NFP Partners recently accepted an invitation from SVP (Social Venture Partners) of Boulder to make a presentation to nonprofit executive directors on financial management best practices. As a result, we will take the time to cast our net wider and deliver a list of the most consequential practices to our subscribers each month.
Here’s this month’s best FM practice, which is subject to revision as we compile our list. We recommend that the Board of Directors has a qualified financial professional who will provide oversight of the internal accounting and finance function as well as serve as the chair of the finance and audit committees (it may be impractical to have separate committees). This is especially relevant to small nonprofits with limited resources. If a qualified person is not available to serve as a Board member, the Board should recruit a qualified person to fulfill that role as an advisor, either on a voluntary or paid basis.
The risk of not having oversight and even serving in a “controller” role for small organization with a single staff person doing the accounting is simply too great to not implement this practice. NFP has sourced and adapted a sample charter for a combined audit and finance committee and the qualification of such a person. It can be downloaded from our Download Library on our website; click on Audit and Finance Committee near the bottom of the list.