A More Meaningful Board Treasurer
Sep 29, 2022 | Financial Matters,
By Sue Greenberg, VLAA Executive Director
As outlined in most by-laws, the treasurer is the organization’s principal financial officer. The treasurer’s duties may include: making regular financial reports to the board; overseeing the preparation of the annual budget and monitoring its implementation; chairing the finance committee; ensuring that all federal, state and local financial reports are filed on a timely basis; contracting with a CPA to conduct an audit; monitoring the safety of principal, liquidity and diversification of investments; and monitoring the work of the chief financial officer.
In small nonprofits, particularly those operated by volunteers, the treasurer typically keeps the books and assumes responsibility for day-to-day fiscal management. This arrangement works well for many arts organizations, assuming the treasurer’s system of record keeping can be easily replicated by his or her successor.
As a nonprofit organization grows, the treasurer’s role changes dramatically. Most, if not all, of the day-to-day matters are delegated to paid staff with the treasurer providing guidance when needed. In larger cultural institutions, the office may even appear unnecessary because treasurers receive a briefing from the CEO or CFO before the board meeting and simply recapitulates what they’ve been told. This ritual provides a sense of security (sometimes false) for board members. John Carver, the nonprofit governance guru, calls the treasurer of such an organization a “vestigial organ.”
Too often, boards are grateful to be freed of the dreaded task of monitoring the finances and fail to hold the treasurer to a reasonable standard of performance. Even more dangerous is the tendency for treasurers to hold the position for a long time. As Maureen K. Robinson notes in Nonprofit Boards That Work, this can result in “a loss of rigor and an idiosyncratic, personality-driven perspective of the organization’s finances.” Clearly, the position often is not what it should or could be, so we encourage arts organizations to re-think treasurer’s role.
How to Make the Treasurer’s Role More Meaningful
- Acknowledge that the board, as a whole, is responsible for the financial oversight of the organization and should not relinquish this oversight responsibility to anyone, including the treasurer.
- Consider recruiting an experienced nonprofit CFO or executive director to serve as treasurer.
- Adopt a policy limiting the term of the treasurer.
- Prepare a written job description outlining the treasurer’s duties.
- Recognize that the treasurer’s job description can change and should be designed to meet the evolving needs of each organization.
- Encourage questions.
- Choose a treasurer who has the ability not only to analyze and interpret budgets and financial statements, but also to teach fellow board members how to assess the organization’s fiscal health by looking at the reports and audits.
- Conduct a short education session annually to make sure the board members understand the basics of nonprofit accounting.
- Ask key stakeholders or service organizations, like VLAA, for help early and loudly when trouble looms.