When the federal government changed the rules for grant management at the end of 2013, there was a little noticed change that occurred. Internal controls for nonprofits moved from a finance concept wrapped around the annual audit to an administrative requirement involving the direct program staff, finance, and management. In other words, internal controls moved out of the dusty halls of accounting and became everyone’s responsibility.
Big change for internal controls!
Whenever you’re implementing a big change in an organization, whether it’s strengthening internal controls or implementing a new software system, it is critical to have a strategy and get buy-in across all areas of the organization and not just rely on a few decision makers to ensure a smooth transition. Change is hard and building a strong internal controls structure when there has not been one previously takes time. That’s why I want to spend some time talking about building habits and values throughout all levels of the organization to increase organizational buy-in.
Here are 7 practices for building an internal control structure that will increase buy-in and stand the test of time.
1. Strive for integrity and transparency
“A single lie destroys a whole reputation of integrity.” –Baltasar Gracian
Demonstrating integrity and transparency starts at the highest levels of the organization and flows down layer by layer. Senior management and the board set the “tone at the top.” This is where the expectations for the organization are set and reinforced. Without integrity and transparency from the highest level, even the most committed employee will become discouraged and disillusioned.
A strong first step in building this practice is to communicate consistently, starting with the hiring process, that integrity and transparency are valued by the organization and expected of the employees.