Let’s start with confirming that financial management is a crucial function in any organization regardless to its nature. Possessing savvy financial planning skills is not a plus in NGOs but a must in order to deliver promised results without running out of gas in the middle of the way.
Passionate managers in NGOs or governmental aid organizations can end up wasting their endeavors if they lack the proper financial management skills that can help them select the right projects, tactics and steer their operations properly.
Let me start with clarifying the term. Financial intelligence does not mean holding an MBA in finance. On the contrary it is a term that has been tossed in the business world in the last 2 decades to refer to the hands-on financial skills that non-financial professionals can acquire to help them make better decisions without having to verify with financial analysts every now and then.
I believe that aid project managers can be considered financially intelligent when they can carry out the following, even on a basic level:
Differentiate between costs, expenses and investments: Inability to make this distinction ends up with wrong decisions over the priority of spending and inaccurate evaluations.
Feasibility studies: in order to their assumptions and ideas into a simple spreadsheet layout so that they can assess if a certain project is viable in compare to alternatives.
Cash flow planning: lay-out the projected cash streams in a structured manner and project potential deficits in advance.
Capital Requirements Analysis: quantify the project requirements in terms of investments needed over a certain time frame.
Resource Allocation: to distribute the available scarce resource over the various demanding projects and ensure optimal utilization.
Risk Assessment: to quantify the potential risks surrounding a certain project from a financial standpoint, such as currency or commodity price fluctuations, logistic difficulties or labor incompetency