Standards for Canadian organizations

2020 Edition

Financial Management (CA-FIN) 3: Revenue and Investments

The organization works to ensure its long-term financial viability and achievement of its mission through active pursuit of diverse sources of revenue and proper management of investments.
2020 Edition

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Purpose

The organization's ability to achieve its mission is based on sound financial management practices that ensure efficient, data-informed use of its resources.
1
The organization's practices fully meet the standard, as indicated by full implementation of the practices outlined in the CA-FIN 3 Practice standards.
2
Practices are basically sound but there is room for improvement, as noted in the ratings for the CA-FIN 3 Practice standards.
3
Practice requires significant improvement, as noted in the ratings for the CA-FIN 3 Practice standards.
4
Implementation of the standard is minimal or there is no evidence of implementation at all, as noted in the ratings for the CA-FIN 3 Practice standards.
Self-Study EvidenceOn-Site EvidenceOn-Site Activities
  • Investment policy
  • Results of most recent investment review
  • Governing Body minutes and/or committee meeting minutes where investments were reviewed
  • Interviews may include:
    1. Governing body 
    2. CEO
    3. CFO

 

CA-FIN 3.01

The organization pursues stable, predictable sources of revenue through diversification and balance in funding streams consistent with the organization’s mission and programs.

Interpretation

Organizations meet the intent of the standard if they can demonstrate that they are actively pursuing stable and predictable sources of revenue, even if they have not yet achieved that goal.
1
The organization's practices reflect full implementation of the standard.
2
Practices are basically sound but there is room for improvement; e.g.,
  • The organization makes active efforts to diversify or strengthen resources but still relies primarily on one or two major funding sources.
3
Practice requires significant improvement; e.g.,
  • Management manages investments with little oversight of the governing body; or
  • The investment policy has not been reviewed or updated within the last three years.
4
Implementation of the standard is minimal or there is no evidence of implementation at all; e.g.,
  • The organization has no “fallback” position and has made little or no effort to protect itself from the consequences of dependence on a single source of revenue.

 

CA-FIN 3.02

An organization that invests funds has controls to ensure the proper management of investments, including a committee established by the governing body, as appropriate, that:
  1. follows, and biennially reviews, an investment policy that outlines acceptable levels of risk, criteria for contracting with investment advisors or firms, and protocols for making investment decisions;
  2. oversees and reviews both the investment of funds and the management, purchase, or sale of real estate, securities, and other assets;
  3. ensures practices conform to applicable legal and regulatory requirements; and
  4. reports the status of investments and investment recommendations to the governing body.
Examples: All nonprofit funds are invested and fall under the oversight of the governing body. This includes short-term investments like savings accounts, longer-term investments like stock, bonds, and mutual funds, as well as properties and other assets owned by the organization. The investment policy would, for example, specify how much of the organizations funds will be placed into savings accounts, which provide immediate access to those funds, versus longer term investments.
1
The organization's practices reflect full implementation of the standard.
2
Practices are basically sound but there is room for improvement; e.g.,
  • Investment policy was last reviewed and/or updated between two and three years ago.
3
Practice requires significant improvement; e.g.,
  • Management manages investments with little oversight of the governing body; or
  • The investment policy has not been reviewed or updated within the last three years.
4
Implementation of the standard is minimal or there is no evidence of implementation at all; e.g.,
  • The governing body plays no role in investment oversight; or
  • There is no investment policy.