Finance Committees

Sections of this topic

    © Copyright Carter
    McNamara, MBA, PhD, Authenticity Consulting, LLC

    Vast majority of content
    in this topic applies to for-profits and nonprofits. This book also covers this topic.

    Developing, Operating and Restoring Your Nonprofit Board - Book Cover

    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 with relevant
    financial and tax rules and regulations, as well as standards of accounting.
    Typically annual recurring goals of this committee might be to:

    1. Ensure conformance to relevant rules and regulations affecting financial
      management and taxes, e.g., IRS and Sarbanes Oxley.
    2. 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.
    3. Train other Board members and leaders in the organization on how to analyze
      financial data and make appropriate decisions.
    4. Ensure organizational sustainability by developing appropriate budgets
      (operating, product/program-based, etc.) that are approved by the Board.
    5. Ensure ongoing effectiveness and efficiency in the management of financial
      resources with timely generation and analysis of relevant financial information.
    6. Ensure effectiveness and focus on revenue development by establishing revenue
      targets for each product/program where appropriate.
    7. 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 their 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

    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

    Also, consider
    Related Library Topics

    Learn More in the Library’s Blogs Related to This Topic

    In addition to the articles on this current page, also see
    the following blogs have posts related to this topic. Scan
    down the blog’s page to see various posts. Also, see the section
    “Recent Blog Posts” in the sidebar of the blog or click
    on “next” near the bottom of a post in the blog. The
    the blog also links to numerous free related resources.

    Boards of Directors Blog

    Nonprofit Capacity Building Blog

    ›Return to All About Boards of Directors

    For the Category of Boards of Directors:

    To round out your knowledge of this Library topic, you may
    want to review some related topics, available from the link below.
    Each of the related topics includes free, online resources.

    Also, scan the Recommended Books listed below. They have been
    selected for their relevance and highly practical nature.

    Related Library Topics

    Recommended Books