Helping NGOs do more with their money



A set of financial records, either kept on paper or on a computer.

Account Code

A code used to group specific types of transactions, e.g. ‘transport’ or ‘salaries’. Also known as Nominal Code.

Accounting Period

A specific period of time for recording and reporting financial activity; usually a month or a year.

Accounting Software

A computer programme used to keep an organisation’s accounts. Most Accounting Software is based on Double Entry Book-Keeping, which can make it complicated to run. Also known as an Accounting Package.


Money that you owe to a supplier for goods or services that you have received, but not yet paid for in full.

Accumulated Fund

Money an organisation may build up year by year through not spending all its income or by investing its funds. Includes the current estimated value of any fixed assets. Also known as General Funds, General Reserves or Reserves.

Acid Test

The ratio achieved by dividing Current Assets (excluding stocks) by Current Liabilities. It tells us if the organisation has sufficient funds to pay off its debts immediately.

Apportioning Costs

The technique of splitting shared costs between different parts of the organisation. E.g. Central support costs are normally apportioned to different activities.

Apportionment Policy

The policy that explains how shared costs are split between different parts of the organisation.


Something you own. Any possession or claim on others which is of value to the organisation. See also Fixed Assets and Current Assets.

Asset Register

A list of the organisation's Fixed Assets, usually giving details of value, serial numbers, location, purchase date, etc.


An independent examination of activities (e.g. financial records) which concludes whether they are in good order or not.

Audit Trail

The ability to track any recorded transaction through an organisation’s accounting systems, including checking original supporting documents.


The process of approving transactions, normally the decision to purchase or commit expenditure. Careful authorisation is a way of making sure that spending is appropriate and in line with the budget.

Back Donor

When funds are passed on from one organisation to another, the original donor is sometimes called the ‘back donor’.

Balance Sheet

A summary of how much an organisation owns (i.e. ‘assets’) and how much it owes to other people (i.e. ‘liabilities’) at any particular date.

Bank Book

A register which records all transactions passing through a single bank account. Also known as a Cash Book or a Cash Analysis Book.

Bank Reconciliation

The process of checking that your Bank Books and Cash Books agree with your Bank Statements at any particular date. This is an important check that your records are complete and accurate.

Bank Statement

A report produced by the bank, which lists all the receipts and payments made into a specific bank account and the balance that is held in the account on a specific date.


Beneficiaries are the people that NGOs and donors ultimately aim to help. They are the most important of all an NGO’s stakeholders.


The process of keeping all the financial records up to date in an organisation. This usually involves transferring details recorded on supporting documents into books of account or Accounting Software.

Books of Account Formal records of financial transactions which are kept by accounting staff, including: cashbooks, registers of assets and accruals, wages/salary books and others.


An amount of money that an organisation plans to raise and spend for a set purpose over a given period of time.

Budget Holder

A named individual who has the responsibility for managing a specific budget and has the authority to approve expenditure from that budget.

Budget Monitoring Report

A report which shows how much has actually been spent and received compared to the Budget. This is a key tool for financial management. Also known as a Budget vs. Actual Report.

Budget vs. Actual Report

A report which shows how much has actually been spent and received compared to the Budget. This is a key tool for financial management. Also known as a Budget Monitoring Report.

Capacity Building

The process of helping individuals and organisations develop skills and confidence so that they increase their capacity to act.

Capital Expenditure

Expenditure on equipment, property and other Fixed Assets which will be used to support activities over more than one year.

Cash Book

A register which records all transactions passing through a single account. Also used to refer to a Bank book.

Cash Analysis Book

A Cash Book which has columns for different types of expenditure, which can be used to analyse transactions as they are recorded.

Cash-flow Forecast

A report which shows exactly when specific receipts and payments will happen over a certain period, and the total amount of cash an organisation expects to have as a result.

Central Support Costs

Costs which cannot be allocated to a specific activity, department or project but which are general in nature. Also referred to as Overheads, Core Costs or Indirect Costs.

Chart of Accounts

A list of all the Accounts Codes used in an organisation’s accounting system, including a description of each code.

Closing Balance

The amount of money held in a specific account (e.g. a bank account) at the end of an Accounting Period.

Committed Expenditure

Money that you are committed to spending on specific goods and services from specific suppliers which you have not yet paid to them.

Core Costs

Costs that pay for central organisational support, not directly related to specific activities. E.g. including: office rent and electricity. Also known as Central Support Costs, Overheads and Indirect Costs.


The abuse of entrusted power for private gain. (Definition from Transparency International.)

Cost Centre

A specific activity (or group of activities) where costs are incurred or income generated. Cost Centres provide a useful structure for the accounts in organisations with several different activities or donors.


This means comparing the cost of activities to the results they achieve, as a way of reviewing whether your activities provide value for money. It is extremely difficult for NGOs to measure cost-effectiveness in practice.


