Five Minutes for Finance - The Board Treasurer
The Board Treasurer
In addition to collaborating with the fundraising team, the CFO or Director of Finance partners with the Treasurer on the Board of Directors. Whereas the CFO is the financial leader among the staff, the Treasurer is the person responsible for ensuring that the Board fulfills its fiduciary duties.
The Board’s Fiduciary Responsibilities
As a member of the board, the Treasurer plays a key role in upholding the board’s fiduciary duties. Nonprofit board members are legally obligated to act in the best interest of the organization and exercise three key fiduciary responsibilities:
Duty of Care: Board members, including the Treasurer, must make informed and prudent decisions regarding financial matters, ensuring that the nonprofit's resources are managed wisely.
Duty of Loyalty:– The board must act in the best interests of the nonprofit, avoiding conflicts of interest and ensuring that financial decisions align with the organization's mission.
Duty of Obedience:– Board members must ensure that the nonprofit adheres to its governing documents, mission, and legal obligations, including financial reporting and compliance with tax laws.
The Treasurer helps guide the board in fulfilling these duties by providing financial expertise, ensuring transparency, and advocating for responsible financial management.
Key Responsibilities of the Treasurer (in small organizations that do not have a CFO or Director of Finance)
Financial Oversight: The Treasurer monitors the organization’s income, expenses, and overall financial status, ensuring that funds are managed effectively and in accordance with best practices. They ensure that accurate financial records are maintained and that financial statements are regularly reviewed and reported to the board. This oversight helps prevent financial mismanagement and supports informed decision-making.
Budgeting and Financial Planning: Developing and managing the annual budget is one of the Treasurer’s core responsibilities. By collaborating with the board and executive leadership, the Treasurer ensures that financial resources are allocated strategically to support the nonprofit’s mission. They also participate in long-term financial planning, ensuring the organization’s sustainability and ability to fulfill its goals.
Reporting and Compliance: The Treasurer is responsible for preparing and presenting financial reports to the board, providing insights into cash flow, expenditures, and revenue sources. Additionally, they ensure compliance with legal and regulatory requirements, such as tax filings (e.g., IRS Form 990 in the U.S.), audit, and adherence to financial policies. Compliance with these regulations is crucial for maintaining the nonprofit’s tax-exempt status and credibility with stakeholders.
Larger nonprofits may have an Audit Committee that is responsible for ensuring that an annual audit is conducted by an independent third-party that assesses the reliability of the organization’s financial statements and its adherence to generally accepted accounting principles (GAAP). In the State of California, Nonprofit Integrity Act provides rules on audits, the audit committee, and any overlap with the Treasurer and Finance Committee.
For smaller nonprofits, the audit responsibility may be held by the Treasuer and/or Finance Committee.
Fund Management and Stewardship: Many nonprofits rely on donations, grants, and fundraising efforts. The Treasurer plays a key role in managing these funds responsibly, ensuring they are used according to donor intent and organizational priorities. They may also oversee investment policies and reserve funds, balancing short-term financial needs with long-term sustainability.
Internal Controls and Risk Management: To prevent fraud, mismanagement, or financial conflicts of interest, the Treasurer helps implement strong internal controls. This includes oversight of bookkeeping practices, bank reconciliations, expense approvals, and adherence to financial policies. The Treasurer works with the board and staff to ensure accountability in financial transactions and mitigate risks that could threaten the nonprofit’s stability.
Collaboration with the CFO and Financial Team
In organizations with a Chief Financial Officer (CFO) or dedicated financial staff, the Treasurer collaborates closely with them to oversee financial strategy and operations. While the CFO handles the daily financial management, the Treasurer acts as a liaison between the board and financial team, ensuring alignment between strategic goals and financial planning. Key areas of collaboration include:
Financial Reporting: The CFO prepares financial statements, while the Treasurer reviews and interprets these reports for the board.
Budget Development: The CFO works on the details of the budget, and the Treasurer ensures it aligns with the nonprofit’s objectives before presenting it to the board for approval.
Audit and Compliance: The Treasurer (or Audit Committee) supports the CFO in coordinating audits and ensuring compliance with financial regulations.
Investment and Reserve Management: For nonprofits with endowments or reserve funds, the Treasurer and CFO work together to develop investment strategies that align with the organization’s financial health and risk tolerance.
Qualities of an Effective Treasurer
A nonprofit Treasurer should have financial literacy, attention to detail, and strong organizational skills. While a background in accounting, finance, or nonprofit management is beneficial, clear communication and integrity are equally important. An effective Treasurer fosters trust among board members, donors, and stakeholders by promoting financial transparency and accountability.
Conclusion
The Treasurer’s role extends beyond bookkeeping; they are a strategic financial steward and a key partner in ensuring the nonprofit’s financial health. By working closely with the board, CFO, and executive leadership, the Treasurer upholds fiduciary responsibilities, safeguards financial resources, and supports the organization’s long-term success. With strong financial leadership, nonprofits can build credibility, attract funding, and make a lasting impact on their mission.
About this Series
Subsequent articles in this series will cover other topics related to nonprofit financial management. Here is a list of, with links to, previous articles:
About the Author
For over 30 years, Robert Pascual has been a leader in nonprofit financial management as a CFO, consultant, conference speaker and educator. He holds an MBA from the Haas School of Business at the University of California and is the founder and principal of Robert Pascual, MBA LLC. He has worked with small, mid-size, and large nonprofit organizations spanning the fields of education, workforce development, housing, health, philanthropy, social services, media, fiscal sponsorship, nature, and the environment. Each of these organizations has faced both unique and common challenges, some of which are probably similar to ones that you wrestle with.