Fundamentals of the Finance Committee

Adrianne Geiger Dumond

Adrianne Geiger Dumond

 

 

 

A nonprofit’s finance committee plays an important part in keeping the organization financially healthy and legally safe. A recent article published in BoardSource[1] clearly defines those fundamentals. They are:

 

  1. Oversee financial planning: Play an active roll in the strategic planning process and in the budgeting process.
  2. 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. 
  3. Ensure that adequate funds are protected: overseeing investments or endowment funds, and the internal controls necessary. 
  4. 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.
  5. Anticipate financial problems: staying aware of the external fiscal environment and its effect on the board’s decision-making. 
  6. Oversee financial record keeping: assess the reliability and usefulness of the organization’s finance staff – is it timely and accurate.
  7. 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.
  8. Ensure all legal reporting requirements are met: if outside professional help is lacking, make sure all federal, state and local reporting is done.
  9. 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.

[1] BoardSource,Resource Solutions,” Finance Committee Fundamentals”, Aug. 26, 2016

Author:  Adrianne Geiger DuMond, Executive Coaches of Orange County, www.ECofOC.org