KOI Financial Policies and Procedures

Effective date: TBD

Adopted by Board of Directors of KOI on: TBD

Review cadence: Semi-annually

Purpose, scope, and definitions

Purpose

A KOI financial procedures and policies document is needed:

• To prevent fraudulent use of donor funds
• To ensure the fiscal health and safety of the organization
• For compliance with grants
• For compliance with gudits
• For reference by KOI volunteers

Recognition of Capitalism and Harm

The finance committee of KOI recognizes the harm capitalism and colonialism have inflicted upon folks, especially queer and BIPOC individuals. Because of this harm, accounting, and finances, have rightfully gained a distrust from the public of their labor and values.

To fulfill the duties of KOI, the finance committee of KOI will use the professional duties, expertise, and labor of the accounting and finance fields for the sole purpose of the evacuees, and the mission of KOI. The finance committee may not engage in harm via financial trauma, fraud, gatekeeping, and bureaucracy. We believe this is all possible and we can fulfill the obligations put upon us by the US Generally Accepted Accounting Principles (GAAP) at the same time.

KOI is a non-profit organization (501(c)(3) that is recognized by the Internal Revenue Service (IRS), and therefore, has no owner equity. That does not mean KOI is immune from capitalistic goals and means. While non-profit organizations are accountable to the public/community via regular government reporting (The 990, SoS filings, etc.), that does not mean the organization is immune from seeking out power, control, and the accumulation of wealth at the expense of others.

Therefore, the finance committee chooses to adopt the following values, in addition to the values of KOI, to ensure the integrity of the KOI, and the mission:

KOI Finance Values

• Transparency – All financial information should be shared with as many of the KOI volunteers as possible while maintaining privacy and confidentiality. No terms should be gatekept, and all curiosity regarding the finances should be met with well-thought of answers, and knowledge sharing.
• Accountability – KOI defined accountability includes a cessation of harm, and collective restoration. Shame and guilt are counterproductive to accountability. The finance committee will ensure accountability is expected of them and of all KOI volunteers.
• Accuracy – The finance committee will ensure all financial information is as accurate as possible to ensure sound decisions can be made with the information provided by the committee
• Collaboration – All financial tasks shall be able to be delegated to anyone on the finance committee, regardless of past expertise with accounting. All finance committee members will collaborate, and delegate tasks to ensure an equity of labor and energy.
• Trust – The finance committee will garner trust in our systems/procedures, and will reciprocate the trust back onto the rest of the organization, and community, without suspicion of intent.
• Confidentiality – The finance committee will ensure the safety and security of our community is guaranteed by keeping personal information private.
• Natural Consequences – KOI will rely upon natural consequences for misappropriation and fraud instead of artificial punitive actions. Escalation to authorities will only be involved if there is immediate danger to the fiscal health of the organization.
• Non-punitive Restoration – KOI will rely upon all parties (the harmed, and the harming) in cases of fiscal harm done to KOI, or by KOI to repair the harm.

How to use this Document

The following stakeholders may need this document:

• KOI board treasurer
• Finance comrades
• KOI volunteers
• Auditors

The document should be readily available online for ALL volunteers and have all changes tracked.

How to Update the Document

All changes should be tracked to ensure:

• What is removed and added
• Who produced the changes
• What time did they make such changes.

Changes that do not need oversight include:

• Typo and formatting corrections

Changes that need explicit oversight from the finance committee include:

• Changes in procedure

Changes that need explicit approval from the finance committee include:

• Changes in policy
• Changes in internal controls

Structure

Headings should be used to create a table of contents and easy navigation of the reader. Any images should have alt text with them. Headings should be nested appropriately for the ease of navigation of the user.

Each section should ideally come with a dedicated section for the policy of the financial operation and with the procedure of the financial operation. A Policy is a malleable set of guidelines to ensure any procedure properly follows sound and compliant decisions by KOI. A procedure is the steps to enact the policy.

