We’ve all seen it, the glazed looks as your board scans an income statement, the attempt to give away the store for some pet project, the attempts to run the Treasurer off the Board for keeping the nonprofit financially viable, the efforts to ramrod unbudgeted expenditures through Board meetings. But what’s a new Treasurer to do to keep a Board from running a non-profit into the ground? The following are some useful tips for a new Treasurer to do just that, derived from our many years of experience providing prudent financial management to nonprofit organizations.
First, realize that managing a nonprofit is as much a political exercise as a financial one. Some Boards just don’t care about the numbers because they are there to accomplish a purpose no matter the cost. Therefore you first have to form a cadre of members who do care. To do this we highly recommend that a new Treasurer form a Budget committee consisting of the nonprofit’s officers and keep them continually informed of the financial condition and all financial matters affecting the nonprofit. You also need to educate them regarding their fiduciary responsibility and liability should the organization become insolvent. Make them your defacto deputy treasurers. The payoff? A core group of Board members who will support your position for fiscal prudence during meetings when other members want to give away the store.
Second, realize that many Board members don’t understand the difference between a balance sheet and a laundry list. You have to put the numbers in a format that they understand as well as tell them what they mean. Therefore, a new Treasurer should prepare a one page Treasurers report which reviews of the numbers and not only tells them what the numbers mean, but also informs them about the fiscal issues facing the organization and your recommended course of action. This should be emailed out to the board several days prior to the monthly meeting as well as distributed to the members at the meeting. This facilitates understanding of the issues and helps win the Board to your point of view.
Third, graphs, graphs, graphs. Nothing makes a member understand fiscal issues like a graph. We recommend that you prepare and distribute graphs showing the organizations monthly cash position as well as actual versus budget revenue and expenditures each month. While the board may not understand the numbers, they will understand a graph.
Finally, like every road trip needs a map, every nonprofit needs a revenue and expense budget to map out the trip toward solvency and fiscal prudence. Every line item should have a designated Board member responsible for its accomplishment; and actual versus budget reports and graphs should be distributed at each monthly Board meeting along with a copy of the annual budget. This precludes Board members avoiding responsibility by feigning ignorance that “they didn’t know what their budget was”. You let them know what is each month by including the budget in their monthly report package.
Follow these simple steps and you can be a successful Treasurer who can feed the Board the numbers without them throwing up.