In this blog series, we’ve already explored a non-profit board member’s duties of care, loyalty and compliance. Now we’ll look at the duty to manage accounts.
Directors of non-profit organizations have the duty to be good stewards of the organization’s assets, and the responsibility to ensure that adequate financial resources are available to accomplish the organization’s mission. Keep in mind, though, that ensuring financial accountability doesn’t just involve reviewing financial statements. The duty to manage accounts requires the board to:
Establish a budget. Creating the organization’s budget and monitoring performance relative to that budget will help the board evaluate what programs the organization should offer to most efficiently promote its charitable purpose.
Monitor investments. It is important to regularly review investment statements and understand the information presented. Investment policies should reflect a risk tolerance appropriate for the organization, and should take into account necessary spending policies.
Retain records of all income and expenses. The IRS requires organizations to be able to document all information presented in the annual Form 990 filing. The board should ensure good records retention policies and procedures are in place. Oversee fundraising. The board has the duty to promote the organization’s financial sustainability by ensuring there are adequate sources of support. Director’s own financial support is a very important part of a director’s service on a board, but interestingly, there is no legal duty to fundraise or contribute.
