How financially competent is your nonprofit team?

If yours is similar to many small nonprofits or charities, the board, management and staff are likely struggling to address financial challenges arising from the battered economy. Given these pressures, the treasurer’s role has become integral to the financial stability of many nonprofits and charities.

Having an experienced, capable treasurer on the board can provide directors, management and staff with comforting reassurance that proper financial oversight is in place. And, in light of the growing appetite for financial accountability and transparency, a nonprofit’s treasurer can also impact the perceptions of funders and the public regarding the organization’s professionalism and trustworthiness. Finding the right treasurer can, therefore, be one of the most important tasks a nonprofit undertakes. Here’s how to go about it.

While the board of directors is responsible for the funds received and spent by a nonprofit, the treasurer is the fulcrum for ensuring the board fulfills its fiduciary responsibilities. This individual oversees the management and reporting of a nonprofit’s finances, helping to ensure the organization stays financially sound and that assets are used appropriately. Yet many board members do not have prior experience with nonprofit accounting and finances, hence, the treasurer is often called upon to educate directors about the differences between for-profit and nonprofit financial management.

It’s also helpful for board members to understand that while the treasurer helps to set financial policies and to monitor the financial performance of the organization, it is not this individual’s responsibility to manage finances and achieve financial targets; this responsibility rests with the executive director. As well, unless a nonprofit specifically requires its board members to participate in fundraising, the treasurer is generally not responsible for bringing funds into the organization.

The role of a treasurer

The specific responsibilities of a treasurer can vary widely depending on the size, make-up, and policies of a nonprofit. In start-ups or small organizations for example, the treasurer may maintain the books and write the cheques. Sometimes the duties of treasurer and secretary on the board are combined and one individual holds the title of secretary/treasurer. In larger organizations, the treasurer may provide guidance to the executive director. And in even larger organizations, the treasurer may chair a finance committee.

Thus, while individual roles can vary widely, responsibilities typically fall into the following categories:

• Financial policies – oversees the development of financial policies and procedures and their review by the board.
• Funds and investments – ensures that funds are retained in safe accounts/investments; co-signs cheques with another signing officer, invests excess funds.
• Financial transactions – verifies that donations and grants are handled appropriately; reviews invoices, cheques and bank statements.
• Financial records – ensures that financial books and records are accurate and up-to-date.
• Budgeting – assists in the preparation of the annual budget and its presentation to the board for review; monitors results and alerts the board to any important issues; discusses with the executive director and the external auditor any potential problems or deficiencies.
• Reports – oversees the development of monthly or quarterly financial statements and presents these to the board; ensures that an independent audit of the organization’s finances takes place and assists with the development and presentation of the annual report to board; informs the board of important financial events, trends, issues.
• Remittances and filings – ensures that government tax filings and remittances are submitted on a timely basis.

 

How to find the right treasurer for your organization

With experienced, qualified treasurers in high demand, to attract and retain the right treasurer for your organization you need to prepare appropriately. Start with a detailed job description. Outline the specific responsibilities you want this individual to assume. Then consider the skills, abilities, and characteristics this volunteer should possess in order to meet the needs of the role and to fit into the culture of your organization.

Obviously you want someone with a financial accounting background and nonprofit experience, but beyond that, here are some other aspects to consider. Ideally, for example, the treasurer should have a professional accounting designation – chartered accountant (CA), certified management accountant (CMA), or certified general accountant (CGA). This provides assurance of appropriate financial management training and experience. Finding a treasurer with these credentials, however, may not always be practical or feasible. If this is not a possibility for your organization, then consider someone with relevant experience, such as budgeting and record-keeping with other nonprofits.

Self-confidence and interpersonal communication skills are also important, since the treasurer must be able to clearly explain sometimes complex or difficult financial issues. He or she should also be organized, detail-oriented, and demonstrate a willingness to ask questions.

When it comes to finding this volunteer, ask other board members for their recommendations, contact professional accounting associations, or register the position opening at CharityVillage or with the BoardMatch Fundamentals program.

Maintaining a good relationship with your treasurer

Once you have a treasurer on board, be sure to provide the support necessary to ensure this volunteer is able to effectively carry out the role. Provide a comprehensive orientation regarding the organization’s mission, programs, activities and financial condition. Ensure that books and records are well organized so the treasurer can easily access invoices, deposits, grants, minutes, financial statements and reports.

The executive director should communicate regularly with the treasurer – between board meetings – and keep this individual apprised of any emerging issues. It’s also important to invite the treasurer to provide input into the budgeting process and to consult on key financial decisions.

Both the executive director and other board members should also offer feedback on the treasurer’s reporting format, providing direction regarding what’s working well and what needs improvement. At the same time, board members should keep in mind that each one of them has fiduciary responsibilities for the organization; having a treasurer on the board does not extinguish these duties.

Nonetheless, in good times or in bad, having a reliable treasurer on your board of directors can give everyone in the organization a certain level of confidence that a capable professional is keeping a close watch on its financial health. For many nonprofits, this can certainly be a treasure trove.

Melanie Borho, CA, is a senior audit manager with BDO Dunwoody LLP where she works with nonprofits, charities, and owner-managed businesses; she is also treasurer of The Mississauga Food Bank. You can reach Melanie at 905-272-7824 or mborho@bdo.ca.