Definitions

Actors

• Volunteer - An individual who has been onboarded into KOI, including alias and chat platform access, and who donates labor toward the furtherance of KOI’s goals and programs
• Active KOI Volunteer - An individual volunteer who has contributed no fewer than 10 hours the previous calendar month
• Director - A director is a volunteer who, for purposes of governmental and inter-organizational interfacing, holds a titled position within the organization but does not have authority for governance - which remains restricted only to the board of directors (e.g. chair, secretary, treasurer).
• Governing Board Director - A volunteer who has a titled governance position within the organization as laid out in the organization’s bylaws and is registered as such by government entities (secretary of state, Internal Revenue Service, etc.)
• Board Treasurer - The volunteer board member who is listed as the treasurer to the Internal Revenue Service and the secretary of state of Washington State.
• Finance Comrade - A finance comrade is a KOI volunteer who has explicit, and approved, access to our accounting system and/or our bank portal. They are also tasked to record financial transactions and to compose budgets.
• Evacuee - A member of the trans community that is being advocated for by KOI to acquire freedom of movement, self-determination and autonomy to create a new life in Washington State.
• Authorizer - A volunteer who holds the power to initiate a transaction of funds from, and to, KOI.
• Signatory

Accounting/Finance Definitions

Accounts Receivable - A general ledger ("GL") account that holds all of the promised, and earned, revenue for the organization. Accounts receivable is also a collection of processes to intake revenue, and track revenue.

Accounts Payable - A GL account that holds all of the expenses owed by the organization, yet not paid. Accounts payable is also a collection of processes to track expenses and disburse funds for expenses.

Going Concern - A going concern means the organization can meet all of its liabilities, and is no danger of losing liquidity. Despite its description, it is a good thing.

Liabilities - Liabilities are legal obligations for future disbursements, or services. The most common of these are loans, accounts payable, and unearned revenue.

Assets

Equity

Fund

Restricted Fund

GL Account

Misappropriation

Fraud

Other Definitions

In Good Standing - The default state for active KOI volunteers who have not been censured, disavowed, or asked to leave the organization and are otherwise meeting all requirements outlined in the organization’s bylaws and rules.

Means testing - A determination of whether an individual is eligible for assistance based upon whether the individual possesses the means to do with less or none of that help.

Finance Committee Meetings

Finance Committee Meeting Policy

The goal of the finance committee meeting is to:

• Ensure the going concern of the organization
• Provide transparency of the finances to the rest of the organization, and stakeholders.
• Provide an impetus to close the books of the prior month.

Finance committee meetings will consist of the following volunteers of KOI:

• KOI board treasurer
• Finance comrades
• Non-finance KOI volunteers

KOI board treasurer will need to be a part of the finance committee meeting for oversight of the financial health of the organization. Finance comrades will attend to ensure tasks are delegated correctly and well within the capacity of the organization.

Non-finance KOI Volunteers should be recruited to attend the meeting to ensure expertise, knowledge, and fiscal power are held to account with the rest of the organization.

A quorum must be established. If there is no quorum, no meeting will be held. Instead, the KOI board treasurer will provide a report to the organization that no meeting was held, a short qualitative summary of the financials, and the financial statements themselves.

A quorum will consist of:

• The KOI board treasurer
• One finance comrade
• One non-finance comrade

The finance committee will have two standing agenda items:

• Review of the prior month’s financial statements
• Review of outstanding action items from prior finance committee meeting.

The financial statements will consist of the following:

• Balance sheet (financial position) for the prior month.
• Income statement (financial performance) for the prior month.
• Expenditures per fund for the prior month.

The financial statements can include comparisons to prior months. Other regular reports can also be requested.

Agenda Items will be notated in the meeting notes at least two days prior to the committee meeting. Each agenda item should list who is the sponsor, discussion notes, and action items.

Once the meeting is concluded, the meeting notes are shared with the organization

Finance Committee Procedures

The KOI board treasurer will post the agenda document for the rest of the finance team in the Finance room in element.

All Organization Financial Policy

Internal Controls

Internal controls prevent fraud and ensure proper spending of the funds of KOI.

