FISCAL MANAGEMENT

Dawn Farm prepares annually a formal, written budget of expected revenues and expenses. The budget categorizes revenues for the organization by source. The budget categorizes expenses by line items. The budget is reviewed by the Board Finance Committee, then submitted and approved by the Board of Trustees at the beginning of each fiscal year, as documented in the Board minutes. Revisions to the budget, made during the fiscal year, are also reviewed and approved by the Board of Trustees.

The fiscal management system includes a fee schedule, which is available in the main office. The organization maintains a current written schedule of rates and charges that has been approved by the Board of Trustees. The fee schedule is accessible to personnel and individuals served by the organization.

The fiscal management system also includes a reporting mechanism that maintains information on the organization’s fiscal performance. Bi-monthly reports are provided to the Board of Trustees that compare the relationship of the budget to actual experience, including revenues and expenses by category. Explanations of significant variances appear in Board minutes. Financial reports are available to those staff and Board members who participate in budget preparation and have fiscal management responsibilities.

A report of the financial operation of the organization is prepared annually by an independent public accountant. The organization maintains current, written policies and procedures for the operation of the fiscal management system. The organization has written policies and procedures for inventory control, including purchasing authority and procedures, product selection and evaluation, and supply storage and distribution. The organization also has written policies and procedures for controlling accounts receivable; for handling cash; for arranging credit; and for handling discounts, write-offs, bad debts and billing. Records are maintained in the Financial Director’s office to document compliance with these established policies and procedures.

FINANCIAL CONTROLS

Accounts Payable: All accounts payable are paid by the Financial Office.

Cash Disbursements: Disbursements are made by check, wire transfer, or online account. The President or Clinical Director approves all disbursements and records are kept to verify evidence that services or goods were actually acquired. Small amounts of petty cash are maintained at the operating treatment sites to be used for minor purchases.

Checks: Checks are pre-numbered. All spoiled checks are marked “VOID” and retained. All checks are prepared by the Finance Office and signed by the President or other authorized check signer.

Wires, Online payments: All are authorized by the President or authorized signer either by voucher or contract/lease requirements. All payments are prepared by the Finance Office.

Arranging Credit: When the organization opens a new account, the finance department oversees the preparation of application forms and receives appropriate authorization as needed. 

Purchases: Purchase requests are ultimately approved by the President or Clinical Director. Program Coordinators and other staff as authorized by the President/Clinical Director will order the requested supplies in accordance with purchasing policy.  All supplies are kept in supply cabinets at the operating sites and the Program Coordinators are responsible for the cabinets’ maintenance. A visual inventory is kept and supplies are requisitioned as needed. Staff members who receive delivery of other goods or services sign the invoice or packing slip as verification of receipt and forward same to Finance. 

Investments: Because of the nature of Dawn, Inc.’s programs, it is unlikely that significant investments of excess funds would be made. However, all investments beyond interest-bearing bank accounts must be authorized by the Board of Trustees and reviewed by the Finance Committee and Treasurer.

At such point as the Board may determine the need for investment income, such investments will be made prudently and with counsel from qualified Trustees, and in accordance with the provisions of the corporate By-Laws of Dawn, Inc.

Product Selection and Evaluation: Before authorized supplies are ordered, comparisons are made to get the best value available. Quotes are obtained from several companies and evaluated before major maintenance and repair work is undertaken. Periodic review of insurance costs, maintenance and leasing contracts, and telephone service is performed.

Payroll: All employees are paid bi-weekly.  The HR Director submits timesheet data to our payroll service provider, who processes pay checks and makes all required tax deposits and tax filings on our behalf. 401K contributions are processed as payroll deductions, and the HR Director transfers the contributions and associated employer match directly to Mutual of America (the 401K fiduciary) who deposits it directly to each employee’s account. 

Insurance: Insurance administration is the responsibility of the Finance Director and/or President for personnel, property, and liability insurance, according to the guidelines established by the Board. The insurance plans are reviewed annually for possible revision. All major changes are approved by the Board of Trustees.

Travel: Travel reimbursement requests must be authorized in advance by the President or Clinical Director. except for monthly travel expenses which are approved as regular budget items. Reimbursement forms must be submitted before payment is released.

Property and Equipment: A record of all property and equipment valued over $5,000.00 is kept for purposes of depreciation.  All property and equipment is adequately insured.

Bad Debt Policy: It is Dawn Farm’s policy to make every attempt to collect outstanding fees owed to the agency by our clients.  Outstanding balances are to be paid prior to starting any new/additional services.  The Finance Director maintains the allowance for bad debt requirements as well as any direct write-off adjustments in accordance with established audited procedures and generally accepted accounting principles.  

