A nonprofit’s finance committee plays an important part in keeping the organization financially healthy and legally safe. A recent article published in BoardSource clearly defines those fundamentals. They are:
- Oversee financial planning: Play an active roll in the strategic planning process and in the budgeting process.
- Monitor that adequate funds are available for financial management tasks: when reviewing financial statements, track the bottom line to spot red flags that could hamper adequate funding for budgeted activities.
- Ensure that adequate funds are protected: overseeing investments or endowment funds, and the internal controls necessary.
- Draft organizational fiscal policies: drafting policies for board approval that deal with acceptable reserves, the board’s involvement in signing major purchases or for financial commitments, and appropriate use of board-designated funds.
- Anticipate financial problems: staying aware of the external fiscal environment and its effect on the board’s decision-making.
- Oversee financial record keeping: assess the reliability and usefulness of the organization’s finance staff – is it timely and accurate.
- Help the board understand the organization’s financial health: serving as a communications channel to the board, using graphics and not just numbers, talking about implications, and linking the report to goals and strategies.
- Ensure all legal reporting requirements are met: if outside professional help is lacking, make sure all federal, state and local reporting is done.
- Sustain the credibility and effectiveness of the committee itself: Board recruitment is a serious process for this committee in order to attract savvy financial experts, and train them for the tasks.
 BoardSource,Resource Solutions,” Finance Committee Fundamentals”, Aug. 26, 2016
Author: Adrianne Geiger DuMond, Executive Coaches of Orange County, www.ECofOC.org