Managing playgroup finances
Playgroups vary hugely in how they operate, including in how much money they need to operate, how they source and collect their income, and how they use and expend the funds they have gained.
Some playgroups don’t need a lot of money to operate and may not charge fees. Others have to allow for a number of costs, including the cost of hiring venues, and will charge fees in order to help cover those costs.
This section discusses a range of issues relevant to collecting and managing fees and other income and is designed to provide a general guide for playgroups. Some of the information here may not apply to your playgroup.
Regardless of the size of the playgroup, some basic financial and administration processes such as records of money collected and spent, will be needed.
The financial integrity of the playgroup's income, expenses and assets, whether the playgroup has a committee or not, and regardless of the size of the playgroup, will be of interest to its members.
For smaller playgroups, the need for formal processes may be less relevant but you may still need some ways of being accountable and responsible for:
- Money that is collected including weekly “gold coin” donations
- having information about costs of running the group
- deciding how money will be used.
For small, informal groups this may simply involve some discussions within the group. For other groups, the playgroup committee will be responsible for keeping the playgroup financially viable and making decisions on:
- Developing a budget outlining income and expenditure
- Setting fees and fee policies
- Determining if fundraising is necessary
- Being accountable for the playgroup’s financial commitments
- Appointing a person or two to oversee the playgroup’s finances, or Treasurer, as appropriate.
Where there is a Treasurer, it is their responsibility for maintaining accurate and accessible financial records. You can find information about Committee roles, including the Treasurer’s role on the Templates, Information and Checklists page, under the heading, Committees - Sample Committee Roles & Responsibilities.
Having a budget can help to prepare for the year ahead, plan for expenditure and ensure you have sufficient income to meet the proposed expenditure.
A playgroup budget outlines the proposed income and expenditure for the financial year. No matter what size the playgroup, it is highly recommended that a budget be prepared for the coming year.
Smaller groups can do this less formally but larger groups with committees will need more formal processes which may include presenting it to the playgroup or playgroup committee for approval.
Your budget should include both income and expenses including future expenditure and commitments.
Some playgroups may also need to consider having funds available to hand-over to incoming committees following a change of leadership.
- rent/venue hire
- running costs including electricity, cleaning and administration of the playgroup
- excursions, incursions and special events
- purchases of toys and equipment
- materials for craft, activities and other consumables
- maintenance costs: if you are renting space, be sure to check and agree who is responsible for maintenance costs, prior to signing an agreement. For more information see Venues and Leases.
- funds to be carried over to the next year for start-up costs.
The playgroup may decide to reimburse volunteer and committee expenses such as telephone and mail costs. However, it is a good idea to agree up front what costs will be covered and any limits or conditions that might apply. For example you may require receipts for any expenditure incurred where reimbursement is requested.
- income from other sources such as grants
- fundraising amount proposed and achieved.
Plan your budget to balance income and expenses with enough to cover start-up costs for the next year.
When starting a new playgroup or a new playgroup year, it is a good idea to review playgroup expenses and set fees appropriately. It may be difficult for playgroups to decide how much to charge, but should consider the following:
- What annual expenses will the playgroup have? E.g. venue hire, maintenance, end of year party, equipment, resources, and craft materials
- Who is responsible for setting the fees?
- When are fees due? Weekly, monthly, once a term, or annually?
- Do visitors need to pay a fee?
- Will the fee be set per child or per family? (Note, Playgroup WA membership fee is an annual, calendar year fee per family, not per child)
- Is a payment plan possible (flexible arrangements)?
- Will discounts apply for families joining during the term, early payments, families experiencing financial hardship etc?
Creating a fee policy as a group can help provide some guidelines.
For information on policy development go to section Policies and Procedures.
Playgroups may wish to have confidential arrangements in place for families experiencing difficulties in paying fees. Playgroups may also wish to consider:
- Fundraising events may cause distress to some families, as can excursions requiring payments. Try to organise a variety of events, including no cost or low-cost outings.
- Avoid buying expensive toys if it places a financial obligation on members.
It is important to have in place effective procedures for collecting fees and other forms of income and for handling the playgroup’s money. It can save a lot of stress, worry and conflict if appropriate procedures are developed and implemented by the playgroup or playgroup committee.
