As treasurer, I work hard to keep the board informed of our financial status and forecast. But when I send or distribute statements, no one looks at them. When I raise the financial status at board meetings, they just say they all trust me and don’t want to spend any board time discussing it. The executive director is also frustrated that the directors will not discuss finances. Is it okay for just the two of us to care?

Congratulations on being conscientious about this important responsibility, and for working co-operatively with the executive director.

Your fellow directors are seriously falling down in their duty of care. They cannot make responsible decisions for the organization without knowing the financial situation, and they are also not taking any care to safeguard the financial assets. It is not a matter of whether or not they trust you; they are required to understand and monitor regardless. If there was a financial crisis or fraud, your stakeholders might deem them negligent given their current practices.

Often boards have trouble getting the information they need. This board is staying willfully ignorant and might have higher liability as a result.

I strongly suspect that most have no idea how to read the information you provide. Perhaps it is being presented in too much detail, or without meaningful comparisons to prior years or approved budgets. Or perhaps the presentation is just fine and they have just not learned how to read financial statements. People coming from human services or community backgrounds often have little financial background or prior interest. Have you offered training? A community college might be able to identify a local trainer in nonprofit finance, or your audit firm might have a workshop. And Canadian Fundraiser offers public workshops on nonprofit financial management, although so far just in the Toronto area.

Of course, you have to get them interested in such training, or even in using their existing knowledge. Here are some options, from which you could pick the combination that works for you:

1. Get your auditor on-side and helping. Perhaps the auditor could ask to meet with the board to explain trends in financial accountability in the corporate world and how that is affecting nonprofit boards. The auditor could explain what they are ALL expected to know before approving the annual statements. Have the auditor take the board through the draft or most recent statements in some detail.
2. Align the budget and financial reports with the strategic plan. If you are not already allocating revenues and costs by program area, and including overhead costs, this may take some work, but it is worthwhile. People cannot really relate to the total cost of rent or telecommunications. They can relate much better to knowing whether the counseling service is a major drain on resources, or the harm reduction program is break-even after government grants, or the conference was a money maker. They can see if the monies are being spent on the priorities they set, or on activities with lower priority. In other words, report to them (and your members, donors, etc.) how monies are being used to get results, not just how they are being generated or spent.
3. Initiate a review of what information comes to the board (in what format, how often, prior to the meeting or at the meetings, etc.). Include the financial statements and seek their ideas on how to make them more meaningful.
4. Explain that you have been researching changes in governance, both corporate and nonprofit, and have learned that audit committees are now very highly recommended and quickly becoming common. Get the board to approve an audit committee or an audit and investment committee. In other words, get at least one other director involved, perhaps along with a non-board volunteer as well, for some external expertise. Prepare terms of reference so they can all see and approve committee responsibilities – it may open their eyes about the scope!
5. As a last resort, when directors put forward ideas that need resources, stop letting them know whether or not the monies are available until the board spends time on the current in-year financial report. After all, how can they know which areas can spare the funds if they do not know the status? Are they willing to run a deficit?
6. Finally and perhaps most importantly, consider whether the lack of financial oversight is symptomatic of other issues with board operations, recruitment, training, and more. If so, seek a broader solution such as a general governance review, with external assistance.

If none of these ideas work, or help you and the ED create other options, you will have to consider whether or not you can keep functioning as treasurer. The current board may be well-meaning, but their neglect of financial oversight is not ethical.

Since 1992, Jane Garthson has dedicated her consulting and training business to creating better futures for our communities and organizations through values-based leadership. She is a respected international voice on governance, strategic thinking and ethics. Jane can be reached at jane@garthsonleadership.ca.

To submit a dilemma for a future column, or to comment on a previous one, please contact editor@charityvillage.com. For paid professional advice about an urgent or complex situation, contact Jane directly.

Disclaimer: Advice and recommendations are based on limited information provided and should be used as a guideline only. Neither the author nor CharityVillage.com make any warranty, express or implied, or assume any legal liability for accuracy, completeness, or usefulness of any information provided in whole or in part within this article.