Working with boards is a topic that DBD Group has written about at length. Less popular, but only slightly less important, is creating an effective Finance Committee for your nonprofit. This group can be the most dynamic, exciting and important group in your organization.
From monitoring financial performance to approving budgets and financial policies, vetting loan options to overseeing the audit process, there is plenty to dig into. The best committees don’t just happen though. They are intentionally built, diverse in more ways than you might think, and given a clear chart of work.
Here are some tips based on our experience:
- Recruit and retain someone to the committee who’s been there before. Having someone who’s seen the best and worst of your organization over a long period of time can bring a unique experience and gravitas to your committee. This is not someone who’s there to say why things won’t work, but rather someone who understands the path the organization has traveled before and carries a sense of respect from others in the room. People, including you, listen when they talk.
- Recruit a diverse committee. By this we mean diversity along racial, ethnic and gender lines yes. But also, a diverse group of occupations. Find a strong CPA who really understands the financial side of your work. Find a banker who really understands the current rate environment. Find someone who has spent time working in a significant nonprofit role who understands the staff viewpoint. And look for generational diversity as well.
- Recruit members with various risk appetites. For every banker (risk averse) on your committee, balance out with an entrepreneur (risk seeking.) Having both ends of the spectrum, balanced out by plenty of people in the middle, should allow your group to be open to new and untried ideas without going off completely off the rails.
- Choose the right Chair. This person is going to run your meetings and keep the discussion moving. They should have the respect of the others in the room, and be willing and able to call the question if a topic or individual goes on too long. We also believe best practice would have this person delivering the financial report to the Board with staff in a supporting role. Find someone who can communicate to their peers.
- Create a Committee Chart of Work. If you have the right individuals selected, they want to get to work and be useful. If you don’t lay out what they are supposed to do, they will likely begin to make up their own job description. This can be counterproductive and frustrating for all involved. Set expectations, in writing and review each year.
In many ways the Finance Committee is where the real work gets done and “the magic” happens. By finding the right people and setting them on the right course you can set your organization up for success!
Nonprofit boards play a vital role in driving an organization’s mission forward, providing leadership, oversight, and support. This month, our blogs will focus on practical tips and strategies to help your board excel. Together, we can strengthen the foundation of your nonprofit’s success.
