to board, developing budget, enforcing policies and managing cashflow.

Bookkeeper (independent contractor): Monthly reconciles income and expenditure between accounts and Xero.

Accounting Firm: (CPA) - Prepares 990 and annual financial review. Annual contract.

Treasurer (elected by board) : Point of contact on financial decisions for Director and Board. Annually signs 990.

Finance Committee  (Appointed by Treasurer): Oversight of policy, development of annual budget for board, advice and oversight related to financial performance.

Signing Authority

Executive Director has signing authority for MakeHaven other than where specifically delegated in writing or as legally granted to board.

Signing: Signing Educational Agreements

The Executive Director agreed that the Education Coordinator could sign agreements on behalf of MakeHaven as long as all the following conditions are met:

• Agreement is within scope of Education Coordinator duties
• Uses previously approved (by Executive Director) templates for agreement with instructor or teacher' assistant, without substantial modification aside from amounts, dates and activity details.
• Agreement is with contract instructors, not ability to hire employees
• Agreement involves less than $1,000
• There is no conflict of interest, or potential conflict of interest  
• Agreement does not bind MakeHaven to any duties or responsibilities beyond those basic expectations directly related to supporting an instructor in their teaching duties.

Any significantly modified instructor or teacher assistant agreements should be reviewed and signed by the Executive Director.

RESERVES

MakeHaven will maintain a reserve balance of funds of $20,000 minimum. Utilization of reserve funds requires written consent of the treasurer. The goal is to build reserves totaling three months of operating, approximately $150,000.  

Reserve funds should be stored in low risk interest bearing account.

Loan(s)

Only under the direction of the board of directors the Executive Director may undertake additional loans.

Line of Credit

A $30,000 line of credit was established at Webster Bank with the knowledge and consent of the board of directors. The intention of the line-of-credit is to manage mismatches in cash flow, such as when payment from a grant is overdue. The executive director will make every reasonable effort to minimize the utilization of the LOC.  The executive director is required to notify the board president and treasurer when utilizing the line-of-credit.  Line of credit may only be utilized in excess of the expected receivables with the advance written consent of president of the board, and ongoing oversight of the finance committee.

Reporting

All MakeHaven financial transactions are tracked in Xero accounting software. The Executive Director will send a monthly financial report to the treasurer within 10 business days of the end of the previous month, the full board will receive quarterly reports. The most recent report will be shared with the finance committee before any meeting of the committee. The board will be presented with a Profit and Loss Budget Comparison and a Balance Sheet, in addition other reports may be included.  Reports will be updated to the most recently closed month at each meeting, as well as any additional detail requested. Reports are to be presented as accrual. The Tresuerer will have view access to Xero, the CPA will have

Employee Payroll

Payroll is automated via Gusto.com under management Executive Director. Executive Director requires explicit written permission from board chairman to change own salary settings.  

Contractor Payments

Contractors are paid via Melio through approval integration in Xero. Operations manager is given permission to add and pay contractors.  Education Manager may be given permission by Executive Director to add instructors and program leaders for payment, and pay them according to their agreements.

Accounts

The Executive Director and Treasurer will both have signatory access on all bank and credit card accounts. The operations manager, and bookeeper at the Executive Director’s discretion, may be given  access to accounts which carry balances (or, in the case of credit accounts, spending limits) that remain below $20,000. Online banking services will have administrative access granted to the Treasurer upon request if allowed by service. Access to accounts will be given to bookkeeper and CPA at Executive Director’s or Treasurers discretion for the purpose of reviewing and retrieving records only.

Materiality

All discrepancies should be investigated to identify if isolated or an example of a systematic error. Systematic errors always demand attention and correction. We do recognize that hIstorical and special case and technical corrections are necessary. These include correcting errors in automated xero statement imports, or in account transactions. The response is scaled by materiality.  

Account Reconciliation

Accounts should have transactions imported into Xero bank statements for reconciling against. Automatic imports where possible. A PDF copy of the statement document as the ground truth will also be kept on file for each account. These will be tracked monthly against statement totals in Xero. Immaterial corrections are made annually to ensure accounts are in sync.

The bank reconciliation report should be reviewed monthly by the executive director that is reviewed by another person or vetted AI.

Procurement

Procurement, purchasing authority, competitive selection, contract administration, and budget-line spending authority are governed by the separate MakeHaven Procurement Policy.

Sales Tax

Sales taxes are paid quarterly on any items sold in the materials store or used equipment. Sales tax is not charged for educational workshops or membership. Paypal and cash fees posted to buyers are inclusive of tax. This means that the buyer does not see the tax charged but MakeHaven calculates it as included in the cost. Xero has been set up to calculate this tax according to the account it is added to.  After the paypal and cashbox are reconciled into Xero a report, the “Sales Tax Report” is run which calculates the tax owed to the state. The bookkeeper runs these reports, notifies the Executive Director and submits taxes quarterly. The report used to determine the amount submitted, and a PDF of the submitted amount are attached to the transaction in Xero.

