A nonprofit board member has important legal responsibilities. Not only should they be making sure the mission is being carried out, but they are responsible for ensuring sound financial management. Board members do not need to be finance gurus – they simply need to know what to watch for. The easiest way to facilitate this is to provide financial statements (balance sheet, profit/loss, etc) – but also identify several financial indicators that will be calculated for each quarter/month and will be provided to the board. This will enable the board to have a quick way to compare how the organization has been doing and they will still have detailed financials if they want to investigate specific questions.It’s also important for board members to be proactive about dollars spent. For example, before spending money the question “Does our financial plan match our strategic plan?” could be asked.
Other important oversight responsibilities are:
- Approving annual budget
- Conducting performance review of the executive director
- Ensuring everyone on the board understands their job and is doing it (Tip: Conduct board member performance reviews)
- Provide advice and input to the executive director on organization management
- Ensuring appropriate checks and balances exist
- Oversee organization’s legal obligations and funder requirements
Next, Board Governance: Resource Development
Photo Credit: Laurent Brancaleoni