Separation of Powers

Separation of powers (sometimes called segregation of powers) is an internal control that prevents misuse of funds by ensuring every transaction has at least two eyes on it. Ideally, each transaction would have at least three KOI volunteers involved with it.

KOI recognizes the following three powers in a transaction process:

• Authorization – Authorization is the power to approve a transaction. These can include expense approvals, check signatory powers, contract signatory powers, payroll initiation, etc.
• Custody – Custody is the physical holding of the funds of KOI. This can include physical checks, P2P transaction app access, credit cards, and cash
• Record Keeping - Record keeping is the logging, and documentation of transactions. Examples include paper files, journal entries, employee records, billing, and payables, financial statement preparation, etc.
• Materiality
  • Materiality for evacuee expenses
  • Materiality for non-evacuee expenses

Misappropriation and Fraud Control

Restorative Steps for Misappropriation

Misappropriation of funds is when funds are disbursed in a way that violates internal controls, but does not consist of personal enrichment. Misappropriation of funds can also include transactions that are for the mission of KOI, but still violate the internal controls.

Examples of fund misappropriation include:

• Using appropriated funds for an evacuee for another documented expense purpose than initially reported
• Using appropriated funds for one evacuee than initially stated
• Unauthorized transactions for sundries for KOI

Restorative Steps for Suspected, and/or confirmed Fraud

Fraud is a severe threat to any non-profit, including KOI. KOI kindly acknowledges the by-and-for nature of the organization brings volunteers from all walks of life that have lived experiences that can sometimes justify fraudulent behavior.

The fraud triangle consists of

• Perceived opportunity
• Perceived pressure
• Rationalization

KOI can only control the perceived opportunity, and can influence the rationalization.

Fraud can consist of:

• Removing funds from KOI for one’s personal enrichment
• Removing funds from KOI’s bank account without disclosure
• Removing funds from KOI for a transaction that violates the mission of KOI
• Obscuring transactions, or hiding them.
• Intentional misstatement of financial statements

All actors, from evacuees to directors, are capable of creating harm via fraud. No actor external, or internal, should have any heightened suspicion unless the roles they hold within the organization might cause such a suspicion.

It is important to know that fraudulent activities can still be for the mission of the organization, but still count as fraudulent activity (example, emptying the bank account to gamble to hopefully increase the funds of the organization).

KOI strives to have a sober and delicate approach to preventing fraud that is not based upon any societal biases. Not only does this approach prevent micro/macro-aggressions on marginalized folks, it is also more likely to prevent fraud as folks who do have nefarious ends will depend upon societal prejudices to prevent being caught.

To preserve the checks and balances, KOI will ensure the finance committee is also staffed by a non-finance KOI Volunteer (A volunteer who isn’t a treasurer or finance comrade).

If fraud were to knowingly occur, the priority is to secure the lost funds if possible, or as much as it as possible. The next step is to prevent it from happening again by finding immediate steps to be taken to secure the funds in the channel the fraud occurred in.

Afterwards, an internal control audit needs to occur to prevent the fraud from happening not only in the channel it occurred in, but in all other aspects of the organization.

Unless the fraudulent activity is a threat to the going concern of the organization, KOI will not pursue the repayment of stolen funds from a volunteer, employee, director, evacuee, or an external party. Escalation will possibly cause issues of clout with the community, extra legal expenses, and organizational culture repercussions. A cheaper option would be to find out how the fraud occurred, and modify the internal controls accordingly.

Any KOI volunteer, evacuee, director, or staff, that has been confirmed to have committed a fraudulent activity with KOI will face consequences such as:

• Re-delegation of tasks and resource access
• For volunteers, lose the good standing status and be removed from the volunteer mutual aid
• Removal from transaction process
• Removal from KOI
• Additional record-keeping to indicate to possible reference inquiries about a history of fraud.

The main aim is not punishment, shame, or guilt. It should be to protect KOI, those harmed, and the harmer as well.

Organization Budgeting

To have a functioning Non-profit, a composed budget is required every year for KOI. A budget must be composed also for Grant applications, and to strengthen the internal controls of the organization.