Restricted Funds

Restricted funds may only be accepted with the approval of the Executive Director. The Executive Director is expected to consult the board if accepting a restricted donation greater than $20,000.  Programmatic restricted fund from grant or donation may be restricted to:

Scholarships - reducing fees based on need for people beyond sliding scale.

Specific programs - For example Pathways to Trades.

These funds will be tracked using the tracking feature in Xero.

Scholarship Accounting

Donations specifically raised for Scholarship will be treated as temporarily restricted funds. Scholarships are tracked in chargebee and updated in xero Quarterly by the Operations Manager. The update in Xero releases the restriction on equal funds from the scholarship account. Only grant or donor dollars specifically designated by donor are placed in the scholarship funded account. If scholarship designated funds are depleted so that the fund is 0, then scholarship expenditure is not “spent” in Xero.

A detailed process for scholarship accounting is documented.

Reimbursement

Reimbursement will only be made for approved MakeHaven expenses. It is preferred that staff use their organizational credit cards for expenses but MakeHaven will reimburse approved organizational expenses made personally that have appropriate supporting documentation. Documentation for staff purchases must be submitted as a reimbursement request or at https://www.makehaven.org/reimbursement. MakeHaven reimbursements for mileage on MakeHaven business (not including commuting to and from work) at the recommended IRS rate.

MakeHaven reimburses partially for equipment (phone and computer) purchased for use at MakeHaven. In addition MakeHaven will reimburse a portion of the cost of mobile device subscription for individual employees and for specific commuter expenses. This is set to autopay for the calendar year and is subject to review annually at first of the year by the executive director. Details of this policy are kept in:
PERSONAL POLICY

Recurring health expense reimbursement is reviewed annually by Treasurer, executive director setup monthly payment to employee based on HRA Plan. Recurring Approved Reimbursement is made via Gusto.

Instructors, Volunteers and Members may request one time reimbursement at https://www.makehaven.org/reimbursement with staff approval. Appropriate documentation must be provided (such as receipt). If purchasing used equipment or raw materials that do not have an associated receipt, on purchases up to $500 staff should take steps to ensure the purchase is prudent and reasonable, and include documentation of their documentation process (such as email exchange with seller) demonstrating staff have done a reasonable comparison to ensure MakeHaven is not paying more than fair market value. Purchases of greater than $500 will have a higher standard of documentation including saving the fair market comparison with the documents, and requires the approval of the executive director.

CASH: RECEIVING

Documentation: Whenever cash is received by staff, it must be placed inside an envelope. The exact amount received, as well as the purpose of the payment, should be clearly written on the envelope. Envelope should be deposited in cash box. If the customer is on site, ensure they witness the process. This step is crucial for transparency and trust-building.

Receipt Generation: A formal receipt should be promptly generated (using Xero or Chargebee for membership) receipt may be emailed to the customer as proof of payment. Preferably receipts are generated by a system that allows future review and access to customer. Ensure the receipt clearly states the amount, date, and purpose of the payment.

Cash Box Accounting Record: The transaction must be recorded in the Xero accounting software as either an invoice or a "received money" entry. Attach any supporting documents related to the transaction, such as listings, agreement-to-buy emails, or other relevant correspondence. At time of emptying cash box any transactions not already in xero should be added. The Cashbox is emptied monthly.

Cash box recoding is done by the Operations Manager.

Direct Membership Fee Deposits: In cases where members wish to deposit cash directly in cash box for membership dues without staff intervention, they should see clear instructions to adhere to the following process:

• Clearly write all relevant details on the envelope.
• Deposit the envelope securely into the cash box.
• Email staff@makehaven.org about the deposit so it can be matched to a Xero or Chargebee invoice in a timely fashion.

CASH BOX: REMOVING AND COUNTING CASH BY STAFF

Scheduled Times: Establish set times near end of month for cash removal and counting.

Two-Person Policy: Always have at least two staff members present during the cash counting process. This reduces the likelihood of errors and promotes accountability.

Secure Location: Count cash in a secure, private location away from public view to reduce the risk of theft or discrepancies.

Counting Procedure:

• Remove envelopes one at a time and verify the written amount with the actual cash inside.
• Count cash twice to ensure accuracy.
• Record the total amount counted on envelope for deposit.

Recording:

• Document the total amount, date, and time of counting.
• Both staff members present should sign the cash count sheet to verify the counted amount.

Discrepancies:

• If there's a discrepancy between the written amount on the envelope and the actual cash, note it on the cash count sheet.
• Investigate and resolve discrepancies as soon as possible.

Depositing Cash:

• Once counted, prepare the cash for deposit.
• Record the deposit details, including bank, date, and deposit slip number.
• Ideally, deposits should be made as soon as possible after counting.

Documentation:

• Update the spreadsheet

Security:

• Ensure that the cash box is locked when not in use.
• Cash for deposit should be put in envelope, in the executive director’s inbox and locked in staff room.

Related Policies

• HRA Plan
• Disposal Policy
• Procurement Policy
• Policy for Disposal of Assets
• Conflict of Interest Policy
• Personal And Benefits Policy
• Organizational Financial Accounts and Contacts