Fiduciary Responsibility
Section 5 (Items 41-50) of the
Annual Checkup: A Board Government Self-Assessment
Annual Checkup: A Board Government Self-Assessment
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41. The budget is your group's statement of priorities and plans for the future. It deserves a lot of board time and attention. Here's a good checklist of budget items to discuss from the Nonprofit Assistance Fund. Capterra put together a nice collection of budget templates. Netsuite did a study of how boards can reconciling their fundraising team with their finance team in The Elephant in the Room. Nonprofit Quarterly published an interesting article about the pros and cons of diversifying revenue streams.
42. Financial reports don't have to be overly complicated. Here's a simple example offered by the Charities Review Council. BoardSource chimes in with this fabulous blog explaining what board members need to understand about financial statements. The new requirements established by the Financial Accounting Standards Board has many nonprofits and their accountants scrambling in 2018. Here's a great primer from the National Council of Nonprofits. 43. Restricted funds are generally program-specific. Organizations also need unrestricted, general donations for organizational costs. The Nonprofit Assistance Fund did a nice overview on Managing Restricted Funds. The BoardSource handout on Key Financial Statements also provides a nice breakdown.
44. Propel Nonprofits has done a nice blog post on Help! I've Been Elected Treasurer. For boards with a full finance committee, this BoardSource article on Finance Committee Fundamentals is helpful. 45. Board members who are confident in their understanding of the financials are more likely to bring up concerns. Here's a nice article from Bridgespan on How to Talk About Finances with Nonfinancial People. This BoardEffect blog on Fiduciary Duties makes it clear that board members have a responsibility to speak up if something does not look right. |
46. When it comes to providing a clear road and criteria for high quality organizational performance, perhaps there is no better resource than the Baldrige Foundation. Here's their Baldrige Performance Excellence Framework. This Accufund study on Functional Expense Reports can help board members see more clearly what their true program costs are. BoardSource has one on how to increase board members' understanding of programs and another on exceptional program oversight.
47. Fiscal responsibility means having strong financial systems and policies in place. Internal controls are not optional. CompassPoint's Checklist is a good place to start. The American Society of Association Executives has published a helpful Investment Policy. The Charities Review Council comes through with a great template for Reimbursements Policy. This Sample Set of Financial Policies was put together for a small nonprofit in Ohio by The Board Doctor's predecessor consulting firm. Love this Ethics and Accountability Checklist from Independent Sector.
48. The Nonprofit Assistance Fund put together these Financial Policy Guidelines to help boards get started. According to this BoardSource article, Charity Watchdogs are looking to see that groups have their financial policies together. 49. Boards of smaller organizations often struggle with the question of whether or when to commission an external audit of their books. The National Council of Nonprofits put out a great guide. Click here to follow the link. BoardSource's contribution is a description of the Audit Committee's Responsibility. Knowing what red flags to look for on audited financial statements is the subject of this BoardSource handout.
50. This BoardEffect blog called The Value of D&O Insurance is a nice primer, as is this one on liability insurance. The best resource there is for all-things insurance is the Nonprofit Risk Management Center. Click through to their website. Love this info from Charity Lawyer Blog about the Top Five Nonprofit Legal Risks. |
Additional Resources:
- Our national nonprofit leadership is in consensus that wrong ideas about administrative costs are keeping the sector under-resourced and weak. Here is a primer published by Guidestar about busting the overhead myth. Stanford's Social Innovation Review weighs in with classic piece called The Nonprofit Starvation Cycle and also this one on Caps on Indirect Costs are a Misguided Invention. BoardSource did a nice article on Discussing Overhead Expenses in the Boardroom. CPA Curtis Klotz put together an excellent handout called Graphic Re-Visioning of Nonprofit Overhead in which he turns the traditional pie chart on its ear. He also did a free webinar for Nonprofit.Courses that can be accessed here.
- The Nonprofit Assistance Fund put together a great brief on The Characteristics of Financially Healthy Nonprofits. (Hint: Board members are involved.)
- For those who are still not sure what it is all about, BoardSource created this excellent Glossary of Financial Terms.