Anyone the organisation owes money to.

Current Assets

Cash and other assets that are in the process of being turned back into cash (e.g. Debtors). In theory, they can be converted into cash within one year.

Current Liabilities

Debts that you have to pay back within the next 12 months (e.g. from suppliers, or a bank overdraft).

Current Ratio

The ratio achieved by dividing Current Assets by Current Liabilities. It tells us if the organisation is able to pay off its debts within 12 months.


Any person or organisation who owes you money.


A way of spreading the cost of a Fixed Asset over a number of years. Every year, a proportion of the original cost is charged from the Balance Sheet to the Income and Expenditure Account.

Designated Funds

Unrestricted Funds which have been accumulated over time and set aside for a particular purpose by the Trustees.


The process of social change in favour of the poor. There is no agreement as to how to achieve this. Different people follow different theories (based on different social values) which they believe will lead to ‘development’. E.g. some believe in free market economics, or democracy, or local empowerment.

Direct Cost

A cost which can be specifically allocated to an activity, department or project.

Donation in Kind

A donation of goods or services, rather than a donation of money.

Double Entry Book-keeping

The method that accountants use to record every transaction in two places in the accounting system. It gives a full picture of all an organisation’s cash and non-cash transactions.


The process of helping individuals to increase their influence on the factors that govern their lives.

Exception Report

A short report which describes significant differences from planned activities, e.g. which may accompany the management accounts.

External Audit

A financial audit carried out by an independent auditor, separate from the organisation, which provides an opinion whether financial reports are “true and fair”. External auditors may also write a management letter, which comments on important issues noted in the organisation’s internal controls.

Financial Accounting

Recording, classifying and sorting financial information, resulting in financial reports for people external to the organisation.

Financial Management

The processes which trustees, managers, staff and beneficiaries use to make sure that financial resources are used to achieve an organisation’s objectives efficiently, effectively and accountably.

Financial Sustainability

An organisation’s long-term financial security, which is based on having: strong stakeholder relationships, diverse sources of income, Unrestricted Funds, and General Reserves. See also Sustainability.

Financing Strategy

A document which sets out how the organisation expects to finance its operations now and in the future. It has to be developed as part of the overall strategy and approved by the board.

Fixed Assets

Items (such as equipment, vehicles or buildings) that are owned by an organisation which retain a significant part of their value for more than one year. Also known as Tangible Assets.

Fixed Costs

Costs that you will incur no matter what level of activities you carry out (e.g. office rent). The opposite of Variable Costs.


A sum of money entrusted to someone advance for a particular purpose when the precise costs are not known in advance.


The deliberate mis-use of an organisation’s resources for private gain.

Fund Accounting

A method of tracking income and expenditure according to different ‘funds’, related to specific donors or projects.

Funding Grid

A report which shows how the budget agreed with each different donor fits together with the total budget for a project or organisation.

General Ledger

A complete list of all the transactions recorded in all the Account Codes. This is the central register for Double Entry Book-Keeping systems (e.g. as used by most Accounting Software). Also known as the Nominal Ledger.

General Funds or General Reserves

Unrestricted Funds which can be used for any purpose to achieve the organisation’s objectives. Also referred to as Accumulated Funds.

Humanitarian Aid

Short-term assistance provided to people who have become very vulnerable because of a specific emergency (e.g. providing food and shelter to earthquake victims).


A cash float, set at an agreed level, which is topped up by the exact amount spent since it was previously replenished, to bring it back to its original level.

Income & Expenditure Report

Summarises income and expenditure transactions for an Accounting Period, adjusted for transactions that are not yet complete or took place in a different Accounting Period (e.g. Accruals).

Indirect Cost

A cost which cannot be allocated to a specific activity, department or project but which is general in nature. Also known as Central Support Costs, Overheads or Core Costs.

Institutional Donor An organisation which provides funding to NGOs. For example: DfID, USAID and Comic Relief.

Internal Audit

An Audit carried out by staff within an organisation that often checks whether policies and procedures are being followed in practice.


A written request for payment received from a supplier for specific goods or services.

Journal entry

An entry in the accounts which covers a non-monetary transaction – e.g. for recording a Donation in Kind, or Depreciation or correcting an error made in the accounts.


An amount owed by your organisation to others, including loans, accruals, grants received in advance and outstanding invoices.


The level of cash and assets readily convertible to cash compared to the demands on the available cash, e.g. to pay bills.

Liquidity ratio

A measure of liquidity obtained by dividing Debtors, Cash and Short-term Investments by Current Liabilities.


The process of encouraging powerful decision-makers to take account of the interests of poor and marginalised people.

Logical Framework Analysis (also known as ’logframe analysis’) A method for planning, monitoring and reporting on projects, based on a rigid hierarchy of goals, objectives and activities. There is a vigorous debate about whether it is a suitable tool for accountability in the NGO sector.

