It’s no surprise that raising funds is paramount for nonprofit organizations, allowing them to provide the vital services they offer the community. Some nonprofits have staff available to assist and steer the accounting function while others rely solely on volunteer support. In either case, the role of the Board Treasurer is key in ensuring the financial integrity of the organization.
Why is the Treasurer’s Role Important?
Board Treasurers fulfill a volunteer role, and while they aren’t paid to perform this function, they should still have clear job responsibilities and functions, just as any other key member of your organization. Accounting policies and procedures should be formalized, and this is particularly important for nonprofits that essentially function as small businesses.
Smaller nonprofit organizations may have a more casual relationship with the treatment of money, and yet this can create problems such as questions about how money was spent, money getting lost or even theft. By systematizing the accounting function, and using your Board Treasurer to help provide oversight and enforcement, your nonprofit can avoid many problems that could damage your nonprofit’s viability and reputation.
What Should Your Treasurer Be Doing?
To help you understand the ins and outs of your Treasurer’s role and responsibilities, we’ve compiled the following list:
- Steward finances with ethical standards. Treasurers, with the help of a nonprofit CPA expert, should set up and oversee controls regarding receipt of cash, incoming checks, authorization of invoices, signing of checks, and cash deposits.
- Utilize the annual budget to evaluate and plan. Every nonprofit should be operating with an annual operating budget. This process begins with having managers and executives estimate their expenses, in addition to plans for funding those expenses through income and fundraising. Treasurers should also assist in reviewing the prior year’s budget, ensuring that income and expense estimates appear to be achievable.
- Ensure appropriate licenses and permits. Due to the benefits of having 501(c)(3) status, your nonprofit is subject to special permits and licenses, in addition to those that are required for certain activities such as holding a special event. These laws vary from state to state and your Treasurer should facilitate checking on these requirements beforehand.
- Supervise financial filings. Your Treasurer is ultimately responsible for ensuring that your filings, particularly form 990, are submitted in an accurate and timely manner. Keep a calendar of when filings are due, and consult with a nonprofit CPA as needed. Your Treasurer should also be sure your nonprofit is registered with the appropriate charitable solicitation agencies; the Unified Registration Statement (URS) offers a summary of state requirements.
- Track volunteer time. Many nonprofits leverage substantial time contributions from volunteers, but fail to track it. Ensuring that you know who has volunteered, when, where and for how long can help protect your organization and its volunteers from liability. Additionally volunteer time can be an important line item to monetize in your budget and underscore when applying for financial support, such as grants.
- Recognize donations. Your Treasurer should help set up systems and oversee the written confirmation and recognition of donations. Thank you letters should be sent promptly and comply with IRS requirements for reporting, particularly for donor tax records. You can send this information via email; be sure to list any single contribution of $250+ and in cases that aren’t cash, describe the property without a value.
- Prepare timely financial reports. Reviewing your current finances against your budget is vital in understanding your ability to carry out your plans. Yet often nonprofits struggle in understanding what kinds of reports to generate and how to use this information for planning purposes. Working with an expert like a nonprofit CPA, your Treasurer can ensure template reports are created and reviewed at each Board meeting. Additionally, as you grow you should consider commercial accounting software such as Quickbooks, in addition to cloud-based options (see below).
- Recruit his/her replacement. Being prepared for your next Treasurer to assume responsibility requires some planning as well as recruitment. Your current Treasurer should be involved in seeking his or her replacement, and ensuring s/he has been properly trained.
What Cloud-Based Options are Available?
Cloud-based accounting software is the new frontier in accounting, and can be particularly helpful for nonprofits as they work in tandem with their Treasurer. Such software solutions include:
- Quickbooks Online
For more information on how you should be working with your Treasurer, or to implement cloud-based accounting options for your nonprofit, contact ESP. We’d be happy to discuss solutions for your organization.