Budgeting Policy

The budget will be composed every fiscal year for KOI. The budget will include forecasted monthly amounts for every active GL accounts, or soon to be active GL Accounts. Added GL Accounts can be approved during the budgeting process. The budget can be composed and reviewed by the Finance Committee. However, the budget must be approved in an all-organization meeting.

The timeline of the budget should be as such:

• Two months before the beginning of the fiscal year, the other committees are informed of their obligations, and a template is created.
• One month before the beginning of the fiscal year, the Finance committee reviews a finished budget and submits it for review by the organization.
• During the last meeting before for the new fiscal year, the budget is submitted for approval by the organization.

If the budget is not approved by the organization, then there is no operational budget. The budget has to be recomposed, and re-submitted.

The draft budget should be available on an accessible platform where changes can be tracked, and colloborated

The following committees are responsible for:

• Development Committee is responsible for the Fundraising revenue forecasts, and the fundraising expenses.
• Evacuee Care Committee (to be established) is responsible for the forecasted evacuee expenses.
• The Finance Committee is responsible for forecasting all administrative and sundry expenses.

In the scenario where KOI secures programmatic grants, the Program Managers will compose the budgets for their individual programs (with assistance from the Finance Committee), and use said budgets for the organization budget.

In the scenario where KOI secures the funds to hire paid staff, the Wage Schedule will be composed by the Finance Committee based upon the inputs of the Board.

Evacuee Expenses

Evacuee Expenses Policy

Evacuee Disbursement Budgeting Worksheet 

Credit Cards

Credit Card Policy

Credit cards are a liability for the organization, and spending must be done so in a cautious manner. Therefore, the policies are going to be generally verbose.

Credit Card Policy - Accessible Language Summary

To be accessible, the following section is for general use, but is not considered legally binding. Please use this section for clarification and guidance, but the following section for substantiation and procedure formulation

Credit Card Policy Detailed

The credit cards are there to make transactions easier to initiate for care coordinators while also maintaining the internal controls of the organization.

The most important internal control to maintain is the separation of powers. Credit card holders will have custody, therefore, they can never authorize their own transactions, and they can never record their own transactions in the accounting software.

A notable transaction that can skip authorization are the specific evacuee expenses that were pre-approved in a budget to require no authorization, and just documentation as detailed in the evacuee expense policy.

Credit card holders must be a volunteer in good standing with KOI. Currently, KOI volunteers are required to pass a background check to be in good standing. If the background check requirement is ever waived for a volunteer to be in good standing, credit card holders will still be required to to submit to a background check.

Credit card holders are accountable for ensuring:

• Transactions meet the mission statement of the organization
• Transactions are not misappropriated.
• Suspected fraud is reported to signatories.
• Unknown, or unauthorized, transactions are reported to signatories.
• Transactions are completed once authorized.
• Transactions are within the budget of the organization.
• Transactions that are over/under variance of the budget have a narrative.
• Credit cards are spent within the monthly limit.
• Documentation for the transaction is provided to KOI and the finance committee
• Answer questions from the finance committee regarding transactions on their card.

No credit card may have a cash advance available.

Unknown, and unauthorized transactions, may cause the credit card to be shut down and a replacement card to be issued. This is not a policy of KOI, but of our bank.

Each card has a spending limit. These limits are decided based upon 1) The aggregate spending limit allowed by our bank for all of our cards and 2) The budget per evacuee as approved by the organization all volunteer meetings.

If a card is approaching the spending limit, the card holder may request a signatory to complete an early payment. The board treasurer can confirm if there are cash reserves available for such a payment.

Credit card holders may attach the credit card to a peer-to-peer (P2P) monetary option such as Venmo, Cash App, Paypal, etc.

Credit card holders may use the credit card for recurring expenses, and may only ask for approval once due to the consistent nature of the expense.

If there is an unknown, and/or unauthorized, transaction on the card, the card holder must notify the signatories within 24 hours of the posting date.

If there is suspected fraud (with substantial evidence), the card holder needs to alert the finance committee or a signatory immediately.