Management Accounting

Providing financial information to managers for the purposes of planning, decision-making and monitoring and controlling performance.

Net Book Value

The original cost of an Asset less its accumulated Depreciation to date. This is the value of an Asset that is shown on the Balance Sheet.

Net Current Assets

The funds an organisation has available for conducting its day-to-day operations. Usually defined as Current Assets less Current Liabilities. Also known as Working Capital.

Nominal Code

Another name for Accounts Code. A code which groups specific types of transactions, e.g. ‘transport’ or ‘salaries’.

Nominal Ledger

A complete list of all the transactions recorded in all the Account Codes. This is the central register for Double Entry Book-Keeping systems (e.g. as used by most Accounting Software). Also known as the General Ledger.

Non Governmental Organisation (NGO)

A not-for-profit organisation which is based on a set of social values, is independent from the government and works for the benefit of other people. Also known as a Non-Profit Organisation or a Private Voluntary Organisation.

Opening Balance

The amount of money held in a specific account (e.g. a bank account) at the beginning of an Accounting Period. It should be the same as the Closing Balance from the previous Accounting Period.


A chart that shows who works where in an organisation and how departments are organised.


A short-term loan from a bank, when you spend more money out of your bank account than you have in it. Overdrafts are expensive and have to be re-paid whenever the bank demands the money back. It is best to avoid them.


Costs which cannot be allocated to a specific activity, department or project but which are general in nature. Also referred to as Central Support Costs, Core Costs or Indirect Costs.

Petty Cash Account

A small cash float held in the office for small day-to-day payments

Petty Cash Book

A register which records all receipts and payments made from the Petty Cash Account.

Phased Budget

A Budget which is split into distinct time periods – typically showing the Budget for every month.


Transaction where you pay for goods or services before you receive them – e.g. annual insurance premium. Prepayments are the opposite of Accruals.


A formal record received from a supplier that confirms that you paid a certain amount of money for certain goods or services, including details of: date, amount, supplier etc Also given to anyone who buys goods or services from your organisation.

Receipts & Payments Report

A summary of the Cash Book for a specific Accounting Period, including Opening and Closing Balances. This does not include adjustments for transactions which are not yet complete or which refer to different Accounting Periods.


The process of checking that one set of records agrees with another set of records. This allows you to be sure that information is complete and accurate. The Bank Reconciliation is a particularly important control.


Funds set aside from surpluses produced in previous years.

Restricted Funds

Income received which has to be used for a specific purpose (e.g. a specific project). May have additional conditions attached, including the requirement to report back to the donor in a specific format.

Separation of Duties Splitting the different duties for handling a transaction between different people. (E.g. one person places an order and another writes the cheque.) Also known as Segregation of Duties.

Service Delivery

The process of providing people with ‘welfare services’ such as clean water, education and health care. Normally the responsibility of the government.


People who are authorised to sign cheques on behalf of the organisation.


All the groups of people who are involved in an organisation’s activities. E.g. including: beneficiaries, staff, managers, trustees, donors, government.

Supporting Documents

The original documents that describe each transaction – e.g. Invoices, Receipts and records of Authorisation.


An organisation’s ability to keep on existing and working in future years. See also Financial Sustainability.

Treasurer An individual trustee who has specific responsibility for overseeing an NGO’s financial management and for bringing financial matters to the attention of the other trustees.

Trial Balance

The list of balances on each individual Nominal Account on a specific date. The Income & Expenditure Account is prepared from the Trial Balance.


A member of an organisation’s most senior decision-making body, often known as the Board of Trustees or the Governing Body. Collectively, trustees have responsibility for using all of an organisation’s resources.

Two Golden Rules of NGO Field Work

1. NGOs have to maintain a respectful dialogue with the people they aim to help.

2. NGOs depend on their field staff, and have to empower them to make good judgements.

Unrestricted Funds

Funds held for the general purposes of the organisation, which can be spent on any activity that contribute to the organisation’s stated objectives.

Variable Costs

Costs that increase and decrease as you out different levels of activities (e.g. bricks for a building project, or fuel for field visits). The opposite of Fixed Costs.


The difference between the budget and the actual amount of income or expenditure on any one Accounts Code or for an entire Budget.


The transfer of money from one budget heading to another.


A note which describes the financial aspects of a transaction. Often used in accounting systems. Vouchers includes details such as: date, amount, accounts code, payee / payer etc.

Working capital

The funds an organisation has available for conducting its day-to-day operations. Usually defined as Current Assets less Current Liabilities. Also known as Net Current Assets.


The cut-off date for the annual Accounting Period.

Zero-base Budgeting

A method of preparing budgets based on calculating estimates of income and expenditure from scratch rather than from last year’s financial results.

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