In small playgroups, all the members should be involved in deciding how funds will be spent. In larger playgroups, the committee generally approves all expenditure.
No matter what the process is, it is important to ensure that approval for expenditure has been obtained before spending money or paying bills.
It is now common for members to pay fees to playgroups via electronic means. Playgroups are also using electronic methods and systems for recording and reporting on income and expenditure. These can vary from simple Excel spreadsheets to a range of commercial products and systems.
Each playgroup needs to decide what type of system your group needs and choose a system that is appropriate and relevant for your playgroup and members.
Smaller playgroups may find the use of a locked cash box is all they need to safely store playgroup money and records of expenditure with receipts.
Where that is the case, playgroups need to discuss where the cash box will be kept. Over time, receipts may fade or become damaged, so it may be useful to scan records and receipts and save them electronically rather than leave them in the cash box. When scanning records and receipts, make sure that they are clear.
The following recommendations may be useful when handling cash:
- Issue receipts (in duplicate) or some other form of acknowledgement of receipt for all amounts received. One copy is given to the member paying the money, the other stays in the book and provides a clear account of money paid, by whom, what it was for, and the date it was paid.
- If the playgroup has a bank account, cash should be banked as soon as possible.
- Consider the best place to store cash if it is not possible to get to a bank.
- Do not leave cash in a car.
- Deposit money “intact” - do not take money out of cash received from fees or fundraising to pay expenses. Bank it first, that way it is easier to match income to banking receipts.
- Record proceeds from fundraising separately from general banking of fees so that accurate information is maintained about income and expenditure associated with fundraising activities.
- Maintain a fee register. In small playgroups, this may be a simple list of members and payments and kept in a cash box.
- When a playgroup has a large number of members, it is recommended to issue itemised accounts to playgroup families to inform them the total amount owing and the due date.
- If the playgroup has multiple sessions, nominate fee collectors in each session to collect fees and other income. The fee collectors issue receipts to members when receiving payment and then forward the money collected to the Treasurer or nominated person with the relevant information - amount paid, by whom, and what it was for.
- Playgroup WA membership fees collected from members should be forwarded to Playgroup WA promptly. Playgroup families are not covered by insurance until payment is received, after their second visit.
- Cash should not be left overnight on playgroup premises. Insurance cover for loss of money may not be provided if money is not held or banked in accordance with insurance policies. Contact Playgroup WA’s insurance broker for further information.
In playgroups with multiple sessions, a petty cash box might be helpful. Petty cash is a pre-set amount of money which is used for small items of cash expenditure such as tea, coffee, and milk. The playgroup or playgroup committee determine the amount of petty cash that is available. Petty cash needs to be managed like any other financial asset by:
- Issuing a receipt when you receive petty cash to confirm that it has been received.
- Obtaining receipts for items purchased wherever possible. These receipts need to be forwarded to the Treasurer together with other relevant information when the petty cash float needs to be reimbursed.
- Details of purchases are recorded in the petty cash book and forwarded to the Treasurer when petty cash is being reimbursed.
If the playgroup has many members and multiple sessions, it may need a more formalised system in place.
Opening a bank account allows playgroups to accept electronic payments and provides safe storage of money. Playgroups are advised to check with individual banks and building societies about the type of account that would best meet their needs and specific requirements for opening a bank account.
The following information may assist you when opening a bank account:
- Obtain an authority form from the relevant financial institution. This must be signed by the people authorised by the playgroup or its committee to operate the account. You may need to provide supporting documents, such as the minutes of the AGM and constitution or a supporting letter from Playgroup WA confirming the playgroup’s status as a not-for-profit group.
- The account should be in the name of the playgroup.
- Ideally, there should be three agreed upon co-signers with two signatures required to conduct online banking, sign cheques, and change bank details. These signatories must be nominated by the playgroup or its committee and should be people who are readily available.
- Those approved to be signatories will usually be required to pass the “100 point test” and may need to take relevant forms of identification to the bank (driver’s license, passport, birth certificate).
- Fees and charges may apply to the account. Shop around and negotiate for lower charges.
The following recommendations may be useful when managing bank transactions:
- Ask members who pay their fees by EFT (Electronic Funds Transfer) to include a reference number or term, and to forward their bank-issued receipt to the playgroup.
Always ensure there are at least two people who must sign or verify electronic payments and transfers.