Fee Splitting: Dawn Farm prohibits fee splitting or the provision of any financial compensation to referral sources. Staff should maintain formal professional relationships with referral persons, declining any financial incentive.

Internal Controls: Improvement of internal controls occurs on an ongoing basis. Every attempt is made to involve more than one employee or officer in each area of the financial operations. Independent means of verification of all transactions is utilized.  The independent auditors look at internal accounting control as part of their audit each year.

Solvency/Continuity of Services: Continuity of funding is assessed annually by the Finance Committee and Board, utilizing the Review of Funding Sources. To ensure continued services, Dawn Farm maintains a line of credit that can be accessed in case of funding crises. In addition, the Community Mental Health Partnership of Southeast Michigan (CMHPSM) allows for advances in financial emergencies.

FUNDING SOURCES

Introduction

The following are the sources of funding for Dawn Farm:

1. Community Mental Health Partnership of Southeast Michigan (CMHPSM) for services

2. Washtenaw County Community Corrections

3. Various Courts including: 15th District Sobriety, 14B, 14A Sobriety, Mental Health, (residential, transitional housing, outpatient)

4. First Party (private individuals) for treatment services and for transitional housing

5. Other Third Parties

6. Donations

7. Miscellaneous sales of eggs, seasonal items and other donated items

Community Mental Health Partnership of Southeast Michigan (CMHPSM)

CMHPSM pays Dawn Farm per diem fee-for-service for individuals approved for long-term and short-term residential, withdrawal management, outpatient services, RSS services and transitional housing as per current contracts. 

State Disability Allowance (SDA) is a subcategory fund within CMHPSM that provides $27 per day for qualifying clients.  In order to receive SDA funding for a client, they must complete the qualifying form.  SDA funds are billed to and paid by CMHPSM as per current contract. 

Washtenaw County Community Corrections

Jail Outreach Program Services

Dawn Farm provides substance abuse group counseling to inmates of the Washtenaw County Jail.  CCAB pays Dawn Farm on a performance contract that is billed to the CCAB Director in 12 monthly installments.

First Party

Dawn Farm is a private, non-profit organization with a mission of providing quality care for individuals regardless of ability to pay. The agency has a long tradition of offering treatment to those who have nowhere else to go—the truly disadvantaged and disenfranchised.

We believe that those who can pay, should pay, for treatment.  We have to rely on public dollars and charitable gifts in caring for the more needy.

Our actual costs for keeping a resident in treatment should be the determining factor for setting bed day costs for paying clients. Our fees will be reviewed annually to assess bed/day cost based upon current expenditures. 

We realize that individuals may have the capacity to pay much more. While we will encourage them to support Dawn Farm further and more generously, we will nonetheless rely on the principles of more than two decades to sustain us. 

Residential

Clients or their families pay for residential treatment at the per diem rate.  Families are billed for treatment in 30-day installments at the beginning of each 30-day period.

Fees for service are determined by the President and or Board of Trustees. Fees for families generally reflect actual computed costs for residential care (total budget divided by number of beds divided by 365 days);

Outpatient

Clients or their families pay for outpatient treatment for services rendered. Payment is expected at the time of service.

Transitional Housing

Clients are expected to make a monthly rent payment and maintain a sober lifestyle. Rent includes utilities at all locations. Although family members may assist with rent payments, residents can usually afford this level of rent with entry-level jobs.   Dawn Farm submits bills to residents at the beginning of each month. 

Third Party Residential Services

A number of community-based organizations also provide funding for specific clients:  Regional coordinating agencies, 15th District Sobriety Court, 14B District Court, Mental Health Court, 14A Sobriety Court and others.  Whenever possible, Dawn Farm negotiates the same reimbursement level with third parties as for private pay clients. Dawn Farm submits invoices to all third parties in accordance with their contracts.   

Transitional Housing

In some cases, a third party will fund a client for specified time in transitional housing.  Dawn Farm works closely with each third party to coordinate any special billing or documentation requirements.  

Donations 

Organizations and individuals donate checks, cash, stock or goods.  Dawn Farm holds a solicitation by mail giving campaign at the end of each calendar year.  Dawn Farm also hosts an annual Jamboree where items are sold and auctioned, the Ride for Recovery—and other events as developed.  

Throughout the year, Dawn Farm applies for grants from foundations and organizations to fund its mission. Additional mailing solicitations are developed as needed.  

