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Finance Committees
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McNamara, MBA, PhD, Authenticity Consulting, LLC.
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Vast majority of content
in this topic applies to for-profits and nonprofits. This book also covers this topic.  |
Overview of a Board Finance Committee
The Board Finance Committee is a usually standing committee chartered to guide,
oversee and support the financial and tax practices of the organization, including
approval and conformance regarding up-to-date fiscal policies and procedures;
development of the annual budget; and ensuring accurate tracking and analysis
of financial highlights, trends and issues. It also ensures conformance to relevant
financial and tax rules and regulations, as well as standards of accounting.
Typically annual recurring goals of this committee might be to:
- Ensure conformance to relevant rules and regulations affecting financial
management and taxes, e.g., IRS and Sarbanes Oxley. - Ensure accuracy and efficiency of financial management by reviewing and
updating the fiscal policies and procedures, and training all Board members
and relevant leaders about the policies and procedures. - Train other Board members and leaders in the organization how to analyze
financial data and make appropriate decisions. - Ensure organizational sustainability by developing appropriate budgets
(operating, product/program-based, etc.) that are approved by the Board. - Ensure ongoing effectiveness and efficiency in management of financial
resources with timely generation and analysis of relevant financial information. - Ensure effectiveness and focus of revenue development by establishing revenue
targets for each product/program where appropriate. - Ensure sufficient protection of assets, including through risk assessment
and responding strategies, e.g., insurance protection and sound cash management.
The Committee should have a work plan that itemizes these, or very similar,
annual goals and also associated objectives with each goal such that when the
objectives are achieved in total, they also will have achieved its respective
goal. When committees do not have work plans, they often flounder in finding
valuable and focused means to provide value to the Board. Unfortunately, in
these situations, many Board mistakenly conclude that “committees do not
work”, or they reduce the number of committees, thinking that inactive
committees were because there were too many — rather than realizing that committees
can be extremely useful when focused on the most important annual recurring
goals.
Additional Perspectives on Finance Committees
The Finance Committee and Committee Chair Responsibilities | Nonprofit Accounting Basics
Creating a Financial and Audit Committee
Nonprofit Finance Committee Explanation
The Role Of Your Finance Committee
Nonprofit Finance vs Audit Committees | Minnesota Council of Nonprofits
Board Finance Committee
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