It is not uncommon to go to the Board meeting of a nonprofit and discover that they don’t have a Board Treasurer. Having someone who oversees the organization’s finances seems like such an important job, so why is it neglected?
The Treasurer role of a nonprofit is not an easy role. A quick look at the Treasurer’s duties outlined in any organization’s bylaws will quickly tell you why this is such a critical role and why it is often a challenge to fill the position with the right person.
In smaller organizations where there is often a lack of internal accounting support, it is not uncommon for the Treasurer to be responsible for many of the accounting functions that should otherwise be the responsibility of an accounting and finance department. While the Treasurer certainly needs to have a good understanding of basic nonprofit accounting and finance, their role shouldn’t be deciphering numbers. Their role, instead, should be ensuring the organization is financially viable and has meaningful and accurate financial data to plan strategically.
What Makes a Good Treasurer?
First, what is a nonprofit Board Treasurer? The nonprofit Treasurer is the Board Director responsible for managing the organization’s finances and providing financial oversight. When looking for someone to fill the role of nonprofit Board Treasurer and provide nonprofit financial accountability, you will want to make sure they possess the following skills:
- Integrity: A nonprofit Treasurer understands that one of the core values to the success of their position is earning stakeholders’ trust by providing financial transparency with accurate data.
- Knowledge and Experience: Nonprofit financial knowledge is a valuable trait for a Treasurer. After all, the Treasurer must be able to plan for the organization’s financial success. There needs to be a solid understanding of the organization’s finances and the ability to present financial information in a clear, concise manner that is easily digested by the other Directors.
- People Skills: Of course, good communication is a crucial skill all Board Directors must have. A good portion of the Treasurer’s job is communicating the financial standing of the organization to stakeholders during Board meetings. This requires them to work effectively with the accounting and finance team to ensure they can explain nonprofit financial and accounting concepts in a clear manner to other Board Members.
- Critical Thinking: The Treasurer must be able to make recommendations to the Board regarding the organization’s financial future. To do so they need to be able to think critically to anticipate the risks the organization may face, and to strategically develop plans to mitigate those risks.
What Does a Nonprofit Board Treasurer Do?
The nonprofit Treasurer’s duties and tasks can vary immensely between organizations, and sometimes it doesn’t stop at just handling the organization’s finances. Before a Treasurer is even elected, their job description should be written and voted on by the nonprofit Board.
The roles the nonprofit Treasurer plays may also differ depending on the size of the organization. In larger organizations, they may operate alongside, and closely with, a CFO or Executive Director. In smaller organizations, they may also provide accounting and finance support.
The nonprofit Treasurer’s primary tasks are to understand, and make regular reports on, the organization’s financial status to the Board of Directors. As previously mentioned, the role of a Treasurer can cover a wide range of responsibilities depending on the size of the organization. Treasurers may often serve as a signatory for bank and investment accounts, manage cash flow, and they may also share some of the accounting tasks such as reconciling bank accounts.
While those are just a few basic tasks the nonprofit Treasurer performs, there are four key roles they must play to ensure the organization’s nonprofit financial accountability and success:
- Operational: Understanding the organization’s different functions, from top to bottom, will allow the nonprofit Treasurer to better understand budgetary needs, as well as identify areas where financial challenges may arise.
- Accountability: Nonprofit financial accountability is of the utmost priority for an organization. A good nonprofit Treasurer will aid in the creation of policies that promote transparency and accountability in the organization. These policies, such as internal controls, conflict of interest and an investment policy, help reduce fraud risk and improve the confidence level of stakeholders.
- Strategic: A good Treasurer does not need to be an accountant, but they must have a clear understanding of the organization’s finances. A Treasurer should be able to rely on the accounting and finance department to provide the information they need to ensure they can make strategic decisions. Developing a sound financial strategy that ensures the success of the nonprofit Treasurer is key to the overall success of the organization.
While the nonprofit Treasurer has the vital task of overseeing the organization’s finances and establishing financial accountability, the nonprofit also has the responsibility to ensure the Treasurer’s success before the position is filled. The organization should establish clear bylaws that outline the duties of a nonprofit Treasurer. The Board should also provide the Treasurer with the right tools and support such as accounting system access and/or access to nonprofit accountants who will help them interpret the financial data.
Taking the time to learn the nonprofit Treasurer’s role in an organization will help the organization thrive through proper handling of the organization’s finances and nonprofit financial accountability.
Do you have the right people in the right place to ensure the financial success of your organization? If not, we can help! Book a complimentary consultation with Chazin & Company to learn how our expert team of nonprofit accountants can become your trusted financial partner.