Miscellaneous Sales

At various times throughout the year, Dawn Farm offers for sale eggs, produce, seasonal items and merchandise.  Any sale of equipment or livestock is initiated by the Physical Plant Coordinator and approved by the President.

RECORDKEEPING FOR CASH RECEIPTS

Donations are received directly by the President or Development Director, who documents them in a web-based donor database.  The President sends thank you letters, which are filed.  Donations are then given to the Finance Office for deposit and processing.  

Donated goods are recorded by the Development Director. The donor’s name and address and a complete list of goods donated are maintained in an alphabetical file. Copies are submitted to the President so that the donor information can be entered into the database and thank you notes can be sent out.

Bank Deposits

The Finance Office prepares bank deposits as needed for a minimum of once per week.  All checks are endorsed for deposit only.  The Finance Office prepares a deposit slip and a summary of the deposit that includes the payer name, check number, and the income statement or balance sheet category for each receipt.  Copies of all checks and enclosed paperwork are attached to the deposit ticket and are filed by month.  Deposits are entered into the general ledger each month.  The President reviews deposits in the monthly bank statement.

CHARITABLE GIFTS POLICY

Background

Dawn Farm receives funding from a variety of public and private sources, all of which play an important role in the overall financial stability of the agency. Charitable gifts have become more important to the organization: in 1983, less than 5% of Dawn Farm’s revenues were charitable gifts—today they are a significant source of income for the organization.

In 1986, Dawn Farm embarked on a Capital Campaign, raising in excess of $800,000 in pledges, and resulting in the eventual construction of the new facility in Ypsilanti. This effort drew from both small and large individual donors, churches, corporate supporters and area foundations. In addition to raising a significant sum of money, this campaign established Dawn Farm as a credible community fund-raising organization, and cemented many relationships in Southeastern Michigan that have helped to secure additional funding support. 

Charitable support is divided into the following six categories:

Individual gifts—cash donations from individuals or couples, usually received by mail either in response to a solicitation, or unsolicited. A percentage of these come in the form of memorial gifts. 

Corporate cash support—generally modest corporate donations.

Corporate in-kind— primarily through donations of auction items for the Jamboree and food for program service support.

Individual in-kind—primarily through donations of used clothing for Dawn Farm residents, furniture, appliances and household items. The majority of the donated items are used by clients in need of clothing or in furnishings for our transitional housing. A small portion may be sold through ‘yard sale’ at our Jamboree.

Stocks and Bonds—donations of stocks are received in our stock brokerage account.  According to policy, any gifts of stock are immediately liquidated and deposited as cash gifts. Donor acknowledgements are given in accordance with IRS policy.

Community groups—cash or in-kind gifts from church mission boards, women’s groups, sororities/fraternities, civic clubs and unions. Though often modest in dollar amounts, these gifts total to significant revenue every year.

Foundation grants—Although some of this type of funding comes in the form of annual unsolicited grants, most results from specific applications to both local and regional foundations.

Internal Procedure for Handling Charitable Gifts

Financial Gifts (Corporate, Individual & Foundation)

All financial donations are routed first to the Development Director. Record of the gift is made on Dawn Farm’s database, along with additional information that might be available (i.e., updated phone number or address of a donor off a personal check). All checks are then routed to the Finance Office for processing. 

All financial donors are thanked by letter from the President.  Donation thank you letters are maintained electronically in the database. 

In-kind Gifts/Jamboree

Formerly called “Founders Day”, the Dawn Farm Jamboree is conducted on the second Sunday in September. 

Though primarily a goodwill event, the Jamboree has grown significantly over the years, now including live, silent and online auctions.

All in-kind Jamboree donations are routed through the Development Director and volunteer Jamboree Committee. Record of the gift is made on Dawn Farm’s mailing list/database (and databases for use in the actual event). 

All Jamboree donors are thanked by letter from the President. Donation thank you letters are accumulated and available electronically in the database. 

In-kind Gifts/Individual & Other

Donors generally phone the Farm and arrange for drop-off or pick-up of goods. If being picked up, the Dawn Farm Office Manager and Support Staff coordinate a time to retrieve these donated items. As donations of larger items often require storage space, a brief synopsis and photo are reviewed to ascertain need and condition of the item prior to acceptance.   A donation synopsis receipt is prepared with copy for donor and Dawn Farm for all donated items.  Thank you letters are signed by the President, sent to donors for donated items and maintained electronically. 

Record of the gift is made on Dawn Farm’s mailing list/database, along with additional information that might be available (i.e., updated phone number or address of a donor). Items are placed in storage for distribution or sale.  In-kind donation list is prepared and forwarded to the Finance Director at the fiscal year end for review and recording as necessary in the general ledger.   