Playgroups that are non-profit and established for community service purposes will generally be exempt from income tax but may need to register with the Australian Tax Office (ATO) first.
The ATO website has information that can help you work out what might be required of your group including a simple self-assessment to see if you fit the criteria for exemption.
Contact the ATO Not-for-profit Infoline on 1300 130 248 or visit the ATO website to check if your playgroup meets the listed criteria.
Each playgroup must decide for itself whether it will apply for an Australian Business Number (ABN) and/or register for GST. Playgroups should contact the ATO on 132 866 or visit the ATO website for further information.
Accurate and regular record keeping is essential to guarantee the playgroup’s funds are safe and well managed. The committee is responsible for ensuring that effective procedures and processes are in place, accountability to its members, and to provide protection for those people who handle money.
Playgroups are encouraged to review their policies and procedures relating to handling money and to develop new ones when necessary.
Depending on the level of need, playgroups may need to keep some form of records showing income and expenditure. This may simply be a physical logbook or electronic spreadsheet of income and expenditure with receipts, or more complex reporting in large and multi-session playgroups.
If the playgroup does not have a designated Treasurer, it will still need to have someone who keeps track of the financial activities of the playgroup.
The type of records you keep will vary depending on the size of the playgroup and the activities undertaken.
The following records and processes are recommended:
- Income and expenses book or electronic spreadsheet: This is a record of every receipt and payment , and should be maintained on a regular basis to make balancing and reporting easier.
- Financial report: this could simply be a summary at the end of each month which shows all monies can be accounted for and that it balances with your cash in hand or bank account.
- Petty cash book: make sure that the amount shown in the book agrees with the cash in the petty cash tin.
- Receipt books or electronic record.
- Fee register showing who has paid and how much.
If the playgroup has a bank account, it will also be advisable to keep the following:
- Bank statements.
- A deposit book or bank deposit receipts to cross reference with bank statements.
- A cheque book if applicable.
Bank statements should be checked for the following, and details recorded in the income and expenditure book or spreadsheet:
- fees, dishonoured cheques etc.
- any credits such as interest.
Note: It is best practice to keep financial records for a minimum of seven years. This is a requirement for all incorporated playgroups.
Additionally, all incorporated playgroups are required to report their total amount of revenue for their financial year in their yearly information statement to Department of Mines, Industry Regulation and Safety.
Having clear, written procedures will help avoid misunderstandings and will make the Treasurer’s job a lot easier. Honest mistakes do happen but if the Treasurer maintains records and regularly presents information to the committee, such errors should be easy to trace and correct.
If you are running into difficulty with any aspect of your playgroup’s financial record keeping, seek help early. Most problems are simple to trace and rectify.
If you suspect that money is missing:
- The Treasurer can ask another member of the committee to go through the books together to help trace the error
- If the problem is more serious, it is worth seeking the help of a qualified accountant (a fee may be applicable)
In some situations, playgroups may need to involve the police. Reporting the loss of money to the police requires the group to make a statement to that effect. You will need to show clear lines of accountability, receipts, bank books, bank statements and any other evidence that may be available.
Each situation is different, so we strongly suggest that your playgroup refer queries to Playgroup WA’s insurance broker for further information.
Please call Finsura on 1800 252 712 or email firstname.lastname@example.org if you need more information.
A playgroup’s assets are all property belonging to the playgroup. This includes toys, disposable items, cash and money in the bank. It is best for playgroups to have an asset inventory. In some cases, toys and equipment may also belong to the venue. It is always best to check any hire or lease agreement the playgroup has with the building owner.
Playgroups in Western Australia (incorporated and unincorporated) are not generally required to have a regular official review or audit. However, incorporated playgroups may be required to perform a review or audit if:
- Members decide a review or audit is required and make a resolution to that effect
- The Commissioner for Consumer Protection orders an audit to be performed
- The playgroup’s own constitution includes a requirement to audit.
An audit includes reviewing all financial records of the playgroup to confirm the income and expenses are correctly recorded, all money can be accounted for, and appropriate methods are being used to record and manage the playgroup’s finances. An auditor will examine all accounting records including invoices, receipts, vouchers, financial statements, bank statements and minutes.
Incorporated playgroups can get further information from The Department of Mines, Industry Regulation and Safety on 1300 30 40 54 or visit them here.