Our Blog

Internal Controls & Financial Aid

by Mary Stange – SJFS Client Advisor

We are continuing our review of the importance of internal controls in Parish, School & Ministry Finances for key processes. Financial Aid may seem like it would only be relevant to School Finances. However, there are instances where Financial Aid may be offered through a Parish or a Ministry. For example, a donor may offer a restricted donation to fund registration fees for classes offered by the parish, or events hosted by ministries. Additionally, there are arenas such as disaster relief, crisis pregnancy ministries, homeless ministries and more, where the aid offered may come in the form of food or clothing. The truth of the matter is that the Lord’s provident care is limitless, and the role of Parishes, Schools & Ministries is to be good stewards.

Application Considerations

• A standardized application process ought to be in place for financial aid.
  • Where Tuition is concerned, sensitive documentation needs to be protected by a PCI-compliant third party or secure server.
    • Even if your school does not use FACTS to track tuition, FACTS has a Financial Aid arm that many people use to collect the necessary information from families regarding financial need.
      • This FACTS Calculated Need is the result of an algorithm, which entities can make adjustments to based on your demographic area.
  • Community Outreach Ministries can benefit from clear qualification parameters.
    • For instance, prior to qualification, it might be wise to ask those applying for aid through outreach ministries to first apply for assistance from the State. 
      • This allows the state to process their financial position and issue qualification for programs like SNAP.
      • Your community outreach can then request that a current SNAP ID be on file.
    • Other hardships exist and may be temporary, which can be proven with an insurance claim.
      • You wouldn’t need to or want to keep the details of the claim on file, but an active insurance claim number could be an option on an application form.
    • Hard Luck is another important section, especially for families where the breadwinner has been let go from a position.
      • A date of dismissal document should be provided by the previous employer.
  • Retreats and Event financial aid offerings.
    • For the benefit of the financial reporting on an event, it ought to be decided by a finance council or board, whether financial aid is to be offered for a retreat or event. 
      • This aid could be funded from an outside grant or restricted donation, or unfunded, where a certain figure is built into the revenue projections to be offered as financial aid.
    • An application process and an application deadline ought to be clearly communicated along with the event registrations.
      • Depending on the the amount of the financial aid, you can decide whether you will require a substantiated need or not.
        • Substantiated needs:
          • This allows the state to process their financial position and issue qualification for programs like SNAP.
          • Your community outreach can then request that a current SNAP ID be on file.
          • You wouldn’t need to or want to keep the details of the claim on file, but an active insurance claim number could be an option on an application form.
        • Honor-system and Unsubstantiated needs:
          • It is the call of Catholic administration, to dignify the human experience, and financial hardship offers unique challenges.
          • If you chose to use an honor-system and offer aid for unsubstantiated needs, then it would be good to add an addendum of some kind.
            • Guidelines should include: 
              • Self-Reporting
              • Verification
              • Consequences of Misrepresentation
              • Appeal Process
              • An acknowledgement of understanding

Awarding Aid

Implementing robust internal controls for awarding financial aid is essential to ensure fairness, transparency, and accountability in the process. By establishing clear eligibility criteria and a standardized application process, institutions can streamline reviews and reduce the risk of errors or fraud. A dual-review system for high-risk applications can further enhance oversight, while secure data storage protects sensitive information. Regular audits and staff training are vital for maintaining compliance and adapting to evolving regulations. Ultimately, these internal controls foster trust among applicants, ensuring that financial aid reaches those who genuinely need it.

It is equally important that only certain qualified administrators be able to see the identity of the applicants. As much as possible, the information submitted to the review board ought to be redacted or simplified to exclude family names in lieu of an application number for tracking purposes. 

A dedicated review team is crucial when awarding financial aid, as it ensures a fair and thorough evaluation of each application. By assembling a diverse group of knowledgeable individuals, institutions can bring multiple perspectives to the decision-making process, minimizing bias and enhancing the quality of reviews. This collaborative approach allows for more effective identification of genuine need, ensuring that funds are allocated to those who require assistance the most. Additionally, a review team can streamline communication, allowing for quicker responses to applicants and reducing processing times. Ultimately, a well-functioning review team not only upholds the integrity of the financial aid process but also reinforces the institution’s commitment to supporting students in their educational pursuits.