Accountability

During Dawn Farm’s annual certified audit, the audit firm receives a printout of all database giving for the fiscal year, and pulls random samples to compare with bank deposits and thank you letters. 

Though individual donors occasionally have specific requests regarding where their gifts are spent, most donations to Dawn Farm are given without other requirements. However, in order to seek charitable gifts from the public, the organization must maintain its IRS status as a 501 (c)(3) non-profit organization, file timely Form 990’s, and maintain legal compliance with the Michigan regulations pursuant to our License to Solicit Charitable Gifts. 

Foundations often seek formal documentation that their grant was spent for the purpose for which it was given.  This generally takes the form of a reporting document generated by the foundation itself, and copies are kept on file.

CASH DISBURSEMENTS

Operating Fund Expenditures

The President authorizes most purchases. The normal weekly and monthly operating expenses (for example, food, household supplies, vehicle maintenance) are approved via a check request form which indicates the payee, an explanation of the expenditure, and the amount and date needed. After the President or other authorized check signer initials the check request form, the Finance Office prepares the check and records the check number, date, and amount of the check on the request form. Receipts are stapled to the check request form and filed by the vendor.  When ordered items are delivered, the individual receiving the delivery checks the merchandise against the packing slip, signs the packing slip and gives it to the Finance Office who checks the packing slip against the invoice. The packing slip is stapled to the invoice and retained.

Petty cash funds are maintained by the Finance Office at the Farm ($1,000), the Program Coordinator at Spera ($400), the Program Coordinator at Dawn Farm Downtown ($400) and the Outpatient Coordinator ($300).  Petty cash is refreshed as needed when the Program Coordinators submit receipts for expenditures already made.  

Invoices are opened by the Finance Office, amounts due are confirmed and the invoices are entered into the accounting system.   Invoices are selected for payment each week based on their due dates.  The Finance Office prepares the checks and presents them along with supporting documentation to the President or Clinical Director for signing.  Checks are signed and the invoice/check stubs are date stamped paid.  Checks are mailed or distributed by signers and not returned to the finance department.  All paid invoices and documentation is returned to finance for filing in accordance with procedure.  

Bank statements are reviewed and signed by the President each month. The bank reconciliation is performed by the Finance Director.  

Line of Credit

The line of credit is a reserve account kept for cash flow purposes. the Finance Director requests funding from the line of credit as needed. The President is copied on all transfer requests. The line of credit is then reimbursed as funds become available in the checking account.

PAYROLL SYSTEM

The President’s salary and benefits are determined by the Personnel Committee and the Board of Trustees.  The President and the Clinical Director set pay rates for all other staff members based on their review of pay data for comparable organizations.

All personnel are paid for a two-week (80 hour) pay period.  Each workweek begins at 12:00 am on Saturday and ends at 11:59 pm the following Friday.  Scheduling for all staffing is handled by the respective Program Coordinators. All scheduling calendars are retained.  

Performance of scheduled time is verified directly by supervisors or salaried staff during the day. Performance of the evening and midnight shifts is verified by a shift turnover policy: salaried staff does not leave until the evening shift arrives, evening shift does not leave until the midnight shift arrives, the midnight shift does not leave until salaried staff arrives in the morning.

All hourly staff register their time in the online timekeeping system. It is the responsibility of the Program Coordinator or designee to verify and approve their staff’s time sheets in the timekeeping system.  Salary personnel key in approved   PTO time only. The HR Director checks and processes all time keeping system reports to the payroll system for payment. The preferred method of payment is direct deposit.  

The payroll service generates all direct deposits, paychecks, reports (including W-2s) and makes required tax deposits, tax filings, and garnishment deposits.  The HR Director tracks the accrual and use of Paid Time Off (PTO) for all eligible employees.    

Payroll is processed biweekly on a day and time agreed to with the payroll processing company.  If a manual check is issued it is delivered to the Farm location on Thursday for the Friday pay date.  The President receives the checks/ direct deposit confirmations and payroll reports for signing/authorizing and returns to HR for filing or disbursement.    

The payroll service withdraws funds for all payroll, minus 401(k) transactions, directly from the checking account. The HR Director transfers 401(k) contributions and match from the Dawn Farm bank account to the Mutual of America funding account.  All of these banking transactions are part of the monthly bank statement processing and reconciliation. 

The payroll processing is coordinated between the HR Director and Finance Director for accountability and accuracy. 

Reviewed/updated 1-17-2025-Sue Tavis and Anna Byberg