Appendix A: Elements for Good Management

Management is both a simple and a complex art that relies on a certain number of codes (accounting) and measuring tools (management indicators). Don't be afraid... management can be tamed, but if you are allergic to it do not hesitate to call upon specialists.

Each country has its own legal accounting system to which it is useful and may be obligatory to subscribe. But projects are often modest and to not require all the trappings of legal accounting procedures. The tools must be adapted to the needs. The first phase often consists in the establishment of the accounting ledger, that is determining the names of the items under which you will want to place revenues and expenses. It is important to maintain a proper balance between being too detailed and too synthetic, this is something that usually comes with experience. You will gradually find your own way around this, but try to be relevant more than complete.

Always ask yourself the following question: How am I going to use the information I produce with my accounting procedures? The only data that counts is that which is useful, in other words, that which is helpful to describe our activity and improve our performance.

A useful accounting list should normally include some twelve items: salaries, documentation, rent, water-electricity-heating, transportation, telephone and postal costs, financial costs, repairs, materials, paper and office supplies, financial income, gifts and grants, sales... In some countries there are official lists with posting numbers that could be used, but they may need to be simplified.

Buy a notebook and make columns: one per accounting posting number. Place three little columns in front of these: a smaller one for the date, a bigger one to describe the entry and a third smaller one to indicate if the transaction was done by cheque or cash. You now have a daily ledger.

Each time you spend any money or receive any income write in the date, the nature of the transaction and place the amount spent or received in the proper number column. Each month add up the columns. You will then obtain the results of your book accounting. If you then subtract the total of your expense columns from the total of you income columns you will have a book balance, but be careful for this does not mean much in terms of overall management...

Repeat the same procedure every year at the beginning of January or of July. to see how things are evolving and to get a good idea of where you are financially.

Check out each week or each month to see if your postings are correct and make sure that all expenses or revenues done by cheque correspond with your bank statement. Follow the evolution of your bank-book with every operation.

Every year after having established the accounting statement for your books, set aside the purchase amounts for those materials that last more than a year: car, photocopier, buildings, machinery... Subtract these expenses from your book accounting and you will obtain your operations balance.

Make a card for each purchase you made that would be a long term purchase article. On that card write how long you expect the product to last: three years for a car, twenty years for a building... At the top of the card write in the total cost of the product and then indicate for each year the proportional cost of the product. For example a computer that costs US$3,000 will last five years. Therefore for each year the amount would be $3,000 divided by 5, which is US$600. This last amount is called the depreciation of the investment (or amortization).

Each year when you do up your accounting books look at your cards and add up the depreciations for the year. Deduct this amount from your operational book balance and you will then obtain your true operational accounting and the balance will be a surplus or a deficit.

Remember that in some countries you may have to pay a tax on any surplus... Only this balance has any true accounting meaning, because the usual book balance does not take into account the life expectancy of some purchases and their wearing down.

Always distinguish between: book posting, operational account and investments (purchase of materials that lasts more than a year).

You can now present the financial statements for your project, in the case where the laws of the country require that you do so. The statements are a photographic picture of your assets or your liabilities. Your assets are made up of the amount you have in cash and in the bank, the value of your buildings, lands, furniture and materials (less the depreciation), the value of your stocks... On the other side, write in the list of means that were used to pay: your debts, your own funds...

These accounting tools are not difficult to use, but they do require a certain rigor... computers certainly make it easier to do all these operations... These tools give you an overview of your activity but do not allow you to establish an active policy.

Of course a surplus will motivate you and bring you to want to invest... but don't let yourself get carried away by the enthusiasm of the moment.

Here are a few indicators which will allow you to monitor your project and consequently establish better policies. For example, keep track of the amount of your loans or debts (especially the short-term ones that need to be paid back soon), the number of months of salary that you could guarantee in case of a catastrophe, the timelines of grants you are sure of receiving with respect to your major expenses. Monitor your electrical and telephone costs over the years... to make sure there is no slippage. In the end, the best indicators are those that you will discover yourself, the ones that will be in keeping with your needs.

Here are a few addresses to help you find financing:

Some Other Agencies:

Be careful, for all these agencies have specific goals that delineate the acceptance or refusal of requests. Send a well documented submission describing the activity, the names and qualities of the initiators of the project, financial estimates, letters of recommendation and support. There are many submissions and funds are limited. You need to have all the chances on your side by providing a very good submission.

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