The Financial Oversight Responsibilities of a Non-Profit Board of Directors
The financial oversight responsibilities of a non-profit Board of Directors is to ensure that systems are in place to develop and safeguard the organization’s finances. In many cases, funders will want to know that an agency’s board is competent to oversee large grants and federal funds. As the ultimate authority over a non-profit’s mission, the Board approves the annual budget and should regularly review financial reports. As they say, the buck stops here.
Provide Appropriate Financial Oversight and Asset Protection
The Board approves an annual budget and ensures the organization has adequate financial controls.
Maintain Adequate Financial Resources
The Board ensures the organization has adequate resources to fulfill its mission. The Board monitors the CEO’s fund development plan and participates in securing resources for the organization where appropriate.
Establish a Finance Committee
While the annual budget generally requires full board approval, a finance committee will be tasked with reviewing periodic reports to make sure that the organization is on budget.
Interpret your organization’s balance sheet and income statement.
While the finance committee may get into the nitty-gritty of financial statements, every board member should be able to read and interpret their organization’s balance sheet and income statement.
Oversee the Organization’s Legal and Tax Obligations
The board verifies that all filing requirements and tax obligations are completed.
As we outlined in a previous blog post, the key elements of a high-functioning board are the Duty of Care, the Duty of Loyalty, and the Duty of Obedience. When it comes to finances, those duties are particularly paramount. After all, without money, there is no mission.
If any of these elements are missing from your Board’s financial oversight responsibilities, then it’s likely a sign that your Board is in need of formal training. Contact The Gravely Group today for more information on our Board Training.