When the month ends, the finance committee will reconcile the credit card statement(s) in the accounting software in a similar manner to how the bank account is reconciled.

Natural Consequences of violation of Credit Card Policy

If a credit card holder has repeatedly violated the policy regarding the credit card they hold, then the finance committee will report it to the organization at large.

Accountability will then be established. To avoid a punitive action, KOI will rely upon natural consequences to re-establish trust with the credit card holder and hold the organization to the internal controls that have been established. The consequence chosen will depend upon the violation of the policy to ensure proper re-alignment to the policy.

These natural consequences can include one or more of the following:

• One-on-one discussion with the credit card holder regarding the policy.
• A signed acknowledgment of the policy violation, and what the card holder thinks is the next step.
• Temporary suspension of the credit card for that credit card holder.
• Re-assignment, or reduction, of delegated tasks if case workload is too much.
• Authorization required on transactions where previously none were required.

Cessation of Credit Card use

Credit card cessation is required when:

• Violation, or violations, of policy threaten KOI’s sustainability and going concern
• Violations of policy have been a repeated pattern with no properly implemented address of the violations.
• Violation, or violations, of the credit card policy goes against the mission of KOI
• Use of the credit card creates harm for KOI, KOI volunteers, KOI evacuees, and/or the credit card holder
• No violation has occurred, but there is an impending violation that mandates cessation of the card for the credit card holder
• Fraudulent use of the credit card by the credit card holder.

The immediate next step is to close the credit card. No further credit card can be issued to the credit card holder unless it was determined there was an error in the decision of cessation.

Only the board treasurer, the board chair, and the executive director can make the decision to cease use of a credit card for a credit card holder. No vote is required out of the three, but disclosure must be made. No veto regarding such a decision can be made.

Once there is a decision to remove the credit card from the credit card holder, the decision must be disclosed to the credit card holder, the evacuees depending on the credit card, the finance committee, and to the bank. A bank signatory will then close the account.

Further consequences can include:

• Prohibition of any role in transaction processing for KOI
• Removal from care coordination
• Removal from KOI
• Recordkeeping of violation to be reported in case any reference inquiry were to be made of the former credit card holder.

If there are any fraudulent transactions, no repayment is necessary to KOI if the fraudulent transaction does not impact the going concern of KOI. This is to reduce the workload of the KOI volunteers.

All of the consequences are entirely dependent on the nature of the violations, restoration from harm, and the boundaries of KOI to protect itself.

Volunteer Mutual Aid Fund

The policy regarding the Volunteer Mutual Aid Fund is a separate policy that has to be separately approved.

Accounts Receivable - Donations

Donations - Policy

KOI accepts donations as a form of community support. The donations should be logged appropriately as revenue.

Almost all methods of donations are accepted such as cash, checks, ACH. In-kind donations are accepted on a case by case basis.

Restricted donations, or advised donations, are not accepted.

Workplace donations that are accepted must track the employee that donated, the organization that matches the donation (if there are matching donations).

Documents should be kept that showcase the fund destination requested by the donor, the donor themself, the amount of the donation, and the date of the donation.

Ideally, there is a donation CRM that keeps track of the donors and the donations. End of year donation receipts should be provided by KOI for all non-anonymous donors.

If there is a transaction fee for the donation, the transaction fee should be recorded separately, and the donation should be recorded at gross value.

If there is an organization that conflicts with the values of KOI, or the mission of KOI, KOI has every right to reject the donation and refund the donor.

Bank, and Credit Card, Reconciliation

Account Reconciliation Policy

Account reconciliation is an important internal control to ensure proper record keeping, transparent records, and an accountable finance staff. Accounts are reconciled within 15 days of the statement being received. Each transaction on the statement must have a matching transaction recorded in the accounting software.

Accounts that require regular reconciliation include:

• Bank Statements
• Credit Card Statements
• Line of Credit Statements (If Any)

Copies of the statement and a Reconciliation report must be made available to all who inquire within a certain amount of days. The Finance Team