Roles and Responsibilities of the Finance Committee in a NonprofitPublished on 20th February 2020
The Finance Committee is a standing committee of the Board of Directors and is typically chaired by the Board Treasurer. The committee is responsible for reviewing and providing guidance on the organisation’s financial matters. Specifically, the committee assures internal controls, independent audit, and financial analysis for the organisation.
The Finance Committee should review all financial statements and reports on financial activity that is due to be presented to the board. The board will be better equipped to respond to consolidated information about financial trends, risk and highlights with an accompanying narrative report rather than the detailed statement of financial position. To help the board fulfill its oversight function, it is important for the Executive Director and the Finance Committee to present the information in as clear and concise a manner as possible.
The below are 5 key responsibilities of the Finance Committee:
1. Provide direction to the Board for fiscal responsibility. Alongside this is the responsibility for future long term planning and the development of strategies to back up the plan.
2. Ongoing review of the organisations’ revenue and expenditure, balance sheet, investments and other matters related to its continued solvency.
3. Approve the annual budget and submit it to the Board for approval.
4. Ensure the maintenance of an appropriate capital structure.
5. Oversee the maintenance of Organisational-wide assets, including prudent management of Organisational investments and risk exposure.
Here are some specific tasks the Finance Committee might undertake:
1. Review consolidated variance reports at a monthly Committee meeting.
2. Ensure that adequate policies and procedures are in place for optimal financial governance
3. Develop an investment strategy where necessary.
4. Ensure that an annual audit takes place. This may include the selection of an auditor and reviewing draft audit reports before they are signed off.
5. Provide support to staff as needed. This typically involves working with finance and Programme staff in order to develop useful reports that are presented in accessible ways to the relevant stakeholders within the organisation.
A committee of about 3 to 4 knowledgeable people typically comprise the finance committee for a medium sized nonprofit organisation. The numbers can be amended as you see fit but it is imperative that the right amount of knowledge and power balance (sufficient authority and leadership) is considered during the selection process.
Findev Consulting Limited is a UK based consultancy that provides grant management training to NGOs and civil society organisation. We have worked with numerous nonprofits across 3 continents, focusing on proposal development, strategic planning and project evaluation.
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