Touchstone

Benefits

Developing a written procurement policy is a necessary control for your ministry – laying out guidelines to follow when purchasing and minimizing risk of fraud. Corruption is the number one fraud scheme that affects non-profits – examples include purchasing schemes, invoice kickbacks, bid rigging, etc.

A procurement policy clarifies the roles, decision-making processes, authority, and responsibilities for procurement. As with other policies, the goal of the procurement policy is to provide structure and consistency.

A procurement policy is:

• A practical tool to ensure compliance.
• An organizational reference document – explaining how things will be done.
• A piece of the control environment (eliminating fraud and theft).
• A guide for decision-making.
• A training aide.

Planning Considerations

• Identify the purpose of a finance policy for your organization.
  • Some essentials to the purpose are:
    • Conforming to sound accounting principles and practices.
    • Enabling management to obtain accurate and timely financial reports whichpromotes sound financial management.
    • Ensuring correct and accountable use of funds and resources.
  • Conduct a needs assessment with your finance and executive committee.
  • Identify roles and responsibilities.
  • Conduct an informal risk assessment.
  • Draft the financial policy.
    • Suggested areas for a finance policy:
      • Philosophy
      • Authority
      • Roles and Responsibilities
      • Conflict of Interest
      • Budgeting
      • Gifts
      • Organizational Financial Processes
    • Review, discuss and document feedback from staff and board leadership.
    • Present the final version to the board for approval.
    • Train staff on the financial policy.
    • Review the policy regularly (recommend every six months).

Required Resources

1. Human Resources

• Someone will need to lead the development of the policy.
• Someone will need to document the policy discussions and decisions.
• Someone will need to gather feedback from stakeholders.
• Someone will need write the policy.
• Someone will need to conduct training.
• Someone will need to lead regular policy review.

2. Collateral

• Document the draft(s) and final approved policy.

3. Time

• Time to conduct a needs assessment.
• Time to meet with stakeholders.
• Time to write draft policy and make changes.
• Time for the board to meet to approve the policy.
• Time to train staff and volunteers on the policy.
• Time to review the policy regularly.

4. Space

• Space to hold meetings and to conduct training.

5. Cost

• The cost varies.
• Considerations include meeting/travel expenses and types of communication (